What is the best simple way to invest money right now?

[blinblue]

Good evaluation, but you didn't covered another obvious situation.

Person loses their job and can't find a new one. By paying down mortgage, he did save money on interest charges and what-not, but it's rigid and inflexible. Putting money into the market will provide some level of flexibility. Rule of thumb is 6 months expenses in savings, but it's not impossible to be out of work for more than 6 months, in which case, having the money in the market will allow the person to continue having a house to live in.

I'm all for paying down the mortgage early (I am doing it now), but it has drawbacks as well. Really, the only way to know what is best is to know what happens in the coming years. Both have their upsides, both have their downsides.

What I would do with an extra $50k would be to
1) Ensure 6mo+ of bills - I like 8 or 9 months in emergency savings
2) Pay off any debts with a interest rate above 5%
3) Index funds up to a specific amount, which is age dependent (if I was 23 and had $100k set up for retirement, I wouldn't worry too much. If I were 40 with $100k in retirement, I would)
4) Pay any other debt - top to bottom in terms of effective interest rate (interest rate after any tax deductions resulting from that debt)
5) Hookers and blow

Absolutely, a good sized emergency fund gives you "returns" in terms of piece of mind and financial stability much better than investing it or paying down could do. In both of my scenarios having an emergency fund in addition to whatever else (investing vs paying down mortgage) would be very beneficial.

 

[Wyndru]

My money markets are doing really bad, .03% currently. I miss the days when the yield was up around 5% :\