Patrick Huey

CFP®, CAP®
Personal Finance, Retirement, Investing
5
Answers
1
Articles
“With over a decade of experience in the financial industry, Patrick Huey is committed to helping investors, retirees and the causes they care about dream and design their financial strategies.”
Firm:

Victory Independent Planning

Job Title:

Owner, Principal Advisor

Biography:

Patrick Huey has over 20 years of leadership experience, 11 of which have been in the financial services industry. He is a CERTIFIED FINANCIAL PLANNER™ and Chartered Advisor in Philanthropy®, and holds a Master of Business Administration from Arizona State University.

Before joining the financial industry, Patrick was a United States Naval Flight Officer. During two overseas deployments, he flew the F-14B Tomcat as a member of the Jolly Rogers of Fighter Squadron 103. Since World War II, squadrons flying the pirate flag have honored the original Jolly Rogers and their F-4U Corsairs for their triumphs in the skies over the Pacific. ​To this day, they operate using the radio call sign "Victory."​​

Patrick is also volunteer Treasurer for Portland's Sunshine Division, a food and clothing relief organization. In his spare time, he enjoys travel, reading historical fiction and writing History Lessons, a blog that teaches investment lessons through historical tales.

Education:

MBA, Arizona State University

CRD Number:

5005878

Disclaimer:

Investment advisory services offered through WealthSource Partners, LLC ("WSP"), a registered investment adviser. Patrick Huey (CRD #5005878) is an Investment Adviser Representative of WSP doing business as Victory Independent Planning, LLC. Registration as an investment adviser does not imply any certain level of skill or training. WSP is unaffiliated with and independent of Victory Independent Planning, LLC.

All Articles
March 2018
    Investing, Stocks

All Answers
    Debt, Retirement, Pensions, Social Security, 401(k), Real Estate
I will retire in 2018 with $210,000 in my 401(k), a $3,000 pension payment and social security benefits; should I use my 401(k) to pay off my $85,000 mortgage, which will cut my living expenses in half?

The decision to pay down debt or invest is one that most people come across at some point in their life. I am familiar with this question both personally and professionally as I still have student loans that I pay on monthly while I have been building my personal investment portfolio. Here is why I made that decision and what other potential investors like you should consider:

  1. I have some tolerance for investment risk. When you combine that risk tolerance with a long-term planning horizon, the result is a portfolio that is allocated for growth. And I estimate, based on historical returns, that my return will exceed the amount of interest that I pay on this loan. Therefore, I am still maximizing my total wealth by retaining the loan. You can see that with higher interest loans or more conservative investors, the math may not always point toward investing. And that is what you must ask yourself: Can I earn more off of the 401(k) funds than I pay in interest on the debt. Usually with a moderate portfolio and a low interest loan, the answer is yes. But experiences differ. At 4.3% interest, this will depend on how aggressive or conservative you are as an investor with your 401(k).
  2. I get a tax deduction on the interest paid. This was touch and go for a while, but the deduction survived the final tax bill late last year. The point is, not all debt is created equally. Certainly, revolving debt like credit cards should be paid off before investing as there is no advantage to this debt and it is unlikely that the rates will be low enough to make the math above work in your favor. A mortgage on your primary residence will retain some tax advantages, though you may no longer itemize your deductions.  So this depends a lot on your tax status.
  3. My income is stable enough for debt. Though I’ve gone through some swings in revenue, my income is fairly predictable, and I live within my means. For those who have tighter budgets or more variability in their paychecks, debt can lead to a lot of stress. That may not be psychologically or even physically desirable for some. Don’t allow that stress to shorten the lifespan you would be investing for, even if the math says invest and keep the debt.

If, after all of this, your decision is to pay off the debt, congratulations! But don’t do it all at once.  I’d recommend splitting the distributions between a few tax years, so you don’t put yourself into a higher bracket and pay more than necessary. Talk to your tax professional first!

 

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