Stock Market

[CYdTracked]

For liquid savings accounts might want to look into 1 of these: Top 50 Money Market Rates & High Interest Savings Accounts The sad thing is late last fall I signed up for an account that was earning 5.65% and is down to 3.55% now because of the falling interest rates but still you can't go to the bank and get that rate most likely.

Bank Iowa Banks | Welcome has a 5.5% checking account but there are requirements to get that rate. At least 10 debit transactions and 1 auto deposit or auto pay a month. Not a bad deal at all but I use my CC mostly because I like to pay most of my bills all at once and earn what interest I can on my liquid funds.

Lastly, I use this place for my long term investing: Foster Group, Inc. Financial Planning and Asset Management They charge a very minimal fee, I think a fraction of a percent or something of your account balance to manage your investments. They'll even look over your 401K and give you advice on how to manage that as well. They started very small and still maintain that "small town" business feel as they just hire more staff to keep up with the growing client base while not losing their high level of customer service and personal attention. Plus they usually put on free events like I-Cubs, Barnstormers, Hockey, and Energy games that you can get free tickets to and they usually provide a free meal or something beforehand too. Also a VERY nice and free client appreciation banquet once a year, usually at the Des Moines Golf and country club but I think they have got so big now they had to move locations last year because the country club wasn't big enough to hold it any more. I'd definitely recommend these folks if you are looking for someone to manage your stock portfolio and investments, they are very good at diversifying that when the stock market takes a hit your account doesn't feel it as much because of all the foriegn markets they invest in will even it out.

[jmb]

For liquid savings accounts might want to look into 1 of these: Top 50 Money Market Rates & High Interest Savings Accounts The sad thing is late last fall I signed up for an account that was earning 5.65% and is down to 3.55% now because of the falling interest rates but still you can't go to the bank and get that rate most likely.

Bank Iowa Banks | Welcome has a 5.5% checking account but there are requirements to get that rate. At least 10 debit transactions and 1 auto deposit or auto pay a month. Not a bad deal at all but I use my CC mostly because I like to pay most of my bills all at once and earn what interest I can on my liquid funds.

Lastly, I use this place for my long term investing: Foster Group, Inc. Financial Planning and Asset Management They charge a very minimal fee, I think a fraction of a percent or something of your account balance to manage your investments. They'll even look over your 401K and give you advice on how to manage that as well. They started very small and still maintain that "small town" business feel as they just hire more staff to keep up with the growing client base while not losing their high level of customer service and personal attention. Plus they usually put on free events like I-Cubs, Barnstormers, Hockey, and Energy games that you can get free tickets to and they usually provide a free meal or something beforehand too. Also a VERY nice and free client appreciation banquet once a year, usually at the Des Moines Golf and country club but I think they have got so big now they had to move locations last year because the country club wasn't big enough to hold it any more. I'd definitely recommend these folks if you are looking for someone to manage your stock portfolio and investments, they are very good at diversifying that when the stock market takes a hit your account doesn't feel it as much because of all the foriegn markets they invest in will even it out.

Those boys are good at this business. They do have a rather large account minimum.

[capitalcityguy]

Holy crap!!! This has to be some of the worst advice I have ever read!!! Are you seriously trying to say that a mortgage interest deduction is a mathmatical win? If so can we meet and you give me a $1 and I will give you .28 in return, and can we repeat this for hours. Because if you don't want to engage in that business why would one want to carry a mortgage if they don't have to? Why do banks engage in lending? Because it is a profit center for them.

No debt is good debt. If one must have debt than structure it so that it is tax advantaged, or go towards something that generates income i.e. an education, business, etc.

No matter how you slice it, a house payment simply for the mortgage interest deduction is ignorant.

Wow...everyone out here was respecting each other's POV's...and then you came along.

Who said the sole purpose was for mortgage interest deduct? That was just one piece of the equation. The main reason is that a person can very likely make their money work earning a higher return than what they are paying out in mortgage interest. The bonus ON TOP OF THAT is the tax deduction.

You're obviously not the type of person that is open to hearing others thoughts, so I'm not going to start going back-and-forth with you on this. The bottomline is (and if you'd do some reading, you'd find this out yourself -- you act like I've introduced some new, foreign concept here) most personal financial experts would agree with my take on this (although as one person pointed out, Ramsey does not).

[jmb]

Wow...everyone out here was respecting each other's POV's...and then you came along.

Who said the sole purpose was for mortgage interest deduct? That was just one piece of the equation. The main reason is that a person can very likely make their money work earning a higher return than what they are paying out in mortgage interest. The bonus ON TOP OF THAT is the tax deduction.

You're obviously not the type of person that is open to hearing others thoughts, so I'm not going to start going back-and-forth with you on this. The bottomline is (and if you'd do some reading, you'd find this out yourself -- you act like I've introduced some new, foreign concept here) most personal financial experts would agree with my take on this (although as one person pointed out, Ramsey does not).

edited after re-reading.

I have a master's degree specifically in financial planning, and I just simply don't buy the mortgage interest deduction arguement.

[wartknight]

I happen to have a master's degree in financial planning, and while i would love to argue with a "tax preparer" about the virtue of mortgage interest deductions, I think that I will refrain from beating my head against a wall.

Keep servicing debt I encourage you to do so.

You are looking at this from a very micro point of view. He is not saying the only reason to have a mortgage is for the deduction.

[capitalcityguy]

Thank you wartnight. Whew! Someone is "listening".

[jmb]

You are looking at this from a very micro point of view. He is not saying the only reason to have a mortgage is for the deduction.

fair enough.

I must have misinterpreted what he wrote.

[Phaedrus]

You are looking at this from a very micro point of view. He is not saying the only reason to have a mortgage is for the deduction.

But, in the end, would you take out a loan on your house to invest?

I sure as hell wouldn't, but that's what you're doing, when you stretch out paying off your house so you can "free up" money to invest.

Personally, I'm doing both. I've self-converted my 30 year into a 15 year mortgage through paying down the principal, while investing 15% of my income.

Plus, if I have a surplus, I throw it at the house. I plan on having a rock solid foundation to build my financial future on.

And I swear, the less I owe on my house, the better the grass feels between my toes.

[wartknight]

But, in the end, would you take out a loan on your house to invest?

I sure as hell wouldn't, but that's what you're doing, when you stretch out paying off your house so you can "free up" money to invest.

Personally, I'm doing both. I've self-converted my 30 year into a 15 year mortgage through paying down the principal, while investing 15% of my income.

Plus, if I have a surplus, I throw it at the house. I plan on having a rock solid foundation to build my financial future on.

And I swear, the less I owe on my house, the better the grass feels between my toes.

There's nothing that will replace how you feel about having your house paid off, and I'm all for it, I just want people to do it the most effective and efficient way possible.
I actually could make a very good argument for taking a loan out on your house to "invest" the money. I'd never make that my recommendation to someone, but if someone was interested and open-minded,I could easily show them how it was better for them. Maybe not from an emotional point of view, but using cold, hard numbers.

[djkent01]

I'm impressed by these comments. I get asked this very question all the time as a CPA. There's not a pat answer, but in MOST cases the interest deduction is not a reason to maintain a mortgage and is not a good reason to use the money for investment. As Wesley pointed out, everybody gets a standard deduction - which will be $10,900 in 2008 for joint filers. Say you have a total of $30K in deductions - you're really only going to get the benefit of 2/3 of that which effectively cuts the tax benefit by 1/3.

However, at a previous firm I did have individuals that used home equity to invest and did very well by it - but they were professional investors (and I got lots of grest tips from them, I miss those guys). But as a rule, if you have the liquidity you need, IMO pay down non-tax benefit debt, and then the mortgage. THEN start investing.

[jmb]

There's nothing that will replace how you feel about having your house paid off, and I'm all for it, I just want people to do it the most effective and efficient way possible.
I actually could make a very good argument for taking a loan out on your house to "invest" the money. I'd never make that my recommendation to someone, but if someone was interested and open-minded,I could easily show them how it was better for them. Maybe not from an emotional point of view, but using cold, hard numbers.

risk versus reward, and time horizons must be included

[jmb]

I'm impressed by these comments. I get asked this very question all the time as a CPA. There's not a pat answer, but in MOST cases the interest deduction is not a reason to maintain a mortgage and is not a good reason to use the money for investment. As Wesley pointed out, everybody gets a standard deduction - which will be $10,900 in 2008 for joint filers. Say you have a total of $30K in deductions - you're really only going to get the benefit of 2/3 of that which effectively cuts the tax benefit by 1/3.

However, at a previous firm I did have individuals that used home equity to invest and did very well by it - but they were professional investors (and I got lots of grest tips from them, I miss those guys). But as a rule, if you have the liquidity you need, IMO pay down non-tax benefit debt, and then the mortgage. THEN start investing.

exactly!

[capitalcityguy]

IMO both emotion (which is reflected in a lot of the comments) and "it is what my parent's told me to do" have a lot to do with why people tend to go the route of thinking that paying down their mortgage faster is automatically the wisest financial decision to make.

Here are a couple articles I found. You'll see they do both leave room for both sides of the arguement...



http://www.businessweek.com/magazine...6/b4020112.htm

http://www.mymoneyblog.com/archives/...-mortgage.html

[CyInSoonerland]

I would have to agree with Phaedrus. Completely freeing yourself from debt is a fantastic strategy for anyone - regardless of your income.

Main benefits of the debt-free, cash-only plan:
- Very easy to do it yourself
- Money is always available (you don't owe anyone!)

[wartknight]

I would have to agree with Phaedrus. Completely freeing yourself from debt is a fantastic strategy for anyone - regardless of your income.

Main benefits of the debt-free, cash-only plan:
- Very easy to do it yourself
- Money is always available (you don't owe anyone!)

Contrary to popular belief, money stored in your house (equity, I mean, not under the mattress) is not always available. You can only take it out in the form of a loan so you are more at the mercy of the bank than you would be had you invested or saved the money.