I’m 30. My wife is 34. We saved $350K and I have $350K saved for retirement. Should we pay cash for a home — or take out a mortgage and invest it?

Dear Quentin,

After graduating from graduate school, my wife and I decided to pay off all of our debts before buying a house or something.

We have rented cheaply for the past three years and live as if I were still a very poor graduate student. During that time, we’ve all paid off our debts and even saved around $ 350,000 in cash.

My wife is 30, I’m 34 and we are ready to take the next step. We now have two children under the age of two who are over $ 20,000 and growing in each of their 529 years. We are both covered by ample term life insurance, and I have my own disability insurance. I make about $ 250,000 a year.

I am very fortunate that my employer is bringing about $ 40,000 into my 401 (k) while I contribute up to the Internal Revenue Service’s remaining maximum of about $ 57,000 per year. Our family HSA contribution is maximum and grows every year.

My spouse is now staying at home with the children. We have a combined retirement portfolio of approximately $ 325,000. At this point, should we make a cash offer on a home or take out a loan and invest the difference? Having no mortgage in our 30s seems terribly nice.

Conversely, an investment could bring higher returns in the long term.

With best regards,

At an intersection

You can email The Moneyist with all financial and ethical issues related to coronavirus at [email protected].

Love crossing,

Congratulations on paying off that debt and saving so aggressively is quite a success, and it’s something few people your age can do.

The reference is often in the question. You are already approaching the house. As a general rule, it is always recommended to keep all of your money in one place. So if I were to suggest something – and it’s just a suggestion, not a recommendation – you could also split the difference and pay 25% to 50% for a new home and keep the rest for investing, saving, and a rainy day. Spend everything in moderation, even your hard-earned savings.

Of course, you can live in a house of your choice in the neighborhood of your choice and enjoy it every day, just like your children. Having children can also affect how much you are willing to spend on a house and where you are willing to live based on the schools and amenities in that district. It’s not just an investment, it’s a life qualifying decision, perhaps one of the most important decisions outside of choosing a life partner.

MarketWatch Retirement columnist and CPA Riley Adams recently dealt with you very questionwho break down the pros and cons of both. The advantage of stocks: “Stocks are liquid. Proven track record. Earn dividends. Easy to diversify your portfolio. “The disadvantages of stocks:“ An emotional roller coaster ride. Short term volatility. Capital gains taxes. “It depends on your and your wife’s tolerance for risk and how much time you are willing and able to invest.

The advantage of real estate, according to Adams’ advice: “A hedge against market volatility. Tax benefits. Cash in circulation. “And as I said, you enjoy it every day. The disadvantages:” Real estate takes time and money. Your money is tied up. Tons of fees. Not easy to diversify. “And when you pay a mortgage, in addition to the capital, you have to that is tax deductible, pay interest. The same goes for property taxes. When you pay that interest, you can free up the extra money.

Indeed, a recent study by the Federal Reserve Bank of New York examined consumer preferences for being a homeowner and how their attitudes have changed over the course of the COVID-19 pandemic. Respondents were asked to rate which investment was better – a home or financial assets like stocks – and which factors contributed to their choice. Around 90% of respondents said they would rather have their main residence than invest in the market.

Sit down with your wife and a financial advisor and see your options. Like a good therapist, the counselor should ask you questions and give you all the answers.

My multimillionaire is 90 years old. I took care of him for 41 years but he is not going to help my son

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