Hi,
I am looking for advice on how to best utilize my employer retirement benefits. I am single, in 22% tax bracket. I am saving to purchase my first house. My employer offers a 403b (which I participate in to match), also offers the Roth 403b option (which I am also contributing to). I also have an HSA account. Considering my goal is to buy my first home, which option should I be contributing to the most? Is it smart to have the Roth 403b option vs an individual Roth? Should I be doing more personal investing? Where should I have the money that I am saving for a downpayment? Advice would be greatly appreciated. Thanks!
Investing to buy first home
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Re: Investing to buy first home
I would put down payment savings into CDs or a taxable brokerage.
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Re: Investing to buy first home
You should use trad 401k and save the tax savings.
You can have a separate rIRA.
Depends how far away your purchase is.
You can have a separate rIRA.
Depends how far away your purchase is.
Re: Investing to buy first home
Welcome to Bogleheads. You might want to start here:
https://www.bogleheads.org/wiki/Getting_started
Money earmarked for a particular spending purpose such as buying a house in the near or intermediate future is better saved in something such as a money market account or CDs so the principal is not at risk rather than invested with a chance of loss.
It would also be better to hold those funds for a down payment in a regular account rather than in a tax-advantaged account with withdrawal restrictions. Your 403(b) and similar accounts are generally more suitable for investing for the long-term, for financial independence or retirement.
https://www.bogleheads.org/wiki/Getting_started
Money earmarked for a particular spending purpose such as buying a house in the near or intermediate future is better saved in something such as a money market account or CDs so the principal is not at risk rather than invested with a chance of loss.
It would also be better to hold those funds for a down payment in a regular account rather than in a tax-advantaged account with withdrawal restrictions. Your 403(b) and similar accounts are generally more suitable for investing for the long-term, for financial independence or retirement.
Re: Investing to buy first home
If you're single in the 22% bracket, that means you are making ~$50-100k gross before taxes, right?44089 wrote: ↑Sun Apr 22, 2018 12:56 pm Hi,
I am looking for advice on how to best utilize my employer retirement benefits. I am single, in 22% tax bracket. I am saving to purchase my first house. My employer offers a 403b (which I participate in to match), also offers the Roth 403b option (which I am also contributing to). I also have an HSA account. Considering my goal is to buy my first home, which option should I be contributing to the most? Is it smart to have the Roth 403b option vs an individual Roth? Should I be doing more personal investing? Where should I have the money that I am saving for a downpayment? Advice would be greatly appreciated. Thanks!
Personally, I have always prioritized using all of my tax advantaged space, even when it was tight, ahead of taxable saving for a house, but being a homeowner is not a high priority for me. You never get that space back. That would be for you this year: $18.5k to the 403b/403 roth + $5.5k to a Roth IRA.
My house fund is 40% stock (blend of US and intl), 20% bonds, and 40% cash in a high yield savings. This may be too risky for some folks but I want it to keep pace with house price growth (now housing in major cities seems to be more of a speculative asset with investors around the world, than consumer purchase driven by end users income). Also, it's way over 20% down, so if it goes down it won't keep me from buying entirely.
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Re: Investing to buy first home
Is your strategy to use market gains to speed up your ability to meet the downpayment faster than traditional savings/cd's? If so, that's a very risky proposition unless you are very flexible with timeframe. Especially right now because they markets have been really choppy since February.
If you are serious about buying a house in a specific timeframe like 1-2 years then taking risk off the table and investing in high yield savings or cd's is the way to go. You can get 2-3% annually quite safely right now.
If you are serious about buying a house in a specific timeframe like 1-2 years then taking risk off the table and investing in high yield savings or cd's is the way to go. You can get 2-3% annually quite safely right now.