Pay off or invest

[Kooshiball]

I said this in the another thread. There is only one question you should ask whether or not you should invest or not. That is:

Are you confident to make more than 4.5% per year by investing in your money?

If answer is yes, then you should invest. If answer is no, then you should pay additional principle.

If you are not confident to make 4.5% per year yet still want to invest, then I would recommend you to get educated. There are many other forms of investments such as stock, commodity, real estate etc. You can start from reading books or subscribe investing Podcast. There are plenty of them.

[kv968]

Do Both! I would make sure I maxed the 2012 Roth with 5k and would toss 2k at the home which would still leave you with 9k in the bank.

Agreed.

[MonkeyMama]

In a nutshell:
I owe 11,192 on my mortgage with 4.5% int (P&I 267.75). I'm nervous about investing because I don't know the first thing about it. I still plan on keeping around 9k for an emergency fund.

The bold part is a bit of a problem. I do not believe necessarily in heavy investing when younger and have no idea what you are doing, etc. That said, we have regularly been funding our retirement for the last 13 years or so (I am same age) and we have had a LOT of time to learn on a smaller scale. As income rises, investing rises. I personally feel we were far wiser to pay down our mortgage earlier on. & we will do better with investing now and in the future. Just some thoughts and feelings. {We still owe $200k, so a ways to go!! But also clearly why we have not put retirement/investing on hold - knew it would take a long time. But we also have not neglected retirement in the least. It's just that we put more away with age and knowledge}.

Anyway, do not refi the mortgage for such a small amount. Just pay the thing off! Deciding factor? You owe so little and can be done with it. I seriously doubt at this point that paying it off would have any affect on retirement. You are saying you would pay off this year, basically, right? You can keep the mortgage and start investing, but we are talking basically the same result either way. If you commit to putting all that savings (difference between income and expenses) to retirement and investing, you will easily catch up. You are just going to have to dive in and start investing with it all, though. No starting small...

If it's all the same in the end, I'd just pay off the mortgage to be done with it. One less thing to worry about.

A good starting point is the index funds at Vanguard. Or better yet, a Target Date Fund. Like "Retirement 2040" Fund. There is not much thinking involved in that - you can then use your energy to learn more about investing.

[kri$ten]

Thanks!

Thank you all so much! I am going to be doing some research on financial planning for sure. There are so many resources on this site alone!