Hello 'stashers,
My grandfather recently passed away (after 94 great years). He was kind enough to leave me $18k in mutual fund and bond holdings. With expense ratios greater than 1 percent on the mutual funds, I'm planning to liquidate the funds.
I would appreciate suggestions on the optimum way to allocate these funds.
Background:
- Mortgage: we owe $73190 of $77500 @ 3.875, w/ $33/mo MPI
- Student Loans:
- 2251 @ 3.4
- 253 @ 2
- 15k @ 2.375
No credit card debt, and we own our car outright.
With changes in jobs for both my wife and me this year, I'm not certain of our exact income, but we should be squarely in the middle of the 15% marginal tax bracket (US). We could contribute up to $9800 to IRAs. I could start a 403(b) through work, though no match.
When I finish graduate school in 1.5 to 2 years, we plan to sell our house.
My proposal: use $11.5k to make a one time payment on the mortgage and place the rest in Roth IRAs. The advantage of this plan is that we would have 20 percent equity in the house and could end the mortgage premium/insurance. If we were to sell our house in July 2014 (probably the earliest that it could happen), we would have saved $660 in
premiums and $766 in interest. This seems like a 12.4 percent ROI to me.
Does this plan seem reasonable to you? Have I done my math right?
Thanks!