Investment company?

[LopeHunter]

A different perspective.

Stress kills. We have focused on reducing stress when is an option. By choice, we never had tenants. By choice, we never had employees.

Our goals also shifted as soared past middle age. We began to look at a glide path to retirement. During our mid-50s, we paid off our remaining mortgage balance. Having zero debt offered us significant peace of mind.

Keeping the mortgage or even opting to pull equity out of our home would have provided more funds to invest.

We were already maxed out on annual contributions to retirement accounts so any arbitrage of mortgage debt would end up aa investments inside our taxable investment accounts.

We use dividend reinvestment on existing investments which triggers immediate tax liability in taxable accounts so our expected post-tax return at our marginal tax rates over the remaining life of the mortgage was not going to be life-altering for us.

Capital preservation also popped up on our radar by our mid-50s so we began shifting our investment mix from virtually 100% stocks. That investment mix shift would reduce our expected net worth growth over our remaining lifetime.

We accepted this likely outcome as the increase in investment mix diversity gained a reduction in risk of sequence of returns during our upcoming critical initial decade of retirement.

We also sought out simplicity as reached our mid-50s. We rounded up “orphan” 401K accounts to consolidate at one brokerage. Managed bills online and used autopay more.

Reviewed our term life insurance which had served its main purpose when we had dependents and our net worth was much less. Premiums were increasing much faster than inflation as we hit 60 yet the only way to “win” was to die soon. The windfall would not be life-altering to the surviving souse in our case. We dropped all term life insurance and used the resulting savings into investment accounts.

Was our approach “smart”? Likely not, however, was a good fit for us to reduce stress and seek simplicity.

 

[SAJ-99]

I sat down and ran the numbers yesterday.

That extra payment money gets my mortgage paid off in July 2035. I will save about 12,500 in interest from the original loan.

That same money invested gets my mortgage paid off in Oct 2035. That is in a lump sum payment from just the principal I saved. Any interest I make on that money in the market is profit. At 6% return over the same 10 years worked out to about 23k. I have to pay taxes on that 23k. A 6% return is pretty low risk investment.

23k profit vs having to pay 3 extra $1035 payments to payoff.

Makes zero sense to keep paying it on the mortgage for a low risk investment.

Just google "zero fee brokerage account". All the options are fine. You might need to be able to buy fractional shares in an ETF, so the account should allow that. It will be a risk account, so understand that you don't just get to clip the 6% each year without the possibility of it losing 20%. Also keep in mind it will be a taxable account so even as the S&P is paying a dividend of 1%, that will get taxed as income each year even if you choose auto-reinvestment of dividend (which you should).

Are you guys saying that a FA is not worth the money in any instance?

Almost never and not at your age. FAs should be able to provide advice on tax mitigation, which is key the closer you get to retirement and closer to SS decision. Between now and your retirement tax rules will probably change numerous times. If you do it, make sure it is a flat-fee FA not looking to suck 1% out of your account each year to pay for his boat. The simple reality is Save (spend less than you make) and Invest. For that saved money, open a RothIRA and keep throwing money at it when you can.

 

[Nick87]

For that saved money, open a RothIRA and keep throwing money at it when you can.

That has been my plan. Last few years have been hectic for us for saving like wed like to. Seem to be in a spot where we can now. As I say that with the furnace and A/C unit will likely take a shit next week now. Thanks

 

[npaden]

Where’s the love for Robinhood?

I have most of my money in Fidelity and have for a long time and they are very good and very low fees. If you ever need to park some $ for a bit with zero risk their money market fund generally has one of the top returns.

I do have a play money account with Robinhood. Have a little crypto there before fidelity had that option and have done several of their early access IPO deals. I don’t like their “gold” monthly fee gimmick to get the higher interest rate but not enough to pay the fee or move my money out.

As far as not paying early on the mortgage, I’m about a week from paying mine off and I’ve actually thought about refinancing to get money out to invest. If rates ever drop back under 5% for a 15 year mortgage I probably will. At 2.25% I would never make extra principal payments.

 

[Addicting]

A different perspective.

Stress kills. We have focused on reducing stress when is an option. By choice, we never had tenants. By choice, we never had employees.

Our goals also shifted as soared past middle age. We began to look at a glide path to retirement. During our mid-50s, we paid off our remaining mortgage balance. Having zero debt offered us significant peace of mind.

Keeping the mortgage or even opting to pull equity out of our home would have provided more funds to invest.

We were already maxed out on annual contributions to retirement accounts so any arbitrage of mortgage debt would end up aa investments inside our taxable investment accounts.

We use dividend reinvestment on existing investments which triggers immediate tax liability in taxable accounts so our expected post-tax return at our marginal tax rates over the remaining life of the mortgage was not going to be life-altering for us.

Capital preservation also popped up on our radar by our mid-50s so we began shifting our investment mix from virtually 100% stocks. That investment mix shift would reduce our expected net worth growth over our remaining lifetime.

We accepted this likely outcome as the increase in investment mix diversity gained a reduction in risk of sequence of returns during our upcoming critical initial decade of retirement.

We also sought out simplicity as reached our mid-50s. We rounded up “orphan” 401K accounts to consolidate at one brokerage. Managed bills online and used autopay more.

Reviewed our term life insurance which had served its main purpose when we had dependents and our net worth was much less. Premiums were increasing much faster than inflation as we hit 60 yet the only way to “win” was to die soon. The windfall would not be life-altering to the surviving souse in our case. We dropped all term life insurance and used the resulting savings into investment accounts.

Was our approach “smart”? Likely not, however, was a good fit for us to reduce stress and seek simplicity.

You missed the explain it like a 16 year old with his first check post. I glad it worked out for you but I have no idea what you what you are talking about.

 

[Treeshark]

If you itemize deductions, don’t forget to factor in mortgage interest into the equation. Regardless, paying off the mortgage early is almost certainly not the correct mathematical answer here (piece of mind not withstanding).

I will have to disagree with @SAJ-99 here a bit, I feel that a good FA is well worth the money.

 

[npaden]

You missed the explain it like a 16 year old with his first check post. I glad it worked out for you but I have no idea what you what you are talking about.

Here’s ChatGPTs attempt:
Here is the same idea explained as if to a 16-year-old who just got his first paycheck, using simple language and real-life comparisons.

⸻

This person is basically saying:

“We could have tried to make more money, but we chose to make life calmer and simpler instead.”

Here’s what they mean, step by step.

⸻

1. Stress is expensive—even if you don’t see it on a bill

They believe stress can hurt your health and happiness. So whenever they had a choice, they picked options that made life less stressful, even if those options might earn less money.

For example:
• They never rented property to tenants
• They never hired employees

Both of those can make more money, but they also cause headaches. They didn’t want that.

⸻

2. As you get older, your goals change

When you’re young, you want to grow money fast.
When you’re older, you want to protect what you already have.

As they got older, they started thinking:

“How do we make sure we’re okay when we stop working?”

That’s called a glide path to retirement—slowly shifting from “grow fast” to “don’t mess this up.”

⸻

3. Paying off their house made them feel free

In their mid-50s, they paid off their mortgage.

That means:
• No monthly house payment
• No debt
• Much less stress

Yes, they could have kept the mortgage and invested the money instead, possibly earning more. But being debt-free felt better to them than chasing extra returns.

⸻

4. More investing wasn’t as powerful as it sounds

They were already putting the maximum allowed into retirement accounts.

Any extra investing would have gone into taxable accounts, meaning:
• Dividends get taxed right away
• Gains aren’t as strong after taxes

So the extra money probably wouldn’t change their life much anyway.

⸻

5. They noticed risk matters more than big gains

When you’re close to retirement, losing a lot of money early on is dangerous.

So they:
• Moved some money out of stocks
• Put it into safer investments

This lowers potential growth, but also lowers the chance of a disaster at the worst possible time.

They accepted:

“We might end up with less money, and that’s okay.”

⸻

6. Simplicity became valuable

They simplified everything:
• Combined old 401(k)s into one place
• Set up autopay for bills
• Reduced financial clutter

Less stuff to track = less mental stress.

⸻

7. They dropped life insurance because it no longer mattered

Life insurance makes sense when:
• You have kids depending on you
• You don’t have much saved

Later in life:
• Premiums get expensive
• The payout wouldn’t change much for the spouse

So they canceled it and invested the money instead.

⸻

8. Final takeaway (this is the big lesson)

They admit:

“This probably wasn’t the most ‘optimized’ financial plan.”

But for them:
• Less stress
• Less risk
• Less complexity

was worth more than squeezing out every possible dollar.

⸻

How this applies to you, at 16

Right now, your job is:
• Learn how money works
• Build good habits
• Avoid dumb debt

Later in life, money becomes a tool, not a scoreboard.

This post is about choosing peace over maximum profit—and knowing that “smart” looks different at different ages.

 

[Treeshark]

At 6% return I can pay it off several years earlier.

@Addicting, why did you use 6% in your example?

 

[SAJ-99]

Where’s the love for Robinhood?

Robinhood is fine as long as people understand that investment accounts are not FDIC insured unless the money is going into a bank sweep, which means lower rates. So you have to trust the financial stability of the firm you invest with.

If you itemize deductions, don’t forget to factor in mortgage interest into the equation. Regardless, paying off the mortgage early is almost certainly not the correct mathematical answer here (piece of mind not withstanding).

I will have to disagree with @SAJ-99 here a bit, I feel that a good FA is well worth the money.

To each their own. I can show you the math for 20yrs and you will feel like you got ripped off. A LOT of FAs are half psychologist, half used car salesman and the training more matches the latter.

Anyone that itemizes deductions with the current standard deduction at the level it is I would guess they are doing pretty well. Also, that is a decision for an accountant, not a FA. I tend to separate the two.

 

[Treeshark]

Also, that is a decision for an accountant, not a FA. I tend to separate the two.

For sure, I agree- I didn’t intend for those two sentences to be connected. To add: if they don’t itemize, mortgage interest still factors into the equation, just on the other side of the ledger.

I would advise just about anyone to have a quality FA AND accountant and consult regularly with both.

 

[SAJ-99]

I will also add that I have asked a few AI programs to give me an investment plan after putting in some basic info and the results have been very good.

 

[belshawelk]

Evan a small amount get an investment broker, who doesn't charge a fee. I have had the same one for last 20 years. I am diversified with funds in
Fidelity
Vanguard
Jackson and several others.

I think its important to have a mixed portfolio. Stocks, bonds, real estate, cash and tack advantage of all Roth and IRA accounts. And make sure you capitalize on all company 401K pre tax options.

 

[Steiny77]

Lots of good thoughts here, I'll add one more thing in favor of paying off the mortgage.
With your early payoff plan, you can 100% guaranteed get the mortgage paid off in ten years and be free of that debt with a whole lot of money freed up to do whatever you want with it.

With simply paying the minimum mortgage payment and instead investing the extra funds you will guaranteed not have your house paid off in ten years.
You may do better in the market and you may not. There are no 6% guaranteed investments I'm aware of currently. Anything in the stock market is subject to periods of loss also, and considering what a good uphill ride we've been on for so long I think one would be silly to assume that we won't have a significant dip or correction sometime in the next ten years that could affect those assumed gains.

Either move is smarter than not planning and doing nothing. Good luck whatever route you choose.

 

[Addicting]

@Addicting, why did you use 6% in your example?

That is what auto populated in the calculator I used. I thought it was a safe # after researching.

Going off the S&P 500 10 year average (depending on the source) 6% is about half. That includes the last few major dips.

 

[Treeshark]

That is what auto populated in the calculator I used. I thought it was a safe # after researching.

It’s very safe, that’s partly why I asked.

 

[SAJ-99]

Lots of good thoughts here, I'll add one more thing in favor of paying off the mortgage.
With your early payoff plan, you can 100% guaranteed get the mortgage paid off in ten years and be free of that debt with a whole lot of money freed up to do whatever you want with it.

With simply paying the minimum mortgage payment and instead investing the extra funds you will guaranteed not have your house paid off in ten years.
You may do better in the market and you may not. There are no 6% guaranteed investments I'm aware of currently. Anything in the stock market is subject to periods of loss also, and considering what a good uphill ride we've been on for so long I think one would be silly to assume that we won't have a significant dip or correction sometime in the next ten years that could affect those assumed gains.

Either move is smarter than not planning and doing nothing. Good luck whatever route you choose.

You are like my wife. You are compartmentalizing the mortgage. You need to net the investment account (asset) against the mortgage (debt/liability). The premise is the asset grows faster than the mortgage would be reduced. In 3 or 5 or 10 yrs if he wants to liquidate the asset and pay down the mortgage he still can and will have more money to do so.

 

[Salmonchaser]

I sat down and ran the numbers yesterday.

That extra payment money gets my mortgage paid off in July 2035. I will save about 12,500 in interest from the original loan.

That same money invested gets my mortgage paid off in Oct 2035. That is in a lump sum payment from just the principal I saved. Any interest I make on that money in the market is profit. At 6% return over the same 10 years worked out to about 23k. I have to pay taxes on that 23k. A 6% return is pretty low risk investment.

23k profit vs having to pay 3 extra $1035 payments to payoff.

Makes zero sense to keep paying it on the mortgage for a low risk investment.

Math and science are wonderful things.

 

[NoWiser]

That has been my plan. Last few years have been hectic for us for saving like wed like to. Seem to be in a spot where we can now. As I say that with the furnace and A/C unit will likely take a shit next week now. Thanks

If you don’t already, I’d recommend a budgeting app. About 6 months ago I signed up for YNAB and it’s been life-changing. Our lifestyle hasn’t changed one bit, but knowing where our money goes and being responsible for every dollar spent has made a staggering difference in how much we’ve been able to save. Gone are the days of being stressed every time I open the CC statement because I already know exactly what it’ll be and they money is set aside for it.

Maybe not the advice you’re looking for, but I think it could make a significant difference in what you’ll be able to set aside for retirement.

 

[Steiny77]

The premise is the asset grows faster than the mortgage would be reduced. In 3 or 5 or 10 yrs if he wants to liquidate the asset and pay down the mortgage he still can and will have more money to do so.

Can you guarantee the growth on the asset?
He can guarantee that he will have his home paid off if he follows a strict plan.

I'm not saying your approach is wrong. Statistically it will probably work out, but you can't guarantee it.
I don't like owing people money. Haven't had a mortgage or any debt for a long time.

 

[SAJ-99]

Can you guarantee the growth on the asset?
He can guarantee that he will have his home paid off if he follows a strict plan.

I'm not saying your approach is wrong. Statistically it will probably work out, but you can't guarantee it.
I don't like owing people money. Haven't had a mortgage or any debt for a long time.

We live in a world of uncertainty. Nothing is guaranteed. He may have a paid-off house worth less than what he bought it for. All we can do is play the statistics. If it doesn’t work out, US bankruptcy laws are quite favorable.