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Old 03-03-2014, 11:02 AM   #41
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Hi ( i am the OP),
If i don't pay off the house, what would you guys recommend i do with the cash ? As a reminder, i have 95K in cash - i need about 25K for 6-month emergency fund; So essentially what am i to do with 60K ( i am a really hesitant to apply that in the stock market, given it is at all time highs).
Market timing does not work. Besides, presumably this is money will be invested for the long haul and even though the market is near all-time highs, I still think that the stock market will be good in the long run.

If you still want to market time, one option is to stay in cash (online savings accounts yield about 0.8%) and have some gunpowder if there is a correction.

I would value average it in over 6-12 months.

Another alternative that I recently bought is Merger Fund which would add some diversification (google it above and you'll find some posts on it).

Do you currently have international equities in your portfolio? If not, that may be a good home that would provide some diversification.
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Old 03-03-2014, 11:05 AM   #42
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Quote:
Originally Posted by atfourty View Post
Hi ( i am the OP),
If i don't pay off the house, what would you guys recommend i do with the cash ? As a reminder, i have 95K in cash - i need about 25K for 6-month emergency fund; So essentially what am i to do with 60K ( i am a really hesitant to apply that in the stock market, given it is at all time highs).
Put it in a high interest MM account like Ally @ ~.85%.

Then figure out what one additional principal payment is per month on that house note and start adding that amount to each payment to make it a 15 year note paydown.
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Old 03-03-2014, 03:01 PM   #43
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Quote:
Originally Posted by atfourty View Post
Hi ( i am the OP),
If i don't pay off the house, what would you guys recommend i do with the cash ? As a reminder, i have 95K in cash - i need about 25K for 6-month emergency fund; So essentially what am i to do with 60K ( i am a really hesitant to apply that in the stock market, given it is at all time highs).
This $60K is no different from any other savings/investments you have, so include it into the rest of your asset allocation plan. If you don't have such a plan,then this would be a great time to make one. There are lots of variables as to where the best place to put this money would be for you, given your circumstances. You have a long time horizon, so a large portion of this should probably be in stocks. They can spend a >lot< of time at or near their highs, trying to time the "get in" point is not feasible. Just know that when you invest your $60K you'll be buying XX number of shares in a lot of companies, and you'll still own exactly the same number of shares even if the market takes a drop. That is, you'll still own the same percentage of a large number of companies, and you'll still get dividends from many of them. Historically US stocks have nearly always done better than bonds, CDs, etc over a 20 year timeframe. And that type of long timeframe is what matters, not what happens next quarter or next year.

Pick an asset allocation you are comfortable with, rebalance every year or so, and don't look at it very often.
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Old 03-03-2014, 03:43 PM   #44
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+1 to what Sam said.

One important thing to understand is that stock are not at an all time high. Inflation matter even when it is low like it has been this last decade. When you adjust for inflation stocks are more than 8% below there all time high of 2010.84 in Aug 2000. More importantly what drives stock is earning and last years earning are more than 50% higher than they were in 2000.


I made a long post discussing Warren Buffett annual letter here. Now my analysis ain't particularly important, but I think everyone should at least read a summary of what Buffett's says. His track record is beyond impressive and when he suggests that his 60 year wife stick 90% of her assets in stocks.. I'd pay attention.
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Old 03-03-2014, 04:40 PM   #45
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Don't drain the Roth's, you don't get to put that stuff back in.

How much can you pay off w/o the Roth's? How much if you let the cash drop to zero and sold your taxable (if you were going to tap the Roth's you could still do that in an emergency, but if no emergency occurs then you haven't wasted years of tax free growth)?

If you really only need $25k as liquid and you don't want to go in the stock market I see nothing wrong with pushing $60k against the mortgage. Its not liquid and won't help you in the various "sky is falling" scenarios, but so what. Earning sub 1% taxable while paying 4% blows.
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Old 03-03-2014, 06:37 PM   #46
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Or just spent $60K on a new pickup. Amazing how expensive those are these days. Then your decision is much simpler... pick a color. See problem solved just like the majority American consumer.

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Old 03-04-2014, 04:05 PM   #47
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Or just spent $60K on a new pickup. Amazing how expensive those are these days. Then your decision is much simpler... pick a color. See problem solved just like the majority American consumer.

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Mmmm, 1 ton Dodge Quad Cab Cummings Turbo Diesel.....forget paying off the house, I know what I'm getting!
Haha, if I bought one of these it'd already be 15 years old and I'd be fixing it for fun. I'm just too cheap, lol!
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