# Would you overpay your mortgage?

**URL:** <https://boards.straightdope.com/t/would-you-overpay-your-mortgage/689229>\
**Category:** In My Humble Opinion\
**Created:** [May 25, 2014, 9:34am UTC](https://boards.straightdope.com/t/would-you-overpay-your-mortgage/689229 "2014-05-25T09:34:46Z")\
**Posts on this page:** 3\
**Page:** 4

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**Author:** ![D\_Odds](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/d_odds/32/2882_2.png) [@D\_Odds](https://boards.straightdope.com/u/D_Odds)\
**Post date:** [May 29, 2014, 5:32pm UTC](https://boards.straightdope.com/t/would-you-overpay-your-mortgage/689229/61 "2014-05-29T17:32:43Z")

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> [@Bill\_Door](#):
>
> I agree with **Dangerosa** , you need at least 6 months take home pay in a liquid account, money market or savings. After that I’d start investing in the market. In your case I’d recommend low fee index funds, Vanguard has quite a few with different portfolio styles and varying minimums, but in most cases substantially lower fees than most brokerage houses.

I used to think the same about Index Funds. Now, if I were still investing in indices, I would opt for ETFs (exchange-traded funds) bought through an eTrade (or other low cost) account. Two ways to the same goal.

That said, I’ve since switched to passive income investments: DRIP stocks & rental real estate\*. You can get involved in DRIPs (dividend reinvestment programs) with a minimal investment, and the securities are liquid. Rental properties, of course, not as liquid.

**Southern Yankee** , you might want to look into 529 programs to help fund your children’s college educations. Depending on your state, there may be additional tax benefits to investing.

\*Note I said _passive_. Being a landlord is not passive. I am not a landlord. I am an owner of (the legal entity that owns) the properties. I hire a property manager to handle the active duties.

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**Author:** ![Southern\_Yankee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/southern_yankee/32/2800_2.png) [@Southern\_Yankee](https://boards.straightdope.com/u/Southern_Yankee)\
**Post date:** [May 29, 2014, 5:47pm UTC](https://boards.straightdope.com/t/would-you-overpay-your-mortgage/689229/62 "2014-05-29T17:47:39Z")

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> [@D\_Odds](#):
>
> **Southern Yankee** , you might want to look into 529 programs to help fund your children’s college educations. Depending on your state, there may be additional tax benefits to investing.

Thanks, **D\_Odds** , we do have college accounts set up for the kids already.

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**Author:** ![Bill\_Door](https://avatars.discourse-cdn.com/v4/letter/b/50afbb/32.png) [@Bill\_Door](https://boards.straightdope.com/u/Bill_Door)\
**Post date:** [May 29, 2014, 8:09pm UTC](https://boards.straightdope.com/t/would-you-overpay-your-mortgage/689229/63 "2014-05-29T20:09:00Z")

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> [@D\_Odds](#):
>
> (snip)That said, I’ve since switched to passive income investments: DRIP stocks & rental real estate\*. You can get involved in DRIPs (dividend reinvestment programs) with a minimal investment, and the securities are liquid. Rental properties, of course, not as liquid.(snip)[/SIZE]

There’s somethng to be said for REIT stocks (Real Estate Investment Trust) as an alternative to rental real estate. Much better liquidity, and tax laws compel 90% of the profits be distributed to the shareholders in order to avoid corporate taxes. It’s a lot easier to diversify too. You can have retail, health care, hotels, apartments and the like. Not a ton of growth, but good passive income producing properties.

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