I ask this question in earnest, because I've been worrying about it for at least a year now. Here is my situation...

I'm sitting on about $30k in my savings, but I'm unsure where I should be investing it because I have no confidence in the stock market or in my 401k. I lost about a third of what I had in my 401k when the economy tanked a few years back, and since then I've been reticent to put much in it (apart from what my employer sticks in for me).

I've thrown around a few other options, like should I pay down my mortgage or should I pay off my automobile loan? Apart from those two loans, I don't have any other major debt worth mentioning.

Or should I tie the money up in IRA's?

I guess what I'm really asking here is where's the best place to put my money right now where it can be safe and give me a decent return?

Thanks in advance for any help that I get on this from the community!


Thanks all for your comments and help; it was appreciated! I spoke with my wife about this last night (after having read all of your comments), and she reminded me that we have a 1st and a 2nd mortgage. Our lender talked us into doing it when we bought our house so that we could supposedly get away from having to pay mortgage insurance. I think it was a ruse on their part to get more in interest from us, because the 2nd mortgage has a rate somewhere up around 8% and it's a 15 year balloon! Anyway, we both decided that we're going to pay off the 2nd mortgage now, and then we'll pay off our automobile. The interest on our 2nd mortgage is way higher than our automobile loan is per month.

  • Work your way down the interest rates! Highest to lowest. Once you are debt free, have a party :) Aug 6, 2010 at 15:42
  • @Michael - Yeah, I think that's what I've come to understand from all of this. Thanks again!
    – Jagd
    Aug 6, 2010 at 15:53
  • Some clarification: your 401k is down, since the market tank of 2008? 2016? 2017? If you kept all of your money in its funds, the market has since recovered and surpassed its pre-crash highs. So if your total net value in your 401k is less than what you put in, I would strongly suspect that you are invested in either some very high expense funds, or funds that do not actually follow the US stock market..
    – Shorlan
    Jan 28, 2019 at 23:29

2 Answers 2


Pay off your debt. As you witnessed, no "investment" % is guaranteed. But your debt payments are... so if you have cash, the best way to "invest" it is to pay off your debt. Since your car is depreciating while your house may be appreciating (don't know but it's possible) you should pay off your car loan first. You're losing money in more than one way on that investment.

  • I have put some serious consideration into paying off my auto loan, but I've held back for a couple of reasons. 1) It would leave me with about 10k is all, which doesn't amount to much really, 2) The interest on the auto loan isn't all that bad, but as you said, it is interest and I am losing money on it. I'll put some more thought into it. Short-term I can see how it could be the best decision.
    – Jagd
    Aug 5, 2010 at 16:46
  • 3
    The only reason to keep any money in your savings with the debt you have is for emergencies, and even then I would suggest 2 months of rent would be sufficient. Pay off the car before you even consider buying stocks or leaving it in a 1% savings account. Aug 5, 2010 at 17:04

Don't be too scared of investing in the market. It has ups and downs, but over the long haul you make money in it. You can't jump in and out, just consistently add money to investments that you 1) understand and 2) trust.

When I say understand, what I mean is you can follow how the money is generated, either because a company sells products, a government promises to pay back the bond, or compounding interest makes sense. You don't need to worry about the day to day details, but if you don't understand how the money is made, it isn't transparent enough and a danger could be afoot.

Here are some basic rules I try (!) to follow

  1. Be out of debt within reason. I think having a mortgage is alright debt wise.
  2. Take all the free money you can (401K matching, tax benefits)
  3. Consistently invest. This is called dollar cost averaging and is your way to smooth the curves of the market.
  4. Don't watch your investments, just check them a few times a year. (Save the heartburn)
  5. Learn a little about basic investing. I like this goofy guy's radio show

The biggest trick is to invest what you can, and do so consistently. You can build wealth by earning more and spending less. I personally find spending less a lot easier, but earning more is pretty easy with some simple investment tools.

  • 1
    The investing is what gets me. I read the "Rich dad, poor dad" book about making wealth, and your argument is making think along those lines. However, I struggle with the whole idea of making wealth by investing in assets because it seems to me you have to have a bit of a risk-taking personality, which I don't.
    – Jagd
    Aug 5, 2010 at 16:51
  • It is true, you have to take a bit of a leap. What helps me to remember is, with enough time (decades) the risk is much much lower that the short run (months)
    – MrChrister
    Aug 5, 2010 at 23:38

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