Episode 114: Save Up for Rental Property or Pay Off House?

Today’s Prep:

This or that? Which is better? David answers three mailbag questions that ask what to do while trying to make wise investment decisions.

(Click the featured times below to jump forward in the episode)

Equipping Points:

Ever feel like you are deciding between a good option and a better option, but you don’t know which is which? On today’s episode of Cover Your Assets KC, David answers these three mailbag questions from listeners wanting to make the best choice with how to invest their money.

Eli wants to know which is better, to pay off the house sooner or save up for a rental property? Is this an investment strategy worth pursuing? David says if you have a good interest rate with a fixed rate mortgage rate, he would not accelerate the payment on the mortgage. Remember that your real estate investments are not easily liquid, especially in tough times. What has David’s experience in real estate investments been like?

While this might be a great investment strategy, there are some pros and cons. Are you aware of the risks? What happens if the property sits vacant for a few months? Are you able to sustain the mortgage payments on multiple properties? Will you be ready take on and pay for broken appliances at a moment’s notice?

Jane is asking about her 401(k) funds and wants to know how many she should have without over or under diversifying. Should you use the target date fund? What’s really in a target date fund? What kind of risk do they carry? If you don’t use a target date fund, do you have better diversification or the illusion of diversification? What types of funds would David recommend?

Mary has been maxing out HSA contributions and wants to know if she should use the auto-investment tool to get her funds into the market or talk to a financial advisor. An HSA or health savings account allows you to contribute money into an account that gets a tax deduction now, grows tax-free, and takes it out tax-free. David says from a tax standpoint, it’s even better than a Roth account. But should you use the auto-advisor tool to invest it or is it best to always reach out to a financial advisor on these kinds of decisions?

Listen to the entire episode or click on the timestamps below to skip to hear David answer a particular question from the mailbag.

[0:26] – Feeling ready for spring?

[2:04] – Mailbag: Pay off the house or save for a rental investment property?

[10:28] – Mailbag: How many 401(k) funds should I have?

[17:29] – Mailbag: Should I use a robo-advisor tool to invest my HSA?

[22:50] – What’s the most important thing to do financially when you’re young?

Today’s Takeaway:

The most important thing about achieving your financial goals when you’re young is to start early, don’t have credit card debt, don’t do stupid stuff with your money, and just keep your head down on your career.”

– David Dickens

Additional Resources:

PODCAST: 5 Things to Know About Capital Gains 


PODCAST: Things Nobody Says About Their Financial Plan


PODCAST: Can You Pass This Social Security Quiz?

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The host: David Dickens

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