If You Had an extra $1000 per month to invest
 

What would you do? Assume mortgage interest rate is 6.25% for 30 years.

Well if it's not splurging on a 993 then do the right thing..Hookers and Blow

Kurt's in the midwest.
Hookers and meth....

This ones tough. The logical side of my brain says pay down the principal, the seat of my pants says the 993, and, err, the other side of my pants says blow it on chicks. I don't daly much in drugs, and I already have my dream 911, so I went with the practical side, for once. Of course, its not my money, if it were, the whores would have probably won me over in the end...

I've been giving this a lot of thought. At first I thought paying down the house was a better idea. But the more I research this I am concluding investing, even if at a lower rate than the mortgage payment, is a better idea. The invested money is readily available, as opposed to equity in the house, and can always be used to pay the principle down later.

But drugs and whores is always my first choice. :D

It depends on your current equity position in the house and how long you want to keep it. If the mortgage payment is no problem for you and you plan to keep the house until it's paid off, then I wouldn't pay down extra principle. Even if you paid it down by 99%, your required minimum payment, taxes and insurance wouldn't change. If you have less than 20% equity and think you may sell in the next five years, then I'd think about paying down the balance.

Creat a Hobby Business. For instance buy a collectable and resell at a profit. Of course it requires you have some knowledge of the items you are trying to sell. Knowing what your looking at, its current value and the desirabilty of what your selling is helpfull. Its not as hard as it sounds.

I started in Art with no knowledge of the subject, and a coupla years later...you wind up knowing something. The only thing I had going for me was an eye for good quality. Thats like being able to tell the difference between a Porsche and a Camero. Which one has better quality built in???

Hookers and blow is an investment in your lifestyle. Much like a cabin or a boat, the relaxation they afford might extend your life, or at least make it more pleasurable. I'd tilt the portfolio at least 80/20 in the hooker/blow ratio. Just remember, you get what you pay for, but you will always pay for what you get.

If you're going to invest, paying down the mortgage is never the wrong answer either. Knowing whether there are better options requires more information. The big market gurus will chime in in a few minutes and tell you how a mortgage is your best investment, to stick everything in the market and ride it out, but there is much more to the story than that. If you pay down the mortgage you are receiving at least the effective mortgage rate as your return on investment - tax free and without risk. Yes, I know mortgage interest is tax deductible, but with the AMT and itemized deductions versus the standard deduction, it's not the tax savings most people think. And the big thing is that if you pay down the principle you save on interest and shorten the life of your loan. That means you can have a mortgage-free house in a few years. And that means you can have an increase in your cash flow of the $1,000 a month that you were paying down the mortgage with and the monthly mortgage that you don't have to pay any more. Think of the reduction in your cost of living if you have no house payment. With no house payment you can retire earlier and with less savings.

If you are going to invest, do it in the market in as low of a cost no-load index fund as you can find. Over ten years the S&P 500 beats about 97% of all financial fund managers. I would recommend putting half in an S&P 500 index fund and the rest in some broad international funds. The dollar is going down and the international economy is growing, so you need good international exposure.

Unless you have some special industry knowledge or some private pipeline to the truth, it's probably best to buy funds rather than individual stocks. Stay broad, don't pay fees, and put your money where the broader market will lift all investments, not on the performance of some fund manager who got lucky last quarter.

Have about $80K in equity in the house so no PMI. Still owe around $180K. Last house I ever plan on buying. Payment is $1500 per month.

All of the above.

Ok, so paying down the mortgage balance makes sense, but I wouldn't throw the entire $1000 per month at it. You can knock the last seven years (84 payments) off your mortgage by making one extra P&I payment per year (divide normal P&I payment by 12 and add that much to each monthly payment). If you can figure out when you want to have it all paid down, I'm sure there's an amortization program on some website to show you how much extra to pay each month.

This is why I love this board...because even when someone asks a legitimate question, everyone votes for hookers and blow

Have been making from 18 to 22% off of my investments the last 2-3 years. Cannot make anywhere near that in real estate around here so would keep socking it away as I have been for retirement.

Seriously? It all depends on your other investments/financial/personal portfolio:

How long do you want to work?

Do you have a secure retirement plan?

Tax profile...means a bunch.

Kids college funds...invested?

Mid-life crisis?

So much more...if I was you and had a spare 1K an month, extra to my financial plan, I'd invest in your lovely daughter right up until there was spare cash for moi:cool:

We can't take it with us, but they can.

What Seahawk said

I always throw an extra few hundred on the house note every month, will end up paying it off about 10 years early

Depending on your income, if you can put it all in tax free or tax deferred investments is pretty attractive. You could toss the whole grand in an education IRA, or even start a Roth or Regular IRA for your kids. Compounding interest is a beautiful thing.

You say that like hookers and blow aren't legitimate options.

I'd freakin' retire....

Oil refining companies, (not oil producing companies) such as tesoro, Valero, frontier oil.
Tesoro was just added to the S&P 500 this week. It's getting bigger fast. It should mimic the meteoric climb that valero experienced over the past 5 years or so and take off in early spring.
These stocks are down quite a bit this quarter, but that is a normal seasonal turn. they go down in the fall and up in the spring.

Over the last 5 years I've averaged at least a 100% ROI per year. Not too shabby especially when it is compounding every year. That turns into about a 1600% profit. since I had almost every penny to my name including my 401K invested in TSO and VLO, I did very well.
It probably won't continue that steep of a trend but I still think it's going up.
Why use the money to pay off a 6% loan when you can make 30% or better, pay off the loan, and have a bunch left over?


2007 Stock Data Close YTD%Change
Tesoro [NYSE:TSO] $49.70 51.13
Valero [NYSE:VLO] $68.26 33.42
Sunoco [NYSE:SUN] $73.37 17.66
Frontier [NYSE:FTO] $43.27 50.56
Holly [AMEX:HOC] $62.03 20.68
Western [NYSE:WNR] $41.77 64.06
Alon [NYSE:ALJ] $35.28 34.09
Delek [NYSE:DK] $27.80 69.62

529

That's a good mortgage rate. I'd probably compromise...$500 on the mortgage, $500 in a no load index fund under a Roth IRA....