cardude
Full time employment: Posting here.
- Joined
- Feb 21, 2006
- Messages
- 599
I've been agonizing for months over getting the bond side of my AA set up in this uncertain environment. I'm worried that bond funds NAVs are due to fall as rates gradually increase sometime in the future. So, a huge part of my portfolio (35%) currently sits in cash earning about 1.75% pre tax.
Why don't I just pay off my mortgage instead of worrying about investing the money into bond funds right now? I didn't really wannt to do that because I wanted to take advantage of paying my mortgage down with inflated dollars eventually. Plus, I really didn't want to tie that much money up in an illiquid asset (would take about 12% of my portfolio if I paid it off), but when I plug the numbers into my SWR spreadsheet my SWR rate drops from 2.8% to 2.23% if I pay it off.
Long term am I better off with a guaranteed 5.12 after tax return by paying off the house or should I just hold onto the cash and wait for the bond market to "correct"? What am I missing here?
My mortgage is 5.12%, I'm in the 25% federal tax bracket this year, and I'm retired but DW is working for the next couple of years. We plan on staying in this house for about 10 years until the kids get out of school.
Why don't I just pay off my mortgage instead of worrying about investing the money into bond funds right now? I didn't really wannt to do that because I wanted to take advantage of paying my mortgage down with inflated dollars eventually. Plus, I really didn't want to tie that much money up in an illiquid asset (would take about 12% of my portfolio if I paid it off), but when I plug the numbers into my SWR spreadsheet my SWR rate drops from 2.8% to 2.23% if I pay it off.
Long term am I better off with a guaranteed 5.12 after tax return by paying off the house or should I just hold onto the cash and wait for the bond market to "correct"? What am I missing here?
My mortgage is 5.12%, I'm in the 25% federal tax bracket this year, and I'm retired but DW is working for the next couple of years. We plan on staying in this house for about 10 years until the kids get out of school.