Which is a better use of our money? Contributing to our 401ks or paying down the mortgage?
Tuesday, May 26th, 2009
rlc_60504 asked:
My wife and I are both employed. We are seeing around 2%-3% returns on our 401k investments each year. Our fund options aren’t that great. Here is what we are considering…Taking the amount we are contributing to our 401ks that IS NOT MATCHED and using it to pay down our mortgage. We would continue to put the amount necessary into the 401ks to get the matches. Since our mortgage rate is 5.625%, it seems like we would be getting a better return on the money than making the 2%-3% that our 401ks are returning on that money. I know that we would be decreasing the amount of interest we are paying on our mortgage each year and reducing the amount going into the 401ks so there are some tax implications. We are both contributing more that 10% to 401ks right now. Which is better? Paying down the mortgage or getting 2%-3% returns on our 401ks?
Eric
My wife and I are both employed. We are seeing around 2%-3% returns on our 401k investments each year. Our fund options aren’t that great. Here is what we are considering…Taking the amount we are contributing to our 401ks that IS NOT MATCHED and using it to pay down our mortgage. We would continue to put the amount necessary into the 401ks to get the matches. Since our mortgage rate is 5.625%, it seems like we would be getting a better return on the money than making the 2%-3% that our 401ks are returning on that money. I know that we would be decreasing the amount of interest we are paying on our mortgage each year and reducing the amount going into the 401ks so there are some tax implications. We are both contributing more that 10% to 401ks right now. Which is better? Paying down the mortgage or getting 2%-3% returns on our 401ks?
Eric