Hi HC1811,
If you pay off the mortgage on your rent properties
you would have about 1/2 of your income requirement
that would rise with inflation. Right? That's cool!
3.99% rate on your home mortgage is a pretty good
deal, IMHO. The fur flies on the forum when "pay off
the mortgage or invest" questions come up. Search
the files to get all the pro's and con's.
You need about 6% return on about $250k if you
decide to invest. Right? To achieve that you
would need to invest in a total return vehicle
instead of strictly bonds.
The rub, if I am reading between the lines correctly, is
that you are not too thrilled about equity investment.
Right? OTOH, long term bonds are a bit risky now
if interest rates go up ..... unless you hold bonds to
maturity.
If it were me, I would hate to give up the 3.99%
mortgage as I don't think we will see rates that low
again in a loooong time. I have a little river boat
gambler in me so assuming you can live off of the
rental income, I would invest in gov bonds with the
same maturity as your mortgage plus a MM account
that you could tap to make up the interest income
shortfall between your 6% need and about 4.5%
you can get with "safe" bonds. The MM account
would also give you a cushion for unexpected
expenses.
Another plan, a little more aggressive, would be to
invest in something like Wellesley Income which
is paying about 3.6% now. The total long term
return should be near 6%, IMHO. If you choose
this route, set up a MM account to hold 3 years of
mortgage payment and invest the distributions
into the MM. Add to the MM account in years when
the total return is greater than 6%.
Keep in mind that if you decide to pay off the home
mortgage, you still need a cash cushion for
emergencies.
Cheers,
Charlie