I have a $200,000 mortgage and $100,000 on savings with no debt should I pay down my mortgage or invest?

Think of it this way. If you only owed $100,000 on your mortgage, would you go take out another $100,000 loan to go invest somewhere? Probably not! But that's essentially what you're doing if you invest the $100,000 you have and keep the $200,000 mortgage.

Whatever you do, make sure you have 3-6 months of living expenses set aside for emergencies.

It depends on the interest rates. If you are earning less on your savings than the interest rate on your mortgage it would make sense to pay it down some. But don't leave yourself short, be sure you have enough available cash in case of an emergency.

Invest the $100,000.00 in Cd's, Treasury's, or Mutual Funds and let it grow. You will most likely always have a mortgage and you can write off the mortgage interest on your taxes.

Should you lose your job etc., you can draw on the interest from the $100,000.00 to cover you in a crisis.

There pros and cons for both options.
I think the best thing is to do both. But do keep back sufficient cash in a deposit a/c to keep you for 6 months,in case of emergencies.

There is some really good advice here for you. You should invest all $100,000. keep 6 months worth of expenses in a relatively liquid account like a money market or savings account just in case of emergency, but your $100,000 will earn far more interest than what you will pay on the mortgage. Think about it this way to... in case of emergency, where would like your money... in the bank or in your home? Which place would be easier to access your money?

I read all of the answers and agree with the financial planner, but I wanted to caution you about the person who said invest in rental properties... That is the wrong thing to do!!!

With the mortgage industry and the real estate market in the toilet, my investors are getting out of rentals and buying mobile home parks and storage facilities. I am in commercial finance and see the trends towards low maintenance businesses for smart people who keep and make money!

As for high interest rates on your own mortgage, if you are under 6% do not try to rate and term re-fi, just make one or two extra payments per month and YES use your tax credit!!

Find the middle ground. The general way to look at it is to consider what hypothetical return on investment (ROI) you can get on the money you have. Compare that to your interest rate.

If you can take $50,000 and invest it for a 25% ROI, that would get you more money than it would save you if you paid the $50,000 down on a 6% interest rate loan, or even 24%. Make the money work for you, keep a cash reserve, and pay down your mortgage otherwise.

The rule of thumb for savings is usually to have 3-6 months' expenses available in cash. You can use a money market or other interest-incurring account that doesn't have a time restraint. You can even use certificate of deposits if you time it so that every month or every month you have one coming out. For example if you get a 3-month CD and a 6 month CD now, then in 2 months put more into a 6 month CD. In 3-months you get one out, wait 2 weeks, put it back in.... Do this with a comfortable cycle so you always have enough money about to come out in case there's a need for it.

The key is that you don't want to feel like this $100,000 just flowed through you. That one minute you had it and soon after it was gone. Put it in something that 1. will give you your principal (initial investment) back quickly and 2. keep giving you more even when you have earned the investment back. If you end up with some that you can't do anything with, pay down your mortgage. But as long as you have a good interest rate and can get a better ROI on your own money, try to keep control of your money and use this "monetary velocity" idea.

What would you invest in? This could be a good opportunity for you to learn a lot about managing your money. Real estate is a big one. So is stock. You definitely have some money to put into a start-up business, your own or that of someone you know and respect. These all take knowledge, but of course it's no secret that information runs this world. Put in the time to find out what, why, and how. Well-informed people have made million dollar fortunes with less than $100,000.

In investing it, you may lose some and gain less, but nothing educates like failure and nothing rewards like self-made success. Combine some studying on investing with hands-on experience, and when you're done you'll be able to take small a portion of that $100,000 and turn it into another full hundred thousand.

Then again, if this all sounds like too much work, pay down your mortgage and forget investing. I don't believe in "a little investing." Take an interest or don't. As Gordon Gekko from Wall Street said, "A player ... or nothing." I'd love to hear abotu what you decide to do with it and how it goes. E-mail me if you feel like keeping me posted or if you have questions.

Depends on a lot of things..

Your age, your dependents/responsibilities, your goals (short and long term), your income (since the mortgage interest in tax deductible unless you hit the AMT), and your risk tolerance.

Personally, I hate debt, so I'd pay off at least SOME of the debt..UNLESS you could use the money for improvements that increase the value of your home without increasing the property tax rates in your locale. OR, again depending on your risk personality, you might look at a combination of Tax Free munis and high quality blue chip stocks, especially in light of the recent downturns.. I would do a little of each..lets say $25K in pay down, $25K in improvements, $25K in munis, $25K in a quality stock mutual fund.

Good Luck
ED

Note: This is not advice..Just opinion..

This depends on your situation. If your mortgage rate is high, that is a good reason to pay it down as soon as possible. I encourage you to pay it down with your earnings, and to keep your savings for future need and investing. Make sure you are fully funding a Roth IRA for yourself(and your spouse?) if you qualify.

This is very general guidance. I encourage you to seek the assistance of a Certified Financial Planner that you trust to help you analyze all the details of your situation and to help you make the best decision.

INVEST!!!!!! And what are the best things to invest in? #`1 land,#2 rental property, but the property must be in a progressing neighborhood or one already established. Land,well my Dear ol' Dad said to me "Son they ain't making anymore of it". You probably already have a good mortgage rate so refinancing is not so great right now.#3 One other thing is collectable cars. I have seen the value of classic /antique cars go thru the ceiling in the last 5 yrs. Just make sure it isn't a "bootleg car" one that was a say Lemans that has GTO emblems on it, etc ,tec,

I suggest that you invest $17 and make it grow to $500 in 2 weeks, $1000 in a month and increase it even more by spending 1 hour a day working for it. Where? Inquire here!

http://500-in-10.green-machine.info/

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