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I owe 88K on my home. The note is for 2.625% The effective rate on the note after the deduction is about 1.78%
I have a spare 88K sitting around beyond an emergency fund just sitting in cash.
I can either write a check to wells fargo and be 100% debt free right now
or I can take that 88K and invest it in some manner.
Beating 2.625% even after taxes isn't terrible difficult over the long term
However, the stock market is already pretty cranked up...
My question: What rate of return should I target to make up for the risk of investing vs. the sure thing - mortgage
For instance... making 5% on my money would be +EV, but would the risk I would take offset that reward?
Given that there are no sure thing investments paying over 1% these days... what would you target and why?
My own personal thought... If in pursuit of an 8% gain I could tolerate the risk of losing about 10-15% of the portfolio...
What type of investments would you consider?
I was considering buying 20K in these 4 segments that either shoot a yield or seem like they are due for a correction in a positive direction:
REM - Reit ETF that yields about 14%
PFF - Preferred Stock ETF that yields about 6.5%
USO - OIl ETF - because I feel like oil is at or near a bottom.... and while I realize the market can remain irrational longer than I can remain solvent.. I'd be positively shocked if Gas were under $2.50 a gallon come late summer
BRK.B - because Warren Buffet is still awesome
Or is the psychology of having the note paid off superior to any +EV in the investment world?
I suppose the lack of liquidity is also a concern on the pay off end of things.. once that money goes into the home it's gone. AT least i can sell any investment
I owe 88K on my home. The note is for 2.625% The effective rate on the note after the deduction is about 1.78%
I have a spare 88K sitting around beyond an emergency fund just sitting in cash.
I can either write a check to wells fargo and be 100% debt free right now
or I can take that 88K and invest it in some manner.
Beating 2.625% even after taxes isn't terrible difficult over the long term
However, the stock market is already pretty cranked up...
My question: What rate of return should I target to make up for the risk of investing vs. the sure thing - mortgage
For instance... making 5% on my money would be +EV, but would the risk I would take offset that reward?
Given that there are no sure thing investments paying over 1% these days... what would you target and why?
My own personal thought... If in pursuit of an 8% gain I could tolerate the risk of losing about 10-15% of the portfolio...
What type of investments would you consider?
I was considering buying 20K in these 4 segments that either shoot a yield or seem like they are due for a correction in a positive direction:
REM - Reit ETF that yields about 14%
PFF - Preferred Stock ETF that yields about 6.5%
USO - OIl ETF - because I feel like oil is at or near a bottom.... and while I realize the market can remain irrational longer than I can remain solvent.. I'd be positively shocked if Gas were under $2.50 a gallon come late summer
BRK.B - because Warren Buffet is still awesome
Or is the psychology of having the note paid off superior to any +EV in the investment world?
I suppose the lack of liquidity is also a concern on the pay off end of things.. once that money goes into the home it's gone. AT least i can sell any investment
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