What are investment options for young married couple with no debt that have maxed out retirement savings?
4.7 is a pretty low rate, especially if you are deducting that from your taxes.  If you reduce the number by your marginal tax rate to get the real cost of the money you end up with a number that isn't far off from inflation, and also represents a pretty low 'yield' in terms of paying off the loan early.  (e.g.  if your marginal tax rate is 28%, then the net you are paying in interest after the tax deduction is 4.7 * .72 = 3.384) While I'm all for paying off loans with higher rates (since it's in effect the same as making that much risk free on the money) it doesn't make a lot of sense when you are down at 3.4 unless there is a strong 'security factor' (which really makes a difference to some folks) to be had that really helps you sleep at night.  (to be realistic, for some folks close to retirement, there can be a lot to be said for the security of not having to worry about house payments, although you don't seem to be in that situation yet)  As others have said, first make sure you have enough liquid 'emergency money' in something like a money market account, or a ladder of short term CD's  If you are sure that the sprouts will be going to college, then there's a lot to be said for kicking a decent amount into a 529, Coverdell ESA (Educational Savings Account), uniform gift to minors account, or some combination of those.  I'm not sure if any of those plans can be used for a kid that has not been born yet however.  I'd recommend http://www.savingforcollege.com as a good starting point to get more information on your various options.   As with retirement savings, money put in earlier has a lot more 'power' over the final balance due to compounding interest, so there's a lot to be said for starting early, although depending on what it takes to qualify for the plans there could be such a thing as too early ;-) ). There's nothing wrong with Managed mutual funds as long as the fund objective and investing style is in alignment with your objectives and risk tolerance; The fund is giving you a good return relative to the market as a whole; You are not paying high fees or load charges; You are not losing a lot to taxes.  I would always look at the return after expenses when comparing to other options, and if the money is not in a tax deferred account, also look at what sort of tax burden you will be faced with.  A fund that trades a lot will generate more short term gains which means more taxes than compared to a more passive fund.  Anything lost to taxes is money lost to you so needs to come out of the total return when you calculate that.  Sometimes such funds are better off as a choice inside an IRA or 401K, and you can instead use more tax efficient vehicles for money where you have to pay the taxes every year on the gains. The reason a lot of folks like index funds better is that: Given your described age, it's not appropriate now, but in the long run as you get closer to retirement, you may want to start looking at building up some investments that are geared more towards generating income, such as bonds, or depending on taxes where you live, Municipal bonds.  In any case, the more money you can set aside for retirement now, both inside and outside of tax deferred accounts, the sooner you will get to the point of the 'critical mass' you need to retire, at that point you can work because you want to, not because you have to. You can't max out your retirement savings. There are vehicles that aren't tax-advantaged that you can fund after you've exhausted the tax-advantaged ones.  Consider how much you want to put into these vehicles.  There are disadvantages as well as advantages.  The rules on these can change at any time and can make it harder for you to get your money out. How's your liquid (cash) emergency fund?  It sounds like you're in a position to amass a good one.  Don't miss this opportunity. Save like crazy while you can.  Kids make this harder. Paying down your mortgage will save you interest, of course, but make sure you're not cash-poor as a result.  If something happens to your income(s), the bank will still foreclose on you even if you only owe $15,000.  A cash cushion buys you time. "Paying the mortgage down is no different than investing in a long term taxable fixed instrument. In this economy, 4.7% isn't bad, but longer term, the stock market should return higher.  When you have the kid(s), is your wife planing to work? If not, I'd first suggest going pre-tax on the IRAs, and when she's not working, convert to Roth. I'd advise against starting the 529 accounts until your child(ren) is actually born.  As far as managed funds are concerned, I hear ""expenses."" Why not learn about lower cost funds, index mutual funds or ETFs? I'd not do too much different aside from this, until the kids are born."
Your first step should be to visit with the financial aid office of the university that you are considering attending, perhaps even before filling out the FAFSA. You may be eligible for grants, scholarships, and subsidized loans, as well as unsubsidized loans. You should pursue the first two options first, and then when you know how much remains to be financed, we can evaluate which of your investments you might liquidate if further financing is needed. There are a range of views on debt on this board. I take a very cautious approach to going in to debt. I worked full-time and took night classes to finish my degree without debt, but depending on your program that might not be an option. It seems that you also have a healthy relationship with debt considering the shape of your savings and finances as outlined above. Apart from the above information about how much money could be obtained and at what interest rates, the other missing information is your current salary, and your expected salary range after completing the program. With all of that information I could make specific recommendations, but at this point, my only recommendation is to avoid liquidating any retirement accounts in your effort to invest in yourself if at all possible. "Is the mortgage debt too high? The rental property is in a hot RE market, so could be easily sold with significant equity. However, they would prefer to keep it. Given the current income, there is no stress. However in absence of any other liquid [cash/near cash] assets, having everything locked into Mortgage is quite high. Even if real estate builds assets, these are highly illiquid investments. Have debt on such investments is risky; if there are no other investments. Essentially everything looks fine now, but if there is an crisis, unwinding mortgage debt is time consuming and if it forces distress sale, it would wipe out any gains. Can they afford another mortgage, and in what amount? (e.g. they are considering $50K for a small cabin, which could be rented out). I guess they can. But should they? Or diversify into other assets like stocks etc. Other than setting cash aside, what would be some good uses of funds to make sure the money would appreciate and outpace inflation and add a nice bonus to retirement? Mutual Funds / Stocks / bullions / 401K or other such retirement plans. They are currently in mid-30's. If there is ONE key strategy or decision they could make today that would help them retire ""early"" (say, mid-50's), what should it be? This opinion based ... it depends on ""what their lifestyle is"" and what would they want their ""lifestyle"" to be when they retire. They should look at saving enough corpus that would give an year on year yield equivalent to the retirement expenses." Is there any benefit to investing in a Roth 401(k) plan, as opposed to a Roth IRA?  They have separate contribution limits, so how much you contribute to one does not change the amount you can contribute to the other.  Which is relevant to your question because you said  the earnings on that account compounded over the next 40 years growing tax-free will be much higher than what I'd save on current taxes on a traditional 401(k).   This is only true if you max out your contribution limits.  If you start with the same amount of money and have the same marginal tax rate in both years, it doesn't matter which one you pick.   Start with $10,000 to invest.  With the traditional, you can invest all $10,000.  With the Roth, you pay taxes on it and then invest it.  Let's assume a tax rate of 25%.  So invest $7500.   Let's assume that you invest either amount long enough to double four times (forty years at 7% return after inflation is about right).  So the traditional has $160,000 and the Roth has $120,000.   Now you withdraw them.  For simplicity's sake, we'll pretend it's all one year.  It's probably over several years, but the math is easier in a single year.  With the Roth, you have $120,000.  With the traditional, you have to pay tax.  Again, let's assume 25%.  So that's $40,000, leaving you with $120,000 from the traditional.  That is the same amount as the Roth!   So it would make sense to  If you can max out both, great.  You do that for forty years and your retirement will be as financially secure as you can make it.  If you can't max them out, the most important thing is the employer match.  That's free money.  Then you may prefer your Roth IRA to the 401k.   Note that you can also roll over your Roth 401k to a Roth IRA.  Then you can withdraw your contributions from the Roth IRA without penalty or additional tax.  Alternate source.   Beyond answering your question, I would still like to reiterate that Roth or traditional does not have a big effect on your investment unless you max them out or you have different tax rates now versus in retirement.  It may change other things.  For example, you can roll over a Roth 401k to a Roth IRA without paying taxes.  And the Roth IRA will act like it was contributed directly.  You have to check with your employer what their rollover rules are.  They may allow it any time or only at employment separation (when you leave the job).   If you do max out your Roth accounts, then they will perform better than the traditional accounts at the same nominal contribution.  This is because they are tax free while your returns in the other accounts will have to pay taxes. But it doesn't matter until you hit the limits.  Until then, you could just invest the tax savings of the traditional as well as the money you could invest in a Roth. There are lots of sub-parts to your question. Let's takle them one at a time. Should I worry about an IRA at this age? Absolutely! Or at least some form of retirement account. When you are young is the BEST time to start putting money into a retirement account because you have so much time for it to grow. Compounding interest is a magical thing. Even if you can only afford to put a very small amount in the account, do it!  You will have to put a heck of a lot less money into the account over your working career if you start now. Is there a certain amount  you need for the IRA deduction? No. Essentially with a traditional IRA you can just subtract the amount you deposited (up to the contribution limit) from your income when calculating your taxes.  What kind of IRA should I get? I suggest a ROTH IRA, but be warned that with that kind you get the tax breaks when you retire, not now. If you think taxes will be higher in 40 years or so, then the Roth is a clear winner.  Traditional IRA: Tax deduction this year for contribution; investment   plus gains are taxed as income when   you take the money out at retirement. Roth IRA: Investment amount is taxed in the year you put it in; no   taxes on investment amount or gains   when you take it out at retirement. Given the long horizon that you will be investing, the money is likely going to at least double. So the total amount you are taxed on over your lifetime would probably be less with the ROTH even if tax rates remain the same. Is the 401K a better option? If they offer a match (most do) then it is a no-brainer, the employer 401K always comes out on top because they are basically paying you extra to put money into savings.  If there is no match, I suggest a Roth because company 401K plans usually have hidden fees that are much higher than you are going to pay for setting up your own IRA or Roth IRA with a broker. You can invest more that 20,000 in Infrastructure bonds, however the tax benefit is only on 20,000. Further the interest earned is taxable. The best guaranteed post tax returns is on PPF. So invest a substantial sum in this. As your age group low you can afford to take risk and hence could also look at investing in ELSS [Mutual Fund].   A note on each of these investments:  LIC: If you have taken any of the endowment / Money Back plan, remember the returns are very low around 5-6%. It would make more sense to buy a pure term plan at fraction of the cost and invest the remaining premium into even PPF or FD that would give you more return.  NSC/Postal Savings: They are a good option, however the interest is taxable. There is a locking of 6 years.  PPF: The locking is large 15 years although one can do partial withdrawals after 7 years. The interest is not taxable.  ULIP: These are market linked plans with Insurance and balance invested into markets. The charges for initial few years is quite high, plus the returns are not comparable to the normal Mutual Funds. Invest in this only if one needs less paper and doesn't want to track things separately.  ELSS/Mutual Fund: These offer good market returns, but there is a risk of market. As you are young you can afford to take the risk. Most of the ELSS have given average results that are still higher than FD or PPF.  Pension Plan: This is a good way to accumulate for retirement. Invest some small amount in this and do not take any insurance on it. Go for pure equity as you can still take the risk. This ensures that you have a kit for retirement. Check out the terms and conditions as to how you need to purchase annuity at the term end etc. Wow! First, congratulations! You are both making great money. You should be able to reach your goals.  Are we on the right track ? Are we doing any mistakes which we could have avoided ? Please advice if there is something that we should focus more into ! I would prioritize as follows: Get on the same page. My first red flag is that you are listing your assets separately. You and your wife own property together and are raising your daughter together. The first thing is to both be on the same page with your combined income and assets. This is critical. Set specific goals for the future. Dreaming and big-picture life planning will be the foundation for building a detailed plan for reaching your goals. You will see more progress with more sacrifice. If you both are not equally excited about the goals, you will not both be equally willing to sacrifice lifestyle now. You have the income now to be able to set yourselves up to do whatever you want in 10 years, if you can agree on what you want. Hire a financial planner you trust. Interview people, ask someone who is where you want to be in 10 years. You need someone with experience that can guide you through these questions and understands how to manage your income stream. Start saving for retirement in tax-advantaged accounts. This should be as much as 10%-15% of your income combined, so $30k-$45k per year. You need to start diversifying your investments. Real estate is great, but I would never recommend it as this large a percentage of net worth. Start saving for your child's education. Hard to say what you need here, since I don't know your goals. A financial planner should assist you with this. Get rid of your debt. Out of your $2.1M of rental real estate and land, you have $1.4M of debt. It will be difficult to start a business with that much additional debt. It will also put stress on your retirement that you don't need. You are taking on lots of risk here. I would sell all but maybe one of the properties and let it cash flow. This will free up cash to start investing for retirement or future business too. Buy more rental in the future with cash only. You have plenty of income to do it this way, and you will be setting yourself up for a great future. At this point you can continue to pile funds into any/all your investments, with the goal of using the funds to start a business or to live on. If all your investments are tied up in real estate, you wont have anything to draw on if needed for a business opportunity. You need to weigh this out in your goal and planning. What should we do to prepare for a comfortable retirement and safety You cannot plan for or see all scenarios. However, good planning will give you more options and more choices. Investing driven by fear will set you up for failure.  Spend less than you make. Be patient. Be generous. Cheers! "As JoeTaxpayer says, ""It's a very rare circumstance where an early 401(k) withdrawal actually makes any real economic sense."" Your statements that one year's salary for you is $60K and the combination of your spouse's income and yours puts you into the highest income tax bracket together lead to the conclusion that your spouse's income is considerably higher than yours. If this income will continue past your death (e.g. you two are not in a joint venture that will collapse when you pass away because she cannot do the work by herself), then it is very definitely to your joint advantage to leave your money in a tax-deferred account for as long as possible. Her income should be enough to cover the mortgage payments.  Also, rather than take the money out and paying taxes at a high rate right now, your  spouse can roll over the 401k money into an IRA and withdraw only small amounts per year, paying taxes spread over the years rather than in a lump sum." "To be honest, I think a lot of people on this site are doing you a disservice by taking your idea as seriously as they are. Not only is this a horrible idea, but I think you have some alarming misunderstandings about what it means to save for retirement. First off, precious metals are not an ""investment""; they are store of value. The old saying that a gold coin would buy a suit 300 years ago and will still buy a suit today is pretty accurate. Buying precious metals and expecting them to ""appreciate"" in the future because they are ""undervalued"" is just flat-out speculation and really doesn't belong in a well-planned retirement account, unless it's a very small part for the purposes of diversification. So the upshot to all of this is the most likely outcome is you get zero return after inflation (maybe you'll get lucky or maybe you'll be very unlucky). Next you would say that sure, you're giving up some expected return for a reduction in risk. But, you've done away with diversification which is the most effective way to minimize risk... And I'm not sure what scenario you're imagining that the stock market or any other reasonable investment doesn't make any returns. If you invest in a market wide index fund, then the expected return is going to be roughly in proportion with productivity gains. To say that there will be no appreciation of the stock market over the next 40 years is to say that technological progress will stop and/or we will have large-scale economic disruptions that will wipe out 40 years of progress. If that happens, I would say it's highly questionable whether silver will actually be worth anything at all. I'd rather have food, property, and firearms. So, to answer your question, practically any other retirement savings plan would be better than the one that you currently outlined, but the best plan is just to put your money in a very low-cost index fund at Vanguard and let it sit until you retire. The expense ratios are so stupidly small, that it's not going to meaningfully affect your return."