$300k windfall

[Anonymous]

$10K for trip, $10k in Ibonds for each one of you for 2022 and 2023, pay off mortgage wit the rest.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are getting an unexpected windfall that we don’t need. Retirement and 529 accounts are maxed out. I know typically people say invest it, but if we have a mortgage with a 6.25% interest rate it makes sense to reduce that right? I don’t know where I can get that kind of guaranteed return. Or should I take a risk and put it in the stock market or PE?

There is no such thing.

Not true. Even if OP hasn’t hit maximum contributions, blindly pumping all of your savings into qualified accounts is usually short sighted from a tax perspective.

https://www.kiplinger.com/article/retirement/t055-c032-s014-can-you-save-too-much-in-your-401-k.html

The author doesn't go into much detail regarding the math behind his strategy. The problem is that nobody knows future tax rates for income and capital gains. Having money in Roth, 401k, and taxable definitely gives you more flexibility when it comes to withdrawal strategies.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are getting an unexpected windfall that we don’t need. Retirement and 529 accounts are maxed out. I know typically people say invest it, but if we have a mortgage with a 6.25% interest rate it makes sense to reduce that right? I don’t know where I can get that kind of guaranteed return. Or should I take a risk and put it in the stock market or PE?

There is no such thing.

Not true. Even if OP hasn’t hit maximum contributions, blindly pumping all of your savings into qualified accounts is usually short sighted from a tax perspective.

https://www.kiplinger.com/article/retirement/t055-c032-s014-can-you-save-too-much-in-your-401-k.html

The author doesn't go into much detail regarding the math behind his strategy. The problem is that nobody knows future tax rates for income and capital gains. Having money in Roth, 401k, and taxable definitely gives you more flexibility when it comes to withdrawal strategies.

That's what struck me in OP. No mention of status of after-tax savings. Like the articles discusses, we are currently over-allocated in pre-tax accounts so we're diligently working to build up our after-tax portfolio (while continuing to contribute to pre-tax accounts). Part of that means not locking up more money by pre-paying the mortgage.