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Reply to "Saving for college vs paying off house"
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[quote=Anonymous]I'm a CPA and I work in the finance industry. Don't payoff the mortgage, but make 1-2 extra payments/year if it makes him feel better. Keep investing in the 529. $4K/year won't even fully fund 1 kid's education, so it's not like you are oversaving. After the itemized tax deduction, the mortgage payoff would only save you 3% annually. The long-term stock market returns are 7%. Plus, with the 529, you get the instant state tax deduction and any earnings can be withdrawn TAX FREE for college. Many very smart investors actually take out the biggest mortgage they can so they don't have to liquidate any investments. Think of it this way- you're not suppose to have all of your assets in one investment. You are supposed to diversify. Therefore, if you have $500,000 of equity in your house and only $100,000 in your 401k plan in stocks- you are severely overloaded in real estate assets- which the housing crisis has shown, can go down. [/quote]
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