Originally Posted By: Cujet
I'm 53 and soon to be unemployed. I have modest savings, enough to pay off my house. I have no other debt. The mortgage interest hovers around $5K per year.
When unemployed, using my savings to pay a monthly mortgage seems like a good way to slowly run my savings down to nothing, while running out of money. Current loan has 3.75 interest rate, balance of $112K.
If I pay it off now, I can, if needed drop homeowners insurance (about 5K/yr) , flood insurance and I will be liable only for taxes.
While I may find employment rapidly, I expect a major pay cut.
Taking the chance of investing 112K and expecting a better than 4% return carries much risk, with little reward.
I'm at an all time high in the stock market. It's setting new records today. There's been a huge run up since the election. It's always tough deciding when to get in, but if you're in, I'm riding it for a while. Last year the rate of return for Vanguard Index 500 was 19.9%, this year in just a few weeks, year to date, it's 3.27%. Over the last 3 years, it's averaged 10.7% I'd say the rewards have been quite rich.