# Decisions, decisions...seeking some guidance and feedback!



## American_Canadian (Jul 3, 2016)

I am turning 30 this year, and am a Canadian living in Central Florida since last year. I had moved down for work, and also for my wife (we got married towards the end of last year). I work in IT as a Consultant and travel to a project location every week for months at a time. My wife and I have no kids yet, but are intending to start in the upcoming year. We both grew up in blue-collared families and luckily for me, she understands how to budget and save money.

We have worked hard to build up our cash savings and are very fortunate to be in a position to get ahead in our lives. With our cash savings, we are interested in one of the opportunities below. However, I'd like to get the opinion of the CMF community on what the best course of action is for us. 


Pay off our remaining mortgage, and contribute more to TD Ameritrade account with savings
Purchase a rental/investment property (and use rental income to contribute more to TD Ameritrade account
Contribute more into our TD Ameritrade account and add to our dividend portfolio


*Current Situation:*
My income: $105K (90K base, 15K bonus, with opportunity for an additional $8K each year based on performance of company's shareprice)
Wife's Income: $87K

*Assets/Liabilities*
Original Home Purchase Value: $250K (current home value likely around $225K)
Mortgage Remaining: $167K

CAD Cash - $130K (from my house sale before I moved down, but due to the weak CAD dollar I opted to leave this cash in Canada until the CAD dollar rebounds)
USD Cash - $104K 
US CD (due 12/2016) - $21,056
TD Ameritrade (joint) - $74,589 (roughly 12 dividend aristocrat stocks, continuing to contribute roughly $3-4K each month)
My 401K - $16,345.27 (aiming to max out each year)
Wife's 401K - $130K (aiming to max out each year)
My Roth IRA - $11,883 (just started last year)
Wife's Roth IRA - $11,995 (just started last year)
Company shares - ~$18,000
Pension from CAD company - $23,130

Total Assets: ~ $765K
Total Liabilities: ~$167K (we have no other debts beside the mortgage)
Net Worth: ~$598K

*Goals: *
- FI by 45
- Start saving for family
- Continue to travel each year (roughly 1-2 large trips each year)

Look forward to hearing your advice/input/feedback!


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## kcowan (Jul 1, 2010)

You talked about money which is good and you are on the right track. You seem to be into dividend investing. That is good. Are your IRAs in stocks or CDs?

Is your home in joint title? Did you get any tax advice on that from your company?

Have you checked Bogleheads?


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## American_Canadian (Jul 3, 2016)

kcowan said:


> You talked about money which is good and you are on the right track. You seem to be into dividend investing. That is good. Are your IRAs in stocks or CDs?
> 
> Is your home in joint title? Did you get any tax advice on that from your company?
> 
> Have you checked Bogleheads?


Thanks for the feedback. We would definitely like to retire off passive income, so most of our investments are in dividend stocks/ETFs. 

Our IRAs are mostly in dividend ETFs, along with some silver stocks. 

Our home is currently in her name, as this was her house that she bought before we met. I had received tax advice this year since I transferred down for work. 

With our extra cash, would you recommend is paying off the mortgage, invest in another property, or increase our dividend portfolio?


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## mordko (Jan 23, 2016)

Never understood the current fashion of focusing on "dividend stocks", just as I didn't understand the earlier fashion of focusing exclusively on stocks that do not pay any dividends. Why pick just one factor out of so many that define company's future value?


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## mordko (Jan 23, 2016)

Personally, I would keep paying off the mortgage while contributing to index ETFs at the same time.


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## American_Canadian (Jul 3, 2016)

mordko said:


> Never understood the current fashion of focusing on "dividend stocks", just as I didn't understand the earlier fashion of focusing exclusively on stocks that do not pay any dividends. Why pick just one factor out of so many that define company's future value?


I'm not one for swinging for the fences. My wife and I are content with hitting singles and letting time and patience work for us. I suppose this is why dividend stocks that have consistently paid dividends and increase their payments have always appealed to me. We do have some cash in hand and would like to make it work for us, but at this point are on the fence about what makes the most sense.


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## American_Canadian (Jul 3, 2016)

mordko said:


> Personally, I would keep paying off the mortgage while contributing to index ETFs at the same time.


Thanks for the response Mordko. Would you recommend that we pay off the mortgage in full from our cash in hand or simply keep the cash in hand and continue chipping away at the mortgage each month?


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## mordko (Jan 23, 2016)

Your house/mortgage are in the States, right? So you are getting a tax benefit on a portion of your mortgage. With the current rates and the tax benefit its's hard to justify paying off the mortgage in full. 

I would:

- keep 3 to 6 months worth of $s in a "high interest" cash account where you can get your money at short notice. You won't get much interest but you might be able to offset inflation. 
- Split the rest 50/50 and use to pay off part of the mortgage and contribute to a low rate index ETF. 
- Carry on with the same split for any future savings, except no need to increase your cash safety cushion. 

Just my opinion. You may need to modify the above based on personal circumstances. For example if you want to buy a bigger house for your growing family within 3 years than I probably wouldn't invest any more in stocks. Then just pay off the mortgage and keep the rest in a high-interest account.

Also, if you are staying in the States then keeping your cash in CAD = risk.


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## American_Canadian (Jul 3, 2016)

Since we have no immediate need for cash, we are thinking of keeping the CAD cash in my Savings account until the dollar rebounds. 

Regarding paying off the mortgage, I suppose our thinking is if we pay off the mortgage in full this year, then the interest payments saved from paying it off earlier would outweigh the tax benefit of keeping the mortgage. We would then also invest the monthly mortgage payments...


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## kcowan (Jul 1, 2010)

The general advice would be to maximize all tax-deferred and employer matched investments, then pay down your mortgage. Does the savings in taxes on your mortgage exceed what your after tax earning on investment would be? Also are you in AMT territory which negates the mortgage deduction?


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