Friday Reader Q&A: Should I Pay Off My Mortgage or Buy Silver?

May 27, 2011

by Jerry Robinson | FTMDaily Editor-in-Chief

HOUSTON, May 27

It's Friday. And that means that its time for FTMDaily's Reader Q&A. Each Friday, we reserve our daily column for our readers and their questions. Whether you have a question about your money, our Five Levels of Financial Freedom, the global economy, commodities, or retirement savings, we invite your questions. (To submit your question, click here.)

Should I Pay Off My Mortgage or Buy Silver?

Q: Dear Jerry, I'm a new listener and have been blessed so far with your work and FTMWeekly radio broadcast. I'm a single woman approaching 60 and currently unemployed. I have a 15 year mortgage at 5% interest with a balance of $108,000. I also have a rental property that is on the market for $127,000, and I have no mortgage on it. Should I use the money to pay off my current mortgage, or buy silver and wait till it jumps back up to $50 and then sell enough to pay off my mortgage? I do have other income, from another rental property to sustain me until my mortgage is paid. Thanks for your answer and God Bless, Sandi Sandi A. St. Louis, MO

A: Sandi, Thanks for the question. As you may know, it is difficult to know how to answer a personal financial question without knowing the person's total financial picture. However, I can tell you that I personally would not put the entire amount into silver. If the proceeds from the sale of this house represent less than 20% of your overall wealth, then it may be safe to gamble with an asset like silver. I personally like silver and I believe that it has tremendous upside potential. But I would not want to literally bet the "house" on it (pun intended). Since you are nearing retirement age, I would urge you to meet with a trusted financial advisor before making any rash decisions. If you want to find a faith-based financial advisor in your area, you can visit our free financial advisor referral service here. Be sure to have someone look at your entire financial picture before making any big moves.

Should I Fund My 401(k) in Level One?

Q: Jerry, I listened to Jan Markell and you talk on her radio show, "Understanding the Times". (Listen to the interview here.) I have scoured your website and listened to your webinar about the 5 Levels of Financial Freedom. We are obviously on Level 1. My question is… while on Level 1 and accumulating those items, what can or should we do about our 401K's at this time? Thank you for your show. I am one of those people you talk about in your webinar. I watch Glenn Beck and Fox News daily. Each time I watch it I get frustrated and ask…"okay, I understand we're in trouble, what can I do about it?" Thanks to you, I now know why they never answer that question. Thank you for this website. Kimberly L. Minneapolis, MN

A: Hi Kimberly, thanks for the excellent question! My view on 401(k)'s is the same regardless of which level you are on. I would only recommend contributing up to the match in most cases. Most people today have all of their retirement dollars tied up in their 401(k) and their primary residence. I know that many financial commentators think that 401(k)'s and good growth mutual funds are the best thing since sliced bread. I disagree. 401(k) are illiquid, government-controlled, and cannot be collateralized. Check and see if your company offers a Roth 401(k) option. If so, investigate with your financial advisor whether this is a good option for your situation. I am glad to hear that you have identified that you are on Level One in our Five Levels of Financial Freedom. Keep going! Once you get through Level Two, you will be financially ahead of 95% of all Americans!

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Until Monday, Jerry Robinson – FTMDaily.com

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Jerry Robinson is an economist, published author, columnist, international conference speaker, and the editor of the financial website, FTMDaily.com. In addition, Robinson hosts a weekly radio program entitled Follow the Money Weekly, an hour long radio show dedicated to deciphering the week's economic news.

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