Also, what would currently be the best way to deal with my student loans: the balance is currently about $10,000. I'm contributing $3,000 towards my 401k and $2,000 towards my Roth IRA. Should I stop contributing to my 401k and IRA accounts and focus on paying off my student loans first?
Thanks
Just checking, did you expect to save $250,000 over the next 5 years, or $25,000? If you're contributing 3000 + 2000 = 5000 a year to retirement accounts, that suggests that you would be saving to the tune of 25,000 over 5 years. If that is the case, I would suggest maintaining the 401k contribution (and make that a Roth 401k if you have the option). If I did not have an emergency fund built up, I would contribute to that before the Roth IRA. Give the 401k priority if there is a company match. As for the student loan, I would make the required payments.
If you really meant that you would be saving to the tune of 50,000 a year, then my first priority would still be to have an emergency fund available. I would maintain payments to the retirement accounts, but focus on the student loan. It should be possible to pay off the entire balance of the student loan in a few months. I'd do that before considering any other investments, just because the return (the savings in interest) is guaranteed, and other investments aren't. And after paying off the student loan, I would max out my 401k and Roth contributions each year.
As far as investments and mortgages, I'm far from expert. I can say that what I did in my own life is put down a healthy down payment on each house, and pay the mortgage aggressively. On my first house, I put down 32%, and paid off in 10 years. On our second house, we put down 53%, and paid off in 7 years. My most reliable investments have been into index funds at Vanguard - the index 500, and bond funds.
If you have 250,000 by the time you will be 30 years old you will be doing WAY better than most 30 year olds.
it is ALWAYS best to pay cash for a house ( if you have the money0 most don't VS taking out a mortgage.
Invest in the house now, before prices and interest rates go up. [ This way your "rent" payment also goes toward the mortgage for the next 5 years, instead of to a landlord. ] With your income, get a 15 yr mortgage.
Where you put your money depends on the interest rate you pay / you get. ALL things financial impact your retirement.
Bad debt reduction always comes first. The higher the interest, the better. I like investing in leveraged real estate and non-leveraged low-fee index funds. I like the couch potato portfolio... it's super easy. Go for the 10 speed.
My grandfather told me the best place to invest money is in real estate, never trust the market. So I didnt. I own a lot of land..lol.
Do like roderick_young did and you will be fine. Get rid of your debts!!!
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