BFG In the News: Victor answers readers’ questions about the best place to keep cash while paying off a mortgageInvesting Financial Planning Credit Baron Team Insights
Victor Cannillo is quoted on this topic in an article in NJMoneyHelp.com by Karin Price Mueller, originally published on March 31, 2021.
A reader with 14 years and $270k left on their 20-year mortgage and currently keeping those funds in an online bank earning 0.40%, posed the question, “Is there a better place to keep this money and earn some kind of yield without too much risk?”
Baron Financial Group’s Wealth Management Principal, Victor Cannillo, offered this advice: As long as the bank you are using is FDIC insured, there is no better place currently to keep your money liquid and safe, without any risk. A 0.40% interest rate is very good in this current environment. Since we don’t know about your specific financial situation, here are questions to consider:
- What is the interest rate on your existing mortgage?
- Rates are currently at all-time lows, so one option might be refinancing your mortgage into a new 15-year fixed-rate mortgage, depending on the breakeven and how long you intend to live in the home.
- If the mortgage rate is competitive, another option is to not prepay the existing mortgage, per your plan to pay off the loan in 5 years, and put the money into a diversified strategy. This allows you to have another bucket of money and access to liquidity if there is ever an income interruption, etc. Remember the bank will not likely lend you money if you should need it if you are unemployed.
If you have any further questions, please reach out to your Baron Team.
Read Karin Price Mueller’s article here.
Disclosure: This is a general communication being provided for informational purposes only. Past performance is no guarantee of future results. Every investment strategy has the potential for profit or loss. This material is not intended to be relied upon as a forecast, research, tax or investment advice. Please consult your tax planning professional for personal tax advice.