Should I pay off my home instead of continuing to lose it in stock market?

Question

I have investments in the stock market in mutal funds that keep loosing money no matter what fund I move it too. Should I just pay off my home before the stock market takes it all?

Answer 1

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Answer 2

There are a number of factors to consider which will help you make this decision; Historic trends in the stock market, Your mortgage interest rate and balance, Your income and your age.

The historic trend of the stock market is for gains to follow losses, so most investment advisors say to ride out dips in the market.  Also, it is best to leave your money in the same funds rather than moving.  On average, trying to time the market by switching from one investment to another leads to losses rather than gains.  If your stocks are medium or higher risk you may want to consider switching to low risk stocks which will reduce the amount of up and down swing they experience in response to the market.

On additional point on the current market, many investment advisors say now is the time to buy stocks!  When stocks are down they are a better value.

What is your mortgage interest rate and balance?  Interest rates have been low for the past several years, is your interest rate greater than the decrease in the value of your investments?  And is the sum of your stock investments greater than your mortgage balance?  There may not be much advantage to selling your stocks if you can't fully pay off your mortgage.

Finally, your age is something to consider.  The younger you are the more years you have for the market to turn around and regain current losses.  If you are older and trying to get ready for retirement selling poorly performing stocks to pay off debt may be beneficial.

If your are not on a budget get on one.  A budget will show how much income you have for investing and\or making additional payments on your mortgage.  You may be able to pay down your mortgage and leave your stock investments in place.

A number of years ago in response to the volatile stock market I decided to reduce my 401K contribution at work to the minimum required to get my companies matching contribution.  I used the additional money to pay off my mortgage figuring it was a better investment to pay off debt and I'm glad I did it.

Currently I'm still make the minimum contribution to my company 401K and I'm putting the rest of my investment income in Roth IRAs.  I'm choosing funds that are diversified across a wide array of financial sectors since these have the best chance of doing well under adverse financial circumstances.

Leaving your money in the market is difficult right now since it is volatile and has the potential for further short term decreases so consider all the factors before making a decision.

Good luck and God bless!

Answer 3

Give me the money instead :)

Answer 4

Everybody is loosing money during these times.  If you have money in mutual funds I assume you invested for long term growth.  5 years plus. Stocks go up and down. That is the rule of the game.  Dont panic just be patient they will eventually go up.  I would payoff my house only to avoid bankruptcy not just because my emotions told me too.  If you want, put your money in an inflation protection fund until third quarter 09.  You wont make much but at least you can stop loosing.

Answer 5

In my opinion, real estate investing is much more complicated that investing in stocks.  The market is taking a beating, for sure, but I would suggest that you hang in there.  Keep saving money, b/c this could be a good time to buy.  Just look at the long-term average returns for RE and the stock market.

Read SEC filings for the companies you currently own and those you are interested in.  So you can make an informed decision to buy or sell.

Or, to save time and energy, use SEC Notes at:

http://secnotes.talkspot.com

Answer 6

just lose all ur money

Answer 7

If you do not need the money for five years, keep where it is. Period of loss are followed by periods of gain. If you lost money for last three years or the fund is doing worse than similar funds, I would sell it and buy a stock index fund.