Low Mortgage Rate Makes Investment Decision Easy

Posted: Jun 01, 2017 12:01 AM

DEAR BRUCE: I owe $120,000 on my mortgage. The interest rate is 3.25 percent. I have the cash to pay it off in full, but I'm trying to decide if it's a better option to invest that money, average around 8 percent and pocket the profit. Which is the best decision and why? -- Todd

DEAR TODD: Your problem is a no-brainer! You're paying an interest rate of only 3.25 percent and you could be earning 8 percent on the money. Why in the world would you want to pay off the mortgage for only a 3.25 percent return? Continue paying your mortgage and invest the cash. There is no doubt on what to do here.

DEAR BRUCE: Any tips on what to look for when you want to move? I'm 61, single, recently retired, in very good health and have lived in Denver for the past 25 years. I have no debt and just have to sell my condo and away I go.

I'd definitely prefer a smaller town (under 50,000) and someplace warmer. Another must is being near a major medical facility. Most likely, this would be my final move. I'd appreciate your thoughts. -- Ron

DEAR RON: I am wondering why you're retired at 61? Trust me on this one. After two or three months, retirement can be a challenge. You'll have time to explore your hobbies, but after the first few months, the free time is going to weigh heavily on you.

I would consider looking for a part-time job, and that's something you can do no matter where you choose to locate. As you point out, Denver is a bit chilly. I, too, prefer a smaller town and someplace warmer. There are a number of warm places around the nation that will welcome you with open arms.

When you find somewhere to live, don't buy a home or condo. Rent for at least six months to a year to be certain that is the place you want to spend the rest of your life. I wish you the best!

(Send questions to bruce@brucewilliams.com. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.)

(The Bruce Williams Radio Show can now be heard 24/7 via iTunes and at www.taeradio.com. It is also available at www.brucewilliams.com.)