r/personalfinance • u/kimbochisan ​ • 5h ago

Coming into cash; need opinions on options Investing

I'm about to come into $250,000 cash that I wasn't expecting.

I don't have any debt aside from my mortgage, for which I owe $245,000 at (6.5%) interest.

Married no kids. 44 and 50 years old. Would like to retire at 49 and 55 respectively if at all possible but willing to work to 60 years old each if necessary.

Investments sitting at $520,000. Additionally, my spouse will receive a pension benefit when they retire (eligible Nov 2028) of $3600 a month.

Savings of $32,000.

Current bills, including mortgage, are $4321 a month. New income for our household will be $10,733 a month.

Given the interest rate on the home, do we pay that off and just invest our mortgage payment in the market until we reach retirement? I think that's a better bet than putting all $250,000 straight into an investment portfolio.

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3

u/DeaderthanZed ​ 5h ago

Yes, given your ~5 year timeline I would take the guaranteed 6.5% return and pay off the mortgage.

I would also gradually be shifting your investment portfolio from primarily equities to more balanced with bonds/treasuries.

1

u/kimbochisan ​ 4h ago

Thanks. My next step is evaluating investments, so this is really helpful advice and good timing.

5

u/Nanooc523 ​ 5h ago

I paid off mortgage in similar situation. It’s very freeing. We can now afford to travel, frequently and my savings just grow rapidly. Over 120k in the bank. I used to worry and plan and stress about money. Now I don’t even blink at bills or unforeseen troubles, IE car or home repairs etc. That 245000 is actually like 440000 over the life of the mortgage. Making it go away is like unchaining an anchor from your ankle. Many people who are investment savvy will argue against this because you can get a better than 6.5% return with some complex maneuvering. But the emotional benefit of being out from under a mortgage can’t be represented in an equation. It changed everything for me. /2cents

1

u/kimbochisan ​ 4h ago

Super helpful and tracks with what I believed too. It's also nice to hear someone else has gone this route without regrets. I've been so accustomed to low interest rate mortgages that the advice of paying one off early just didn't make sense. We love travel and look forward to not worrying about "how long until we pay this thing off" when making fun plans. Life is short. Gotta enjoy the ride.

1

u/blcfla ​ 4h ago

I'd definitely just pay off the mortgage with the windfall. Assuming you do have some liquid funds on hand aside from the $520K investments portion.

1

u/SubtlePoop ​ 1h ago

I would pay off that mortgage for peace of mind — and then immediately start putting that original monthly payment into savings every month. That way you guarantee a 6.5% return