I currently have $35k in a HYSA earning 4.1% interest. Additionally, I’ve invested about $21k: $7k in ETFs, $5k in crypto (BTC and ETH), and the rest in individual stocks (e.g., META, JPM, APPL, and some penny stocks that turned out to be poor choices).
I’m thinking about restarting with VTI but wonder if I should wait for a market correction.
I also have a $282k mortgage with a 7% interest rate. Should I put my savings toward the mortgage instead? I do have an emergency fund for six months in a separate checking account.
Finance major here! Your mortgage rate of 7% is quite high, so paying it down could be a great move if you’re looking for guaranteed returns. But first, make sure you don’t need all $35k in your HYSA. Six months of expenses is typically enough.
As for your investments, consolidating into ETFs like VTI or SPY is a smart move. Avoid penny stocks and individual crypto holdings if they don’t align with your risk tolerance. Finally, prioritize tax-advantaged accounts (like Roth IRAs or 401ks) for investments to minimize your tax burden over time.
We need more info to give tailored advice, but generally: if your returns on investments are lower than 7% (your mortgage rate), paying off some of the mortgage could be wise. However, if you’re confident in long-term market growth, keeping your money in VTI or SPY might work better.
Timing the market is risky. Instead of waiting for a correction, consider dollar-cost averaging into VTI. This spreads your investment over time and reduces the risk of buying at a peak.
Your 7% mortgage is steep, so paying it down is worth considering, especially if you’re not comfortable with riskier investments like crypto or penny stocks. Maintaining your emergency fund is key, though, so don’t deplete all your savings for the mortgage.
If you’re already in a no-state-tax state, you don’t need to worry about strategies like T-bills for tax efficiency. Focus instead on reallocating some of your HYSA into investments like VTI while keeping enough for emergencies.
Have you considered refinancing your mortgage to a lower rate? If that’s an option, using your savings to buy down points could make sense. It’s worth exploring alongside reallocating your investment portfolio.