Ask Money

What to do with mortgage payoff?

Chris Farrell Dec 23, 2009

Question: Hello, @ 78 yrs of age, am looking for the best place to put a mortgage payout, besides the coffee can in the garden. {Hope you don’t think I’m serious} Starting w/ a fine 9% interest rate, the sale of an apartment bldg, some 20 yrs ago; the payout is due in May. Along w/ soc sec and a few investments, I do well & hope to continue. I would appreciate what your take is on where to put it? Don’t know of a good financial advisor. Thanks so much J. L. Seattle, WA

Answer: Darn, I can’t use the coffee can in the yard suggestion? Oh well. There’s no way you’ll get anywhere near the 9% you’ve been earning in today’s money environment. That is, unless you speculate in junk bonds and similar lousy credits. In that case, you might actually do better with a coffee can. You’ll do well to get somewhere between 2% and 4% on your savings.

Here’s the thing: There are always so many things to consider in a situation like yours. Do you want to pass on some of the money to loved ones or charity? Can you see some big medical bills in your future? Will you be staying in your house or selling it?Questions like these matter a lot when it comes to figuring out what to do with the money and where to invest it.

In the meantime, I have two thoughts. The first is to keep the money safe in U.S. Treasuries or in government-insured deposits at a bank or credit union. This way you can think through your options and desires without worrying about a double-dip recession, a collapse of the dollar, or some other economic catastrophe. Secondly, it sounds as if you’re doing well financially. I’d take at least some of the money and spend on yourself. Enjoy.

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