Smart Money: Invest instead of paying off mortgage


DEAR BRUCE >> You have mentioned a few times we should be able to earn 5 percent on our money without much problem. I have a mortgage with five years left on it costing 3 percent. Where do you recommend I invest $100,000 for three to five years to earn more than 3 percent? Or should I pay off my mortgage?

— K.K.

DEAR K.K. >> The choice is simple. You mentioned you're paying 3 percent on the mortgage. If you can invest that money at 5 percent, you'll have a 2 percent net return. On the other hand, if you're going to have it sitting around doing nothing, you're better off paying off the mortgage, but that wouldn't be my choice.

My choice would be to hire an investment counselor. Explain what your goal is and have him/her make the decisions as to where the money should be invested. Trust me, there are dozens of men and women out there who can easily show you an earnings track record of over 5 percent, consistently, year in and year out — some years as much as 10 to 15 percent. The idea of putting the money into the bank that earns no interest has no appeal for me and it shouldn't appeal to you.

DEAR BRUCE >> My management company notified me of a break-in at my condo building. The break-in was in the garage, and the person broke into a vehicle and stole a bike. I requested a copy of the police report to discuss with my insurance agent to determine if I needed to increase the policy on my car. The police officer told me there was no report.

If the person whose vehicle it was didn't report it and the person whose bike was stolen didn't report it, was the management company required to report it to the police for the safety of the people who live in the building? If you owned or managed the building, wouldn't you report it to the police?

— Reader

DEAR READER >> Perhaps yes, perhaps no. The bike would be considered a small loss, and it could be that, because of the way the policies are set up, reporting it may increase the insurance premium to no benefit of the owners. I suspect that may be the reason it wasn't reported. They don't want to show a track record of loss.

As for you, I don't see how reporting the theft makes a whole lot of difference. If there is another loss, that will only demonstrate that the garage owners didn't work on your behalf, but what difference does it make? It wouldn't change the value of your loss.

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