Too conservative?

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bungalow10
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Too conservative?

Post by bungalow10 » Tue Aug 15, 2017 11:48 am

Help, guys and gals. I am worried I'm being too conservative. Here's some background...

We will be renters for the next three years or so while we live overseas. I've recent gone through some job-changes recently... same company, but turmoil, relocations, etc. No idea what comes after my two-three years overseas.

DH stays home with the kids, we have three. Ages 4, 7, 9. I make a good salary right now, we will hopefully be able to enjoy our time overseas and probably won't be building on the nest egg too much while we travel, travel, travel :D :D :D

We have about $725,000 in retirement accounts
$80,000 in taxable investments
$60,000 in 529 plans
and $350,000 in cash

The cash is a combined e-fund and our house equity/future down payment. Should I be looking to invest any of it? I keep researching investment options but then chicken out.
An elephant for a dime is only a good deal if you need an elephant and have a dime.

Grt2bOutdoors
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Location: New York

Re: Too conservative?

Post by Grt2bOutdoors » Tue Aug 15, 2017 11:53 am

2-3 year certificate of deposit or a 5 year certificate of deposit if the early withdrawal penalty is tolerable. -> no more chicken! :)
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

CppCoder
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Joined: Sat Jan 23, 2016 9:16 pm

Re: Too conservative?

Post by CppCoder » Tue Aug 15, 2017 1:25 pm

If you don't invest it, you're losing money to inflation. If you invest the money, you're risking investment loss. Which one scares you more? If you choose to invest, you can always choose your assets to balance risk versus reward. I like Grt2bOutdoors's advice of finding a term appropriate CD. Another alternative would be a (muni) bond investment of appropriate duration or a high yield savings account.

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nedsaid
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Re: Too conservative?

Post by nedsaid » Tue Aug 15, 2017 2:02 pm

Grt2bOutdoors wrote:
Tue Aug 15, 2017 11:53 am
2-3 year certificate of deposit or a 5 year certificate of deposit if the early withdrawal penalty is tolerable. -> no more chicken! :)
That sounds about right. You don't want to put monies set aside for short term goals into volatile investments. Another possible alternative would be an investment grade short term bond fund.
A fool and his money are good for business.

mega317
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Re: Too conservative?

Post by mega317 » Tue Aug 15, 2017 2:08 pm

How much do you expect to spend on the house? $350k is a lot of scratch.

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Hyperborea
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Location: Silicon Valley

Re: Too conservative?

Post by Hyperborea » Tue Aug 15, 2017 2:27 pm

I'm looking at doing something similar myself. I will be selling our house next year and a portion of the proceeds will be used in 3-4 years for buying someplace in another location. If I invest that money in the market then if it's down I may not be able to buy a place or I will have to take the money from other parts of my portfolio and sell stocks in a down market. Either of those situations is not something that I want to happen. So, the only other choice is to put the money into something that is reasonably "risk free" and that's CDs or short term bonds.

If you do keep it in CDs make sure to keep within the FDIC limits. That's easy enough to do with the amount you are planning on but you just need to title them correctly.

If I was younger and working (I'm retired) then another option to consider is to only put the amount you would need as a downpayment and maybe a little extra into something secure. So, if you are planning to buy a $350K place then put $70K (20%) plus maybe another $30K (costs, fees, maybe you buy a little bigger) into CDs. Invest the rest - $250K into your regular allocation. Then you can buy with a mortgage when you return. At that point you can pull from your investments or not depending on the market and other factors or just pay the mortgage and let the money in the investments ride.

mega317 wrote:
Tue Aug 15, 2017 2:08 pm
How much do you expect to spend on the house? $350k is a lot of scratch.
All depends on where he is planning to live. In some places that'll get you a broom closet and in others a mansion.

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KlingKlang
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Re: Too conservative?

Post by KlingKlang » Tue Aug 15, 2017 2:29 pm

bungalow10 wrote:
Tue Aug 15, 2017 11:48 am
I make a good salary right now, we will hopefully be able to enjoy our time overseas and probably won't be building on the nest egg too much while we travel, travel, travel :D :D :D
I'm surprised by this part of your post, normally working overseas is a fantastic time to build your nest egg if you get allowances for housing and expenses.

I agree with your decision to keep your house equity/future down payment somewhere safe. This goes double if you think that you may need to change employers after your overseas assignment.

mega317
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Re: Too conservative?

Post by mega317 » Tue Aug 15, 2017 2:41 pm

Hyperborea wrote:
Tue Aug 15, 2017 2:27 pm

mega317 wrote:
Tue Aug 15, 2017 2:08 pm
How much do you expect to spend on the house? $350k is a lot of scratch.
All depends on where he is planning to live. In some places that'll get you a broom closet and in others a mansion.
I think that's intended as a down payment. Different story if paying cash for the house.

bungalow10
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Location: Amsterdam

Re: Too conservative?

Post by bungalow10 » Wed Aug 23, 2017 1:04 am

KlingKlang wrote:
Tue Aug 15, 2017 2:29 pm
bungalow10 wrote:
Tue Aug 15, 2017 11:48 am
I make a good salary right now, we will hopefully be able to enjoy our time overseas and probably won't be building on the nest egg too much while we travel, travel, travel :D :D :D
I'm surprised by this part of your post, normally working overseas is a fantastic time to build your nest egg if you get allowances for housing and expenses.
I don't get housing allowance or expense allowances. Those deals are from a different economic time :)
An elephant for a dime is only a good deal if you need an elephant and have a dime.

bungalow10
Posts: 2042
Joined: Sat Apr 09, 2011 6:28 am
Location: Amsterdam

Re: Too conservative?

Post by bungalow10 » Wed Aug 23, 2017 1:06 am

mega317 wrote:
Tue Aug 15, 2017 2:41 pm
Hyperborea wrote:
Tue Aug 15, 2017 2:27 pm

mega317 wrote:
Tue Aug 15, 2017 2:08 pm
How much do you expect to spend on the house? $350k is a lot of scratch.
All depends on where he is planning to live. In some places that'll get you a broom closet and in others a mansion.
I think that's intended as a down payment. Different story if paying cash for the house.
Could go either way - we just left the north suburbs of Chicago - $350k would be a 40% downpayment.

Des Moines, IA - we could buy a house outright, or with a small mortgage
An elephant for a dime is only a good deal if you need an elephant and have a dime.

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