Hi Money Minder,
I retired at the ripe old age of 25, and now I’m sitting pretty with a six-figure income that’s guaranteed for life. My only debt is my mortgage, but with a home worth $500k and only $180k left to pay, I’m not losing sleep over it.
My bills only eat up 43% of my income, and I’ve got a hefty life insurance policy and $25k emergency fund. But what should I do with the rest of my cash? I’ve been tossing $2,500 a month into an investment account just for fun, getting an 8% return while my mortgage interest is less than 2%.
I’ve got my kids’ college fund sorted and don’t think a Roth IRA is worth it. So, why save more when I can already jet off on a whim? Help me out, Money Minder! I’m stumped.
Cheers,
Financially Confused
Response from THE MONEY MINDER:
Hello There,
While it’s clear that you’ve set yourself up very well financially with your retirement, income, and overall situation, it’s still important to have a plan for the excess funds you have. Congrats on your retirement at such a young age and the financial stability you’ve achieved. It’s great to see you looking for ways to optimize your financial situation further.
Given your current standing, it actually makes a lot of sense to continue investing your excess funds rather than paying down your mortgage. With an interest rate of under 2%, it seems like a wise choice to focus on investing, aiming for an 8% ROI as you mentioned. This approach can potentially yield a higher return than what you would save by paying off the mortgage early.
Consider diversifying your investments across different asset classes to spread your risk. Look into low-cost index funds, ETFs, or mutual funds, and consider consulting with a financial advisor to ensure your investment strategy aligns with your long-term goals and risk tolerance.
While you may not see an immediate need for additional savings, having a robust investment portfolio can provide you with even greater financial security in the future or allow you to leave a legacy for your loved ones.
Overall, it’s about finding the right balance between enjoying your current lifestyle and securing your financial future. Keep up the good work with your financial management and continue exploring investment opportunities that can make your money work harder for you. As always, ensure you are informed and comfortable with any financial decisions you make. All the best from THE MONEY MINDER.
