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4

If you did not choose any investment options for your 401(k) plan (administered by Fidelity), then the money that you contribute each paycheck gets deposited into the default investment option which is typically either a Fidelity money-market mutual fund or a Fidelity variable annuity (sometimes called a guaranteed income contract (GIC)). Which one it is is ...


1

There is insufficient information to adequately answer the question. According to your inputs, your monthly payment if you were to pay down the loan within 7 years is $2379. But you don't state what your normal payment should be. To contribute the maximum to your 401(k), you would be contributing about $1580/month. So suppose we take the difference as ...


1

Pay off the mortgage. My wife and I paid off the mortgage on our first house in five years; three kids later, second house took seven years. Haven't had a mortgage in...what, 10 years? Wow, time flies. Have put three kids through college on savings in the meantime because our income was going to us instead of a bank. Pay off your mortgage - you'll be doing ...


1

There is no way that your mortgage rate goes from 3% to 10+% in 7 years. It sounds like your mortgage is a 10/1 ARM where the rate is fixed for 10 years and then adjusts annually after that. That adjustment will be based on some benchmark rate such as LIBOR plus a fixed amount, say, 1.25%. The 12-month LIBOR rate right now is in the 2.25% range so if you ...


0

In addition to your options a), b) and c) there might be potentially attractive alternatives. Like mortgage refinance in near future to get rid of the balloon. Or mortgage re-payment with funds borrowed from your 401k.


8

Both of your choices have drawbacks. You currently have a nice low interest rate on the mortgage, so there is no point to paying it off now. OTOH, if you put all the money in a 401k, you aren't going to be able to touch it without paying penalties. I'd suggest a third alternative, which is to invest at least some money outside the 401k. That way, you'll ...


7

Don't mess around with retirement, unless your plan is to survive on the pittance from Social Security. Max out that 401(k). But that only works if you invest it properly. Yes, there is a "properly". With 20 years to go before retirement begins, you need to invest for the long term obviously. When investing long-term, you want to target equities with ...


3

At a high level, what you are asking is "should my assets be mostly concentrated in some mutual funds or in my primary residence?" I would answer that some low-cost, passive-index mutual funds are usually a much better bet. I am assuming you will always remain a US resident. You have laid out two options - aggressively invest in your 401(k) or ...


3

Whether the 401(k) investments are reliably returning rates higher than the mortgage interest is not the issue. What is important is whether the risk adjust (geometric) mean of the investment returns is higher than the mortgage interest. Unless you are highly risk averse, the stock market's risk-adjusted return is significantly higher than 3%. And since ...


14

There's not really a "wrong" answer here, just a choice between risk and reward. You didn't mention how far you are from retirement, so it's impossible to say if your current saving plan is enough. If my 401k investment returns were reliably at a higher rate than my mortgage, then I should put my money in that. reliably is the key word here. Usually it ...


0

To answer your questions in the order it was asked. What are the tax implications of our conversion? Which parts are subject to tax and which are not subject to tax (given that those contributions have been after tax). You have tax deferred (403(b), Simple IRA and SEP IRA )and Tax Exempt (Roth IRA) assets here on the deferred you are going to be forced to ...


1

The first rule of taxation is you don't have to pay tax twice on the same money. Unfortunately the first rule of Roth conversions is that you don't get to select which part of your IRA converts. For instance if your IRA is worth $45,000 but $15,000 of that was NDIRA contribs ... and you convert $15,000... you don't get to say "we're converting the ...


2

From the excerpt you posted: Contributing the suggested 15%† or more? This makes it pretty clear that they simply have a rule that people contribute 15% or more. It's obviously a silly rule in your case, but I suspect that most people receiving that message make less than the $180,000 per year that you apparently do. For anyone making $120,000 or ...


7

You didn't mention how old you are, which may be a factor, but as you observe you are already contributing the maximum you can to a 401(k) (or at least close to it). Most retirement systems have some sort of "retirement calculator" that look at your current savings rate, time to retirement, other retirement assets, and cost of living to determine if you are ...


17

No one at fidelity told you to save more. Some poorly coded notification system suggested you save a higher percentage of your income with no consideration that your current election is taking you within spitting distance of the maximum. It's probably important to remember that the custodian is just a vendor of the company you work for. You're entering a ...


2

It is virtually certain that the reason your investment manager is encouraging you to invest more is because he will make more money if you do. He may have targets to meet and your additional investment would help him reach them. That is not to say his advice is necessarily bad, but we would need a lot more information to be able to pass an opinion on that. ...


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