I am looking for Money Investment Advice. I am currently doing a max contribution to Roth IRA (me and my wife) so $6000 a year.

I am also planning to open ESA for my two kids and contribute $4000 a year ($2k for each child).

I have 30K in savings account (not emergency fund) that I want to know where I can invest.

Currently, the only payment I have is mortgage payment. Should I tackle and pay my mortgage first and then think about investing. I have around 40K mortgage left. I am 38 years old.



2 Answers 2


The easiest way to think about possible investments is in terms of risk and return.

1. Mortgage

Paying off your mortgage is an 'investment' that will provide a 'guaranteed' (low risk) return of the APR of the mortgage, less the amount you receive as a tax deduction from your mortgage interest.

2. Treasuries

Buying treasury bonds or notes (see TreasuryDirect.gov) will also provide money that is also low risk (the government can always print more money if they need to) but as you will see, the rates of return are amongst the lowest, even taking into account that they are not subject to state tax. If you are offered lower returns than that (e.g. by your bank), you would be better off putting your money in treasuries (taking into account ease of accessing the money).

3. Other Asset Classes

Putting money in higher risk asset classes may provide more of a return, but they can be subject to the swings in the market. It can also be time consuming learning about the market and keeping up. The general rule is the more return an asset provides, the more risky it is to invest in.


You can also benefit from diversification. If you put your money evenly across 5 different stocks, rather than one, if one goes bankrupt, you haven't lost all of your money.

Personal Situation

Given the information you provided, it is difficult to determine what is appropriate for your situation. Most brokers are legally required to ensure that any recommendations they make are suitable before making them, so would require more detailed information about your situation.

Independent Quality Advice

If you want to get started with investments, pick up some books on investing from your local library. You might want to start looking into index tracking funds, such as the ones that follow the S&P 500, and if you are interested in specific companies, research those as well.


Keep in mind, you may find that the best investment is to pay off your mortgage, but it is worth considering alternatives, particularly from a diversification standpoint - if all of your money is invested in your home and you need to move and the housing market has dropped, you could be in a difficult situation.


What APR does your mortgage have ? Do you still pay for mortgage insurance ?

In the general case paying off the mortgage isn't going to significantly reduce the return of your money. Sure you could get 6% on the stock market while your interest is likely only 4%, but the stock market has a decent chance of going down and you may hit a rough spot and not be able to pay for the mortgage, which would obviously be terrible.

Because of the security aspect I would almost always pay for the mortgage first.

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