I just liquidated a high risk investment portfolio for $249,000. My original investment was $5,600, so this is a bit like winning a small lottery. After capital gains taxes, I expect the sum to be around $190,000. I'm looking for some advise on how best to use this money going forward.
I'm 37, married with one toddler, living in Toronto. You have probably heard about the insane housing market in Toronto. My mortgage is presently $426,000 at 2.79%. Our monthly payment is $2200 presently. It is a 25 year mortgage and the first five year term is complete in January, 2018. It looks like rates are presently around 2.4% in Ontario. I am permitted to pay up to $70,000 on my mortgage right now, if I wish in addition to my monthly payments. I bought my house for $600,000 about 4 years ago. I haven't had it appraised, but I expect it is worth over $800,000 presently. The housing market has been booming, but has just recently started to slow down due to the implementation of a foreign buyer's tax. We don't have any other investments, besides about $6000 in a Registered Education Savings Plan for our toddler. We add about $300 to this every month.
Combined, my wife and I make about $132,000 / year before taxes. We also rent out the basement suite of our house for an additional $1150/month. Daycare costs about $17,000 / year, or $1416 / month.
What would the community suggest I do with the $190,000? The simplest answer, to me, is to just put it towards our mortgage. We would then be able to pay it of in 10 years rather than 20. Is this the best way to go? Another option, I guess, is to use the money as a down payment on a rental house. I'm sure we could find a house somewhere in Toronto that would earn more for us in rental income than the mortgage would cost to carry at present rates. However, I am not confidant it is a good time to buy real estate in the City and I'm also slightly concerned about the added workload of being landlord to another property. Also, if interest rates rise significantly, the rental income may not cover the full mortgage and we would cut into our living income.
We live relatively comfortably. However, we can rarely afford to travel abroad, which is what I want to do most. In some ways, I would just like to increase our monthly spending money so we could take a nice vacation every year, do some home renovations, keep an up to date computer, etc., but that seems irresponsible. We also have to save for our daughter's education in 16 years.
What are your thoughts? Thanks in advance!
Submitted June 24, 2017 at 09:21AM by xxeyes http://ift.tt/2sC1xBS
