Poll

What to do with $50K in future cashflow

Pay off 50K loan
6 (42.9%)
Invest in the market
3 (21.4%)
Downpayment on a second rental
5 (35.7%)

Total Members Voted: 14

Author Topic: Is 2.8% free money?  (Read 2414 times)

chesebert

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Is 2.8% free money?
« on: March 20, 2013, 10:54:50 PM »
Got about 50k in loan (LOC) sitting at 2.85% at the moment. I have a mortgage of 50k at 3.75% on a rental. Several options to consider for future cashflow:

1. Use a little over half a year' of future savings (about $50k) to pay off the loan;
2. Invest the future savings in the market (DCA);
3. Put the savings as a downpayment on a second rental (will start looking in the fall); or
4. Buy a new amplifier and headphone system ($25k) and, in general, engage in rampant consumerism :D
« Last Edit: March 21, 2013, 07:53:58 AM by chesebert »

arebelspy

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Re: Is 2.8% free money?
« Reply #1 on: March 21, 2013, 07:10:33 AM »
Since it appears you don't have much of a plan in terms of paying down debt, investing, asset allocation, or anything of that nature, I voted for the headphones and amp.  Might as well enjoy the money you're blowing. ;)

(This is tongue in cheek for: this thread is ridiculous, don't ask strangers on the Internet where to invest a surplus, ask where to get the knowledge for you to figure out the best plan to invest the surplus.)
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chesebert

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Re: Is 2.8% free money?
« Reply #2 on: March 21, 2013, 08:00:54 AM »
The last option was meant as a joke. Removed to improve poll accruacy.

One clarification, the LOC is a private bank loan not guarenteed by any real property.

I am primarily concerned with risk/reward and gain between the securities market and real property market, on the one hand, and lock in a 2.8% after tax-free gain by paying off the loan, on the other hand.

arebelspy

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Re: Is 2.8% free money?
« Reply #3 on: March 21, 2013, 08:22:20 AM »
The last option was meant as a joke. Removed to improve poll accruacy.

Clearly you missed the whole point of my post.

None of the above is my vote.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.