Investing questions

[BleedBlueGold]

In honor of Koon asking for advice and then ignoring it, I wanted to make this post to get some opinions of others before ultimately ignoring you all and doing what I want to do:

We just refinanced the house for 15-yrs at 2.75%. I'm the type of person who hates debt and would love to just dump money into it to pay it off asap. So I ran some numbers and it could be accomplished in 8 years. Then I started thinking, what if I used my non-retirement Vanguard account to build a balance faster and then use that to pay off the mortgage? Ran some numbers, it's possible I could do this in 5 years (with a good market...I know, seems laughable at the moment).

I ran this by our broker and he basically said to keep the debt (low interest) and just focus on building wealth by maxing out all retirement accounts, Roth accounts, and then the Vanguard account.

Where are you all on the topic of carrying low-interest debts in order to invest? Or do you all hate debt as much as I do?

Which path helps me retire at 50-55 years old? (that's 13-18 years from now)

 

[NDIrish21]

In honor of Koon asking for advice and then ignoring it, I wanted to make this post to get some opinions of others before ultimately ignoring you all and doing what I want to do:

We just refinanced the house for 15-yrs at 2.75%. I'm the type of person who hates debt and would love to just dump money into it to pay it off asap. So I ran some numbers and it could be accomplished in 8 years. Then I started thinking, what if I used my non-retirement Vanguard account to build a balance faster and then use that to pay off the mortgage? Ran some numbers, it's possible I could do this in 5 years (with a good market...I know, seems laughable at the moment).

I ran this by our broker and he basically said to keep the debt (low interest) and just focus on building wealth by maxing out all retirement accounts, Roth accounts, and then the Vanguard account.

Where are you all on the topic of carrying low-interest debts in order to invest? Or do you all hate debt as much as I do?

Which path helps me retire at 50-55 years old? (that's 13-18 years from now)

Former high-net worth financial advisor here, and the advice we normally operated off of is simply based around comparing interest rate to projected return. If you believe, on average annually, that your portfolio return can or will exceed the interest rate you are paying over the same time frame, then you should carry the debt and invest.

But if debt makes you worrisome, then get rid of it. Nothing wrong with becoming debt free, right?!

Longer-term though, if you believe markets to be efficient and continue an upward trend over the long-haul, then investing the most you can earlier on will give you a larger nest egg when it is time to retire.

*These are my own opinions and are not reflective of an investment recommendation*

^^sorry, but just a CYA since I am no longer covered under FINRA

 

[Whiskeyjack]

In honor of Koon asking for advice and then ignoring it, I wanted to make this post to get some opinions of others before ultimately ignoring you all and doing what I want to do:

We just refinanced the house for 15-yrs at 2.75%. I'm the type of person who hates debt and would love to just dump money into it to pay it off asap. So I ran some numbers and it could be accomplished in 8 years. Then I started thinking, what if I used my non-retirement Vanguard account to build a balance faster and then use that to pay off the mortgage? Ran some numbers, it's possible I could do this in 5 years (with a good market...I know, seems laughable at the moment).

I ran this by our broker and he basically said to keep the debt (low interest) and just focus on building wealth by maxing out all retirement accounts, Roth accounts, and then the Vanguard account.

Where are you all on the topic of carrying low-interest debts in order to invest? Or do you all hate debt as much as I do?

Which path helps me retire at 50-55 years old? (that's 13-18 years from now)

He's right. If you can safely get a higher rate of return via investment than the highest interest rate on debt you currently hold, you're better off investing the capital than using it to pay off debt. Interest on mortgage debt is also deductible, and if you live in a non-recourse state, it doesn't limit your options for borrowing further like other forms of debt do.

 

[Old Man Mike]

I'm 80. That probably disqualifies me from giving "modern" advice --- but anyway:

Ask yourself why really do you want money? Do you really want to retire early to be a world traveler, yacht owner, macro-house owner, playboy, Vegas inhabitant, Florida golf course denizen etc? If you want those things (all of which are --- for me --- unnecessary and shallowly unrewarding.nonsustaining in the end "golden" years), then yes, you'll have to roll dice and pursue the gold as you can.

At 80, and this viewpoint has been where I've been for twenty years, none of that has been important, and to what degree any of it arrived, often more of a hassle to a peaceful happy retirement than a boon. But you need to vision your goal state and not just chase dollars because your "culture" (and mine) has manipulated us to do. Get a vision, then make plans. Your vision might reduce your feelings of how much raw cash you really need for a happy life. I'd suggest putting a lot of family and friends in natural settings into that vision.

A long long time ago I wrote a little poem to no one in particular, but apparently to me.

"The World ... It nodded when I came ... and rushed on by continuing the Chase ... of "something" ... no one seemed to know a name ... but satisfied themselves with keeping pace."

 

[Circa]

I'm 80. That probably disqualifies me from giving "modern" advice --- but anyway:

Ask yourself why really do you want money? Do you really want to retire early to be a world traveler, yacht owner, macro-house owner, playboy, Vegas inhabitant, Florida golf course denizen etc? If you want those things (all of which are --- for me --- unnecessary and shallowly unrewarding.nonsustaining in the end "golden" years), then yes, you'll have to roll dice and pursue the gold as you can.

At 80, and this viewpoint has been where I've been for twenty years, none of that has been important, and to what degree any of it arrived, often more of a hassle to a peaceful happy retirement than a boon. But you need to vision your goal state and not just chase dollars because your "culture" (and mine) has manipulated us to do. Get a vision, then make plans. Your vision might reduce your feelings of how much raw cash you really need for a happy life. I'd suggest putting a lot of family and friends in natural settings into that vision.

A long long time ago I wrote a little poem to no one in particular, but apparently to me.

"The World ... It nodded when I came ... and rushed on by continuing the Chase ... of "something" ... no one seemed to know a name ... but satisfied themselves with keeping pace."

<div style='position:relative; padding-bottom:calc(56.25% + 44px)'><iframe src='https://gfycat.com/ifr/AggravatingDopeyAsiaticgreaterfreshwaterclam' frameborder='0' scrolling='no' width='100%' height='100%' style='position:absolute;top:0;left:0;' allowfullscreen></iframe></div><p> <a href="https://gfycat.com/aggravatingdopeyasiaticgreaterfreshwaterclam"

 

[BleedBlueGold]

He's right. If you can safely get a higher rate of return via investment than the highest interest rate on debt you currently hold, you're better off investing the capital than using it to pay off debt. Interest on mortgage debt is also deductible, and if you live in a non-recourse state, it doesn't limit your options for borrowing further like other forms of debt do.

I know he's right, mathematically, but see OMM's post to get an idea of my feelings. I genuinely hate debt, I'm not worried about the volume of wealth I may accumulate if I grind and invest in all the correct vehicles until i'm 70. My concentration is on being debt free and having a nest egg just big enough to allow me to retire early and spend more time with my kids, parents, etc.

I don't live to work. My father-in-law built a multi-million dollar company. Worked his ass off, was rarely around as his kids grew up, and then died when he was 59 before he could really enjoy anything he'd built. That ain't me.

*I'm aware of the privileged shoes I'm wearing. Perhaps we'd be having a different conversation if that were not the case, however, I'm convinced that my goals and where I place strong value would still be the same.

I'm 80. That probably disqualifies me from giving "modern" advice --- but anyway:

Ask yourself why really do you want money? Do you really want to retire early to be a world traveler, yacht owner, macro-house owner, playboy, Vegas inhabitant, Florida golf course denizen etc? If you want those things (all of which are --- for me --- unnecessary and shallowly unrewarding.nonsustaining in the end "golden" years), then yes, you'll have to roll dice and pursue the gold as you can.

At 80, and this viewpoint has been where I've been for twenty years, none of that has been important, and to what degree any of it arrived, often more of a hassle to a peaceful happy retirement than a boon. But you need to vision your goal state and not just chase dollars because your "culture" (and mine) has manipulated us to do. Get a vision, then make plans. Your vision might reduce your feelings of how much raw cash you really need for a happy life. I'd suggest putting a lot of family and friends in natural settings into that vision.

A long long time ago I wrote a little poem to no one in particular, but apparently to me.

"The World ... It nodded when I came ... and rushed on by continuing the Chase ... of "something" ... no one seemed to know a name ... but satisfied themselves with keeping pace."

Good grief. I'm 37 with an 80-year-old's mind. I guess that's the definition of "Wise beyond my years." I hope I don't get dementia at age 40

Well said Mike, and fantastic poem.

It's funny. I read back in this thread to some of my earlier posts. Many of which were before I had my first child. In the last six years, I have had two kids, who are my world. Roth IRAs, maximizing contributions into the most tax efficient plans, working long hours, etc etc, have become far less important to me. I want to make good decisions, but I just value time with loved ones more than a large bank account.

I appreciate both inputs. This has been a topic of discussion over the past week with my family so I figured I'd get some thoughts on the subject here too as I value everyone's opinions.

 

[Whiskeyjack]

I know he's right, mathematically, but see OMM's post to get an idea of my feelings. I genuinely hate debt, I'm not worried about the volume of wealth I may accumulate if I grind and invest in all the correct vehicles until i'm 70. My concentration is on being debt free and having a nest egg just big enough to allow me to retire early and spend more time with my kids, parents, etc.

I don't live to work. My father-in-law built a multi-million dollar company. Worked his ass off, was rarely around as his kids grew up, and then died when he was 59 before he could really enjoy anything he'd built. That ain't me.

That's good. Was just pointing out that according to conventional wisdom/ Ramseyism, aggressively paying down a low-interest mortgage on your primary residence is not an efficient use of your capital (which you apparently already knew). Debt free is obviously a good place to be, but not all debt is created equal, and a 2.75% 15y mortgage is about as innocuous as they come.

 

[BobbyMac]

In honor of Koon asking for advice and then ignoring it, I wanted to make this post to get some opinions of others before ultimately ignoring you all and doing what I want to do:

We just refinanced the house for 15-yrs at 2.75%. I'm the type of person who hates debt and would love to just dump money into it to pay it off asap. So I ran some numbers and it could be accomplished in 8 years. Then I started thinking, what if I used my non-retirement Vanguard account to build a balance faster and then use that to pay off the mortgage? Ran some numbers, it's possible I could do this in 5 years (with a good market...I know, seems laughable at the moment).

I ran this by our broker and he basically said to keep the debt (low interest) and just focus on building wealth by maxing out all retirement accounts, Roth accounts, and then the Vanguard account.

Where are you all on the topic of carrying low-interest debts in order to invest? Or do you all hate debt as much as I do?

Which path helps me retire at 50-55 years old? (that's 13-18 years from now)

Leave the debt. 3% w/ tax bennies is to cheap too pay off.

We closed on a refi in the beginning of March (on the day of the last record low) and got 3.3% on a 30 yr. I even took extra money out to invest in the market. We looked at a 15yr but the difference on our balance was $1250 mo. So being that I was sucking all the cash out to play in the market, I obviously wanted that $1250/mo to buy more.

We are about ready to go into a big change in the post covid economy. Bet on companies that provide support to this change. Bet on companies that help us live/work more remote.

If you want to lose money, put it in commercial real estate.

One industry that you can also bet on short term is Big Oil. They've had a healthy bounce back but there's still 33% profit waiting in a company like Exxon right now, maybe 50%. I'm playing it.

I don't know if it was this thread but I said buy buy buy in early March. I had the best financial month of my life. I'm trying now to devise my pivot because I know there's numerous Zoom's out there waiting to take off and Tesla is 15% off it's high and running up against 1000 after that with competitors on the horizon.

Invest invest invest. Let you life insurance pay the house off.

 

[BleedBlueGold]

That's good. Was just pointing out that according to conventional wisdom/ Ramseyism, aggressively paying down a low-interest mortgage on your primary residence is not an efficient use of your capital (which you apparently already knew). Debt free is obviously a good place to be, but not all debt is created equal, and a 2.75% 15y mortgage is about as innocuous as they come.

2.75 is pretty low. I'll run some numbers over the weekend and see what the projected difference might look like if I let it ride and just invest. Truth is, 15 years isn't that long. Still puts me with a paid off house at age 52. But at 42, paid off house, and that much more freed up income to invest for 10-15 years...I'm curious what the numbers say.

 

[BobbyMac]

2.75 is pretty low. I'll run some numbers over the weekend and see what the projected difference might look like if I let it ride and just invest. Truth is, 15 years isn't that long. Still puts me with a paid off house at age 52. But at 42, paid off house, and that much more freed up income to invest for 10-15 years...I'm curious what the numbers say.

Invest now, pay off home later (or never pay it off). You own the position in your home.

Don't wait until 15 years to buy position is stocks. They'll double/triple by then in average markets.

 

[pumpdog20]

Leave the debt. 3% w/ tax bennies is to cheap too pay off.

We closed on a refi in the beginning of March (on the day of the last record low) and got 3.3% on a 30 yr. I even took extra money out to invest in the market. We looked at a 15yr but the difference on our balance was $1250 mo. So being that I was sucking all the cash out to play in the market, I obviously wanted that $1250/mo to buy more.

We are about ready to go into a big change in the post covid economy. Bet on companies that provide support to this change. Bet on companies that help us live/work more remote.

If you want to lose money, put it in commercial real estate.

One industry that you can also bet on short term is Big Oil. They've had a healthy bounce back but there's still 33% profit waiting in a company like Exxon right now, maybe 50%. I'm playing it.

I don't know if it was this thread but I said buy buy buy in early March. I had the best financial month of my life. I'm trying now to devise my pivot because I know there's numerous Zoom's out there waiting to take off and Tesla is 15% off it's high and running up against 1000 after that with competitors on the horizon.

Invest invest invest. Let you life insurance pay the house off.

Good advice on oil. However don't do what I did and invest in the futures etf offerings. I didn't do much research and threw some play money at UCO when May futures went negative. Being that I didn't really understand how the investment worked, I doubt I'll get my money back.

 

[Legacy]

I'll join the chorus. Keep your money in the Vanguard account especially if it's a retirement account your employer is contributing to. If so, consider increasing your contribution instead of an extra mortgage payment. Both if you can. Avoid bonds.

The market averages 7% return with your mortgage at 3%. Vanguard has a chart that shows how $10,000 grows over the years.

 

[BobbyMac]

Good advice on oil. However don't do what I did and invest in the futures etf offerings. I didn't do much research and threw some play money at UCO when May futures went negative. Being that I didn't really understand how the investment worked, I doubt I'll get my money back.

That's above my pay grade. I did a webinar relating to the gas station business and the guy was talking about various plays in short term oil and it may as well been in Sumerian.

The play would have been immediately in the companies that own oil tankers because apparently every tanker known to man is full and just floating on the ocean waiting to be sold. They showed a sat map of their locations and it was amazing.

 

[Wild Bill]

I know he's right, mathematically, but see OMM's post to get an idea of my feelings. I genuinely hate debt, I'm not worried about the volume of wealth I may accumulate if I grind and invest in all the correct vehicles until i'm 70. My concentration is on being debt free and having a nest egg just big enough to allow me to retire early and spend more time with my kids, parents, etc.

Debt is easier to tolerate when the interest is being paid by capital rather than labor. Invest in dividend paying stocks, take the dividends you get each month or quarter and throw it at the mortgage. You'll increase the size of your nest egg while simultaneously paying your debts. A lot of dividend stocks took a huge hit right now. BP is paying a 10% yield, and most oil companies are about the same. REITs got hammered too - plenty of them out there paying a monthy dividend. Boeing is another. They're probably paying out a 6% dividend right now and you can get them 50% off.

 

[Luckylucci]

Debt is easier to tolerate when the interest is being paid by capital rather than labor. Invest in dividend paying stocks, take the dividends you get each month or quarter and throw it at the mortgage. You'll increase the size of your nest egg while simultaneously paying your debts. A lot of dividend stocks took a huge hit right now. BP is paying a 10% yield, and most oil companies are about the same. REITs got hammered too - plenty of them out there paying a monthy dividend. Boeing is another. They're probably paying out a 6% dividend right now and you can get them 50% off.

A sound strategy for individuals comfortable with equity risk/fluctuations. But, I’d be concerned about the longevity of this payout for BP. BA has suspended theirs, correct? And some REIT’s will have to cut as well. So, while I agree with the strategy in theory, over long periods of time, be careful in this environment. If a yield is that high, it usually carries significant risk not only to the value of the equity but the dividend itself. You might be buying dividends that aren’t really there or won’t be in the future.

 

[ResLife Hero]

Also, factor in inflation when you're looking at debt. Your interest rate of 2.75% is low enough that the debt will barely outpace inflation at its current rate and could even end up working for you once the economy recovers and interest rates come back up a bit.

I'd keep the funds in a growth asset and just pay down the mortgage on schedule. That said, my folks have a mindset more like yours and immediately paid off their mortgage when they retired.

 

[NDBoiler]

2.75 is pretty low. I'll run some numbers over the weekend and see what the projected difference might look like if I let it ride and just invest. Truth is, 15 years isn't that long. Still puts me with a paid off house at age 52. But at 42, paid off house, and that much more freed up income to invest for 10-15 years...I'm curious what the numbers say.

I like the way you think.

Consider that if you had a 200k 15 yr mortgage at 2.75%, you’ll pay nearly triple the interest over the 15 years than if you paid it off in 5 years (roughly 15k vs 44k). If you like to invest, that’s some good money to be investing that you won’t have by keeping the debt. If you also stick to a good budget, you’ll be surprised that you probably find other money that you can add to investments while you pay off the house early at the same time.

Now let’s look at an investing example relate to this -

Let’s say your mortgage minimum payment is $1000/month and you invest $2000/month in retirement savings. After 15 years at a 7% avg ROI, you’ll have $645k in investments. Now let’s say you pay an extra $2000 on your mortgage a month and invest $500/month. You’d pay off the mortgage with the original numbers I mentioned in 5 years, and after 5 years of investing $500/month, you’d have $37k. Then, let’s say you start investing $3,500 a month for the 10 years after the mortgage is paid off. After 10 years, you’d have $621k in investments. So in the second scenario, you’ll actually end up with $658k in investments over the same 15 year period vs 645k, plus you wouldn’t have paid a bank an extra 30k in interest. If you can tighten your budget in the short term and still invest a little while paying extra on the house, you’ll come out ahead in the end.

 

[NDRock]

I’m like you, hate debt. Paid off my house a few years ago before I turned 40. My wife and I both have very stable pension plans but I also throw 15% of our salaries into the market.

Here’s the thing about being debt free, it really didn’t change anything. It felt good for a few days but then I went right back to normal. We recently bought 11 acres and plan to build my final house (hopefully), starting next year. Actually thinking about keeping a mortgage and using the money (some at least) from the sale of my current house to invest.

At the end of the day though, some decisions shouldn’t be made strictly by numbers. If you really hate owing money, pay it off. Just don’t be surprised if your life doesn’t change that much. Good luck.

 

[BleedBlueGold]

Debt is easier to tolerate when the interest is being paid by capital rather than labor. Invest in dividend paying stocks, take the dividends you get each month or quarter and throw it at the mortgage. You'll increase the size of your nest egg while simultaneously paying your debts. A lot of dividend stocks took a huge hit right now. BP is paying a 10% yield, and most oil companies are about the same. REITs got hammered too - plenty of them out there paying a monthy dividend. Boeing is another. They're probably paying out a 6% dividend right now and you can get them 50% off.

I like this idea and I mentioned it to my broker. That level of dividend income is going to require a hefty account balance. One I don’t have yet and by the time I do, my mortgage will be basically paid off. It’s definitely something I’d like to consider though, esp because when the mortgage is gone, that becomes passive income that can aid in early retirement.

I like the way you think.

Consider that if you had a 200k 15 yr mortgage at 2.75%, you’ll pay nearly triple the interest over the 15 years than if you paid it off in 5 years (roughly 15k vs 44k). If you like to invest, that’s some good money to be investing that you won’t have by keeping the debt. If you also stick to a good budget, you’ll be surprised that you probably find other money that you can add to investments while you pay off the house early at the same time.

Now let’s look at an investing example relate to this -

Let’s say your mortgage minimum payment is $1000/month and you invest $2000/month in retirement savings. After 15 years at a 7% avg ROI, you’ll have $645k in investments. Now let’s say you pay an extra $2000 on your mortgage a month and invest $500/month. You’d pay off the mortgage with the original numbers I mentioned in 5 years, and after 5 years of investing $500/month, you’d have $37k. Then, let’s say you start investing $3,500 a month for the 10 years after the mortgage is paid off. After 10 years, you’d have $621k in investments. So in the second scenario, you’ll actually end up with $658k in investments over the same 15 year period vs 645k, plus you wouldn’t have paid a bank an extra 30k in interest. If you can tighten your budget in the short term and still invest a little while paying extra on the house, you’ll come out ahead in the end.

These are the exact numbers I want to run with my actual scenario. At the end of the day, the actual goal is to retire early so whichever helps me get there the quickest (downsizing the house isn’t an option. Already asked the wife. Haha).

I’m like you, hate debt. Paid off my house a few years ago before I turned 40. My wife and I both have very stable pension plans but I also throw 15% of our salaries into the market.

Here’s the thing about being debt free, it really didn’t change anything. It felt good for a few days but then I went right back to normal. We recently bought 11 acres and plan to build my final house (hopefully), starting next year. Actually thinking about keeping a mortgage and using the money (some at least) from the sale of my current house to invest.

At the end of the day though, some decisions shouldn’t be made strictly by numbers. If you really hate owing money, pay it off. Just don’t be surprised if your life doesn’t change that much. Good luck.

Congrats!

It’s hard for me to imagine my life not drastically changing without a house payment. Hopefully, I’ll be able to let you know if 5 years.

 

[NDRock]

Congrats!

It’s hard for me to imagine my life not drastically changing without a house payment. Hopefully, I’ll be able to let you know if 5 years.

You can make it happen. Truth is, I’m back in debt after buying my property. Oh well, it was nice while it lasted.

 

[BleedBlueGold]

You can make it happen. Truth is, I’m back in debt after buying my property. Oh well, it was nice while it lasted.

I've learned that staying out of debt is the most difficult task among accumulating, paying off, and staying out.

Thanks for the chat, fellas. I don't always get decent feedback in my non-virtual world. It's always great to hear different ideas.

I think the current plan (given the uncertainty of my job) is to stockpile money. I'm going to just invest 100% of our disposable income into my Vanguard (non-retirement) account and then reevaluate later down the road. I can let it ride, cash out and pay off the house, etc at that point. Seems like there are no bad answers as long as I'm saving.

 

[Wild Bill]

A sound strategy for individuals comfortable with equity risk/fluctuations. But, I’d be concerned about the longevity of this payout for BP. BA has suspended theirs, correct? And some REIT’s will have to cut as well. So, while I agree with the strategy in theory, over long periods of time, be careful in this environment. If a yield is that high, it usually carries significant risk not only to the value of the equity but the dividend itself. You might be buying dividends that aren’t really there or won’t be in the future.

Definitely good points. I just looked up Boeing and you're right, they did supsend the dividend. I was considering buying a few shares a couple weeks ago and missed the news. Perhaps buying a good dividend paying ETF reduces the risk but you make some good points and it's something to consider.

I like this idea and I mentioned it to my broker. That level of dividend income is going to require a hefty account balance. One I don’t have yet and by the time I do, my mortgage will be basically paid off. It’s definitely something I’d like to consider though, esp because when the mortgage is gone, that becomes passive income that can aid in early retirement.

I hear ya - gotta start somewhere!

 

[BleedBlueGold]

Debt is easier to tolerate when the interest is being paid by capital rather than labor. Invest in dividend paying stocks, take the dividends you get each month or quarter and throw it at the mortgage. You'll increase the size of your nest egg while simultaneously paying your debts. A lot of dividend stocks took a huge hit right now. BP is paying a 10% yield, and most oil companies are about the same. REITs got hammered too - plenty of them out there paying a monthy dividend. Boeing is another. They're probably paying out a 6% dividend right now and you can get them 50% off.

A sound strategy for individuals comfortable with equity risk/fluctuations. But, I’d be concerned about the longevity of this payout for BP. BA has suspended theirs, correct? And some REIT’s will have to cut as well. So, while I agree with the strategy in theory, over long periods of time, be careful in this environment. If a yield is that high, it usually carries significant risk not only to the value of the equity but the dividend itself. You might be buying dividends that aren’t really there or won’t be in the future.

Reading more into this and Vanguard has a list of high-dividend paying mutual funds/etfs. I don't want to over leverage myself in these types of funds, but what would be a good balance? (I normally just use the KISS rule with 90% stock index and 10% bond index).

Example funds recommended: VDIGX, VIG, VPU, VGSLX

 

[AllTimeIrish]

Thanks, Wiz. Any reason to deviate from this? Otherwise I'm going to let it rip.

ETFs are indexed funds, and cost less. Mutual funds are managed by a person, and cost more. The costs add up over time.

 

[RDU Irish]

In honor of Koon asking for advice and then ignoring it, I wanted to make this post to get some opinions of others before ultimately ignoring you all and doing what I want to do:

We just refinanced the house for 15-yrs at 2.75%. I'm the type of person who hates debt and would love to just dump money into it to pay it off asap. So I ran some numbers and it could be accomplished in 8 years. Then I started thinking, what if I used my non-retirement Vanguard account to build a balance faster and then use that to pay off the mortgage? Ran some numbers, it's possible I could do this in 5 years (with a good market...I know, seems laughable at the moment).

I ran this by our broker and he basically said to keep the debt (low interest) and just focus on building wealth by maxing out all retirement accounts, Roth accounts, and then the Vanguard account.

Where are you all on the topic of carrying low-interest debts in order to invest? Or do you all hate debt as much as I do?

Which path helps me retire at 50-55 years old? (that's 13-18 years from now)

I have yet to see someone regret paying off their house and living debt free. Reducing your monthly cash outflow to mortgage also reduces the monthly income needed (kind of a "duh" statement). Same point you only get one shot at tax advantages of IRA, 401k, Roths.

Tax benefits of the mortgage can be grossly overstated - especially with tax law changes for limited SALT deductions. If you do not itemize you have ZERO interest deduction benefit. Combo of low interest and modest house, modest lifestyle - I would place my bet on standard deduction for your case. So many people assume tax savings to validate mortgage decisions without actually understanding their tax situation.

Based on info given I would prioritize as follows: 1) Employer match level of retirement contributions, 2) Roth IRA, 3) Max out rest of employer plan (due to retiring in lower tax bracket and early retirement needs prior to SS kicking in), 4) accelerate mortgage payments, 5) bolster non-retirement account savings. If that means never getting to #4 and #5 then you probably want to pare back on #3 to make room for #4.

 

[BleedBlueGold]

I have yet to see someone regret paying off their house and living debt free. Reducing your monthly cash outflow to mortgage also reduces the monthly income needed (kind of a "duh" statement). Same point you only get one shot at tax advantages of IRA, 401k, Roths.

Tax benefits of the mortgage can be grossly overstated - especially with tax law changes for limited SALT deductions. If you do not itemize you have ZERO interest deduction benefit. Combo of low interest and modest house, modest lifestyle - I would place my bet on standard deduction for your case. So many people assume tax savings to validate mortgage decisions without actually understanding their tax situation.

Based on info given I would prioritize as follows: 1) Employer match level of retirement contributions, 2) Roth IRA, 3) Max out rest of employer plan (due to retiring in lower tax bracket and early retirement needs prior to SS kicking in), 4) accelerate mortgage payments, 5) bolster non-retirement account savings. If that means never getting to #4 and #5 then you probably want to pare back on #3 to make room for #4.

This is the proper way to do it per the info given, but I'm not willing to put all my personal financial info on here, so I'll just leave it at that. Purposely skipping items 2 and 3 are a personal choice. I've had conversations with our broker about it. He's not entirely on board, but he understands and agrees with the premise.

The question I posed is more directed about using a brokerage account to help pay off the mortgage quicker. Could it work? Should I consider it?

Paying down the mortgage - 2.75%
Saving money in generic savings account - 1.5%
Investing money - numbers based on assumed growth of 6%

If I'm paying my monthly mortgage payment, but putting extra money into the Vanguard account, at some point (hopefully and theoretically sooner) the balance will have grown to equal the remaining balance of the home loan. *Per my numbers, approximately 3 years faster than if I were just putting that extra money on top of the principle.

 

[TorontoGold]

This is the proper way to do it per the info given, but I'm not willing to put all my personal financial info on here, so I'll just leave it at that. Purposely skipping items 2 and 3 are a personal choice. I've had conversations with our broker about it. He's not entirely on board, but he understands and agrees with the premise.

The question I posed is more directed about using a brokerage account to help pay off the mortgage quicker. Could it work? Should I consider it?

Paying down the mortgage - 2.75%
Saving money in generic savings account - 1.5%
Investing money - numbers based on assumed growth of 6%

If I'm paying my monthly mortgage payment, but putting extra money into the Vanguard account, at some point (hopefully and theoretically sooner) the balance will have grown to equal the remaining balance of the home loan. *Per my numbers, approximately 3 years faster than if I were just putting that extra money on top of the principle.

Also, another consideration too is if you own or are a part owner of a corporation they'll assess your personal leverage situation depending of course on the financial health of the company when you negotiate a new banking agreement to get a more favorable LOC/term loan interest rate or payment plan.

 

[RDU Irish]

This is the proper way to do it per the info given, but I'm not willing to put all my personal financial info on here, so I'll just leave it at that. Purposely skipping items 2 and 3 are a personal choice. I've had conversations with our broker about it. He's not entirely on board, but he understands and agrees with the premise.

The question I posed is more directed about using a brokerage account to help pay off the mortgage quicker. Could it work? Should I consider it?

Paying down the mortgage - 2.75%
Saving money in generic savings account - 1.5%
Investing money - numbers based on assumed growth of 6%

If I'm paying my monthly mortgage payment, but putting extra money into the Vanguard account, at some point (hopefully and theoretically sooner) the balance will have grown to equal the remaining balance of the home loan. *Per my numbers, approximately 3 years faster than if I were just putting that extra money on top of the principle.

Worth mentioning you are really deferring your additional brokerage account savings, not foregoing altogether. Pure numerical and theoretical standpoint you are better off earning 6% than paying down 2.75% (obviously) which when applied in straight line analysis gives you your 3 year faster payoff. 1) did you account for taxes on those gains? 2) How well will you sleep at night if that house payoff account drops say 20%? 3) you essentially have a 5 year time horizon for those funds, way too short of a time horizon to go whole hog stock market. To be fair #3 does not account for your flexibility given you are not a forced seller and can wait for better conditions. Anything under 8 years viewed as a win so odds of sustained downturn years 5-8 are the real "risk" and even if longer you are not necessarily compromising your long term goals.

To the bolded - yes is could work (and also might not although odds are in your favor), you are already considering it so "should" is irrelevant to that portion of the Q. Not an all or nothing proposition - why not do half and half or time weight it to more invested now and less later.

Savings account is non-factor - pay down the mortgage and open a HELOC if you have liquidity concerns. Piles of places will provide that line for $0 annual fee.

 

[SonofOahu]

I know he's right, mathematically, but see OMM's post to get an idea of my feelings. I genuinely hate debt, I'm not worried about the volume of wealth I may accumulate if I grind and invest in all the correct vehicles until i'm 70. My concentration is on being debt free and having a nest egg just big enough to allow me to retire early and spend more time with my kids, parents, etc.

That's good. Was just pointing out that according to conventional wisdom/ Ramseyism, aggressively paying down a low-interest mortgage on your primary residence is not an efficient use of your capital (which you apparently already knew). Debt free is obviously a good place to be, but not all debt is created equal, and a 2.75% 15y mortgage is about as innocuous as they come.

Bleed, you have your head on straight. But as Whiskey pointed out, not all debt is created equal. Nothing wrong with having some leverage. Just use your debt on stuff that will appreciate, or on what ultimately makes you happy.

 

[SonofOahu]

This is the proper way to do it per the info given, but I'm not willing to put all my personal financial info on here, so I'll just leave it at that. Purposely skipping items 2 and 3 are a personal choice. I've had conversations with our broker about it. He's not entirely on board, but he understands and agrees with the premise.

The question I posed is more directed about using a brokerage account to help pay off the mortgage quicker. Could it work? Should I consider it?

Paying down the mortgage - 2.75%
Saving money in generic savings account - 1.5%
Investing money - numbers based on assumed growth of 6%

If I'm paying my monthly mortgage payment, but putting extra money into the Vanguard account, at some point (hopefully and theoretically sooner) the balance will have grown to equal the remaining balance of the home loan. *Per my numbers, approximately 3 years faster than if I were just putting that extra money on top of the principle.

I'm not a finance guy, so take what I say with a grain of salt. I wouldn't safely assume a 6% growth rate for the next two years, and I also wouldn't assume 1.5% in a savings account. I think we're going to see some hellacious volatility in the next two quarters, because this COVID situation isn't done yet. I also think we're going into correction number two, and the bottom is really going to drop out when businesses can't get back online through the fall.

Maybe split your money: half into a few extra mortgage payments, while accruing the other half in whatever cash account you use. I follow the Buffett methodology, and his money is on the sidelines. I'm doing the same. My major 401k is also pure S&P 500 index, at this point.