What to do with my money?

[redfishbluefish]

I recently cracked the $2 million threshold and rent in a VHCOL area. I am the primary income with a kid, though I have no plans to send them to private school, etc.

House prices are so high that buying effectively means I cannot lose my job and continue to pay a mortgage. Between that and the fact that I can’t in good conscience pay so much money for so little home, leaves me with a question: what do I do with my money?

All my money is index invested, but to some degree it feels pointless — I have far more than I need for my family barring a lifelong injury or medical condition, but I’ll never earn enough to effectively self insure that case (disability insurance is unfortunately not an option for me).

What do people do short of buying a house when the goal is security and diversification rather than wealth accumulation?

[livesoft]

maybe move someplace else that is more affordable?

[BirdFood]

Early retirement and move somewhere else?

Seek a telecommuting job and move somewhere else?

Buy a modest vacation home somewhere else?

Switch to part time?

[TipsQuestions]

I can't think of anything that would provide more security and diversification than my portfolio of stock and bond index funds. I own no real estate. I'm not sure what you feel is missing there, but it isn't missing for me.

[blortchplop]

It sounds like the main thing you're concerned about is the continued well being of your family if you were to become disabled; am I getting that right?

If that's the case, would it be possible to move your family to a low cost of living area in the event you became disabled? $2M with an assumed 4% safe withdrawal rate is $80k per year. Many families of three live on less than this.

If that strategy is acceptable, then you could even take out a mortgage in your current area. As long as the value of the house stays above the amount owed on the mortgage, you could sell the house if the worst were to happen and move to a lower cost area. Or you could continue to rent and save, if you think watching the number increase would help give you the peace of mind you seem to be seeking. I would retire today if I had $2M saved.

Perhaps an oddball solution would be to buy a home in a lower cost area as a backup plan. You could either rent it out or use it as a vacation home. Although that seems like a lot of work...

Edit: love the username.

[HKexpat]

What do people do short of buying a house when the goal is security and diversification rather than wealth accumulation?

To me, security and wealth accumulation are all the same. With $2m investments, you'll be less stressed about losing your job than without that money. It doesn't need to be enough to retire early to provide a cushion. Your car breaks down? No big deal, unlike for someone without some savings. As your balance increases, so do all the negative shocks you can absorb without stressing out.

Presumably, there are also other things you may want to fund out of your savings. Maybe you want to go on a graduation trip with your kid or make sure they have some disposable income in college so they don't miss out on social activities. Money generally opens possibilities, and more money opens more possibilities. Or maybe you get tired of cramping into economy class and start paying for business class on international flights.

There's never enough money to secure against all imaginable risks. But $2m covers a whole lot, and it's likely that your portfolio will grow further over time.

[Watty]

There is a suggested format for asking portfolio question and if you post your information in that format you will likely get better responses.

viewtopic.php?t=6212

There is a lot we do not know about you and which might be best for a 26 year old who is making $500K a year who has a new baby would likely be different than for someone who is 50 and has a teenager.

Between that and the fact that I can’t in good conscience pay so much money for so little home....

In some areas you may also have trouble finding a home you can afford with decent schools.

It was decades ago but how little house you got for your money was the key for me when I was about 30 and in Silicon Valley in the Bay Area which has always been expensive. I had a friend there who had just bought a house which was about the same as I could have afforded. It was a tiny dumpy place which I knew I would not have wanted to have lived in.

I was well paid there but that was long before the salaries there went so crazy so I did not have anywhere near what you you have saved up but I decided to move to much lower cost of living area where I could buy a house for maybe a fifth of what it would have cost in the Bay Area. For the the quality of life was also a lot better there.

I've moved around since then and ended up retiring in the suburbs of Atlanta and here is an example of what sort of house you can get for $700k here. Housing closer to downtown or in some prime areas can cost a lot more.

https://www.realtor.com/realestateandho ... -list-card

I am not saying that you should move to Atlanta but in probably 80% of the country housing is priced more like this.

I would suggest that you check out other parts of the country to see if there is some lower cost of living area which you would be excited about moving to.

One advantage of living in a more affordable area is that your kids may also be able to afford to live near you when they grow up. My son was able to buy a nice house about 10 minutes from us which is especially nice since he is married and has kids(our grandkids) which we get to see frequently. Especially when interest rates were lower all of my son's high school and college classmates were able to afford to buy nice houses when they were in their 20s.

[mortfree]

Wow. 2 million in a VHCOL and you feel you have enough already.

I’m at 1.5 in a medium COL and feel I don’t have enough.

Just keep saving money. Life only gets more expensive.

If you want homeownership make a plan to move out of the area unless there are other factors tying you down.

[delamer]

There are federal government jobs that are hard to fill.

If you have a skill set that is needed — STEM and medical come to mind — you will get job security, a pension, and many health insurance options (even in retirement). There is a disability version of the pension that is similar to long-term disability coverage in the private sector, since you specifically mentioned that as a concern.

And you can probably find one in a lower COL area. You might be able to buy a house too. The tradeoff, of course, is a lower salary than your skills would probably command in the private sector.

But security is the first thing that you mentioned.

[Rocinante Rider]

$2M with an assumed 4% safe withdrawal rate is $80k per year. Many families of three live on less than this.

I'd urge some caution about using William Bengen's 4% rule, which he developed back in 1994. It's not really a "rule," and it's not a guaranteed "safe withdrawal rate." Even based on the data Bengen used, there was a 10% risk of running out of money after 30 years. The 4% also does not mean that one can "spend" 4% with annual inflation adjustments. All taxes and investment-related fees and expenses are included in that 4%.

[Harmanic]

Wow. 2 million in a VHCOL and you feel you have enough already.

I’m at 1.5 in a medium COL and feel I don’t have enough.

Just keep saving money. Life only gets more expensive.

If you want homeownership make a plan to move out of the area unless there are other factors tying you down.

There have been studies that show that no matter how high your net worth, most people feel they do not have enough. In most cases they "need" about 15% more than they have. In many cases, they already have more than enough. There are people on this forum who worry about retiring with 8 figures.

[Rocinante Rider]

There have been studies that show that no matter how high your net worth, most people feel they do not have enough. In most cases they "need" about 15% more than they have. In many cases, they already have more than enough. There are people on this forum who worry about retiring with 8 figures.

Just curious: can you cite any of those studies? Many, if not most, people probably don't think they have enough to retire safely, and many, if not most, of them are probably right. I'm a little skeptical, however, that most people with very high net worth (e.g., 8 figures) think they need more to safely retire.

[Badinvestor]

I can't think of anything that would provide more security and diversification than my portfolio of stock and bond index funds. I own no real estate. I'm not sure what you feel is missing there, but it isn't missing for me.

This is what one poster has referred to as drinking the Boglehead Koolaid. You ask on Bogleheads and you get people who say that being a renter is OK. You ask normal people and they'll tell you to get on the property ladder while you still can.

[TomatoTomahto]

I can't think of anything that would provide more security and diversification than my portfolio of stock and bond index funds. I own no real estate. I'm not sure what you feel is missing there, but it isn't missing for me.

This is what one poster has referred to as drinking the Boglehead Koolaid. You ask on Bogleheads and you get people who say that being a renter is OK. You ask normal people and they'll tell you to get on the property ladder while you still can.

Happy to be a Boglehead rather than a “normal” person. Renting IS okay. My 4 kids have all done well for themselves, and the oldest only bought at age greater than 40.

[Rocinante Rider]

I can't think of anything that would provide more security and diversification than my portfolio of stock and bond index funds. I own no real estate. I'm not sure what you feel is missing there, but it isn't missing for me.

This is what one poster has referred to as drinking the Boglehead Koolaid. You ask on Bogleheads and you get people who say that being a renter is OK. You ask normal people and they'll tell you to get on the property ladder while you still can.

Happy to be a Boglehead rather than a “normal” person. Renting IS okay. My 4 kids have all done well for themselves, and the oldest only bought at age greater than 40.

Many "normal people" might be under the mistaken assumption that the "property ladder" is the best way to build wealth. Historically, annual returns are about 3-4% on real estate and 10% on the stock market. The compound annual growth rate on my current home, which I've owned since 1998, is just under 4% while the S&P 500 has returned just under 9% per year since 1998. Despite the financial disadvantages, I've happily been a homeowner since 1983 for reasons that have nothing to do with generating wealth. Many bogleheads "say that being a renter is OK" not because they've drank the Koolaid but because they understand investing better than most non-Bogleheads.

[TomatoTomahto]

Despite the financial disadvantages, I've happily been a homeowner since 1983 for reasons that have nothing to do with generating wealth. Many bogleheads "say that being a renter is OK" not because they've drank the Koolaid but because they understand investing better than most non-Bogleheads.

I agree. We love our home, which I don’t think could be found as a rental. That said, there are times when I wish we had a landlord I could call to fix something.

[Rocinante Rider]

Despite the financial disadvantages, I've happily been a homeowner since 1983 for reasons that have nothing to do with generating wealth. Many bogleheads "say that being a renter is OK" not because they've drank the Koolaid but because they understand investing better than most non-Bogleheads.

I agree. We love our home, which I don’t think could be found as a rental. That said, there are times when I wish we had a landlord I could call to fix something.

Yup. Even better than a landlord, a smaller home in a retirement community that has a dedicated, competent, and responsive maintenance staff. Much as we adore our home, I expect that as we get into our nineties, or even eighties, it might be nice to delegate plumbing, electrical, heating, painting, landscaping, glitchy smoke alarms, burnt out lightbulds that require a ladder, etc., etc. to someone else.

[Invictus002]

There are federal government jobs that are hard to fill.

If you have a skill set that is needed — STEM and medical come to mind — you will get job security, a pension, and many health insurance options (even in retirement). There is a disability version of the pension that is similar to long-term disability coverage in the private sector, since you specifically mentioned that as a concern.

And you can probably find one in a lower COL area. You might be able to buy a house too. The tradeoff, of course, is a lower salary than your skills would probably command in the private sector.

But security is the first thing that you mentioned.

Where are they? DC?
I live outside the capital region and I m qualified by education and experience in STEM - I have done more than 300 applications and never seem to get an interview.
The only time, they called me was with a job offer in Clay Center NE, they did not even interview me, it seems the hiring manager said, they loved my resume.

I am feeling, it's almost impossible to land a senior level jobs at the federal government as an outsider.

[delamer]

There are federal government jobs that are hard to fill.

If you have a skill set that is needed — STEM and medical come to mind — you will get job security, a pension, and many health insurance options (even in retirement). There is a disability version of the pension that is similar to long-term disability coverage in the private sector, since you specifically mentioned that as a concern.

And you can probably find one in a lower COL area. You might be able to buy a house too. The tradeoff, of course, is a lower salary than your skills would probably command in the private sector.

But security is the first thing that you mentioned.

Where are they? DC?
I live outside the capital region and I m qualified by education and experience in STEM - I have done more than 300 applications and never seem to get an interview.
The only time, they called me was with a job offer in Clay Center NE, they did not even interview me, it seems the hiring manager said, they loved my resume.

I am feeling, it's almost impossible to land a senior level jobs at the federal government as an outsider.

How do you define senior?

At whatever level, getting hired from the outside can be a slog. Not the place to apply if you needed a job yesterday.

[HenryG]

What do people do short of buying a house when the goal is security and diversification rather than wealth accumulation?

Continue investing until you feel sufficiently secure and diversified. Allocate excess funds to other things you value - spending, giving, etc. There are many ways to spend money other than buying real estate.

[YeahBuddy]

Help those around you. Help those online Basically, help others. Or enjoy some of your money. Buy something you enjoy that will likely appreciate like classic cars, antiques, paintings, art work, etc. Just some thoughts.

[redfishbluefish]

Context: early 30s, kid is under five.

I think the reason a bank account doesn’t seem “secure” is it really is just some numbers on a screen. There’s no inherent usefulness to the stocks, and the value can fluctuate wildly from day to day. Real estate on the other hand, while housing prices could crash you still have a building you can live in. I guess that’s why a lot of people like to own a home even if it doesn’t “make financial sense”.

[Kravguy]

Short term options or purchase farm land. Farmland is increasing in value at double-digit rates.

[bd7]

Many "normal people" might be under the mistaken assumption that the "property ladder" is the best way to build wealth. Historically, annual returns are about 3-4% on real estate and 10% on the stock market. The compound annual growth rate on my current home, which I've owned since 1998, is just under 4% while the S&P 500 has returned just under 9% per year since 1998.

What about OER? And necessary expenses such as maintenance and taxes, of course.

If I look at our house as having a cost basis of our down payment and maintenance/repair costs plus (or minus) any difference between PITI and market rent, that basis would probably be about $150k, certainly no more than $200k. Maybe even less considering rents have exploded lately. But now I have a paid-up house with my choice of well over $1M in equity or greatly discounted rent for our lifetimes. Or discounted rent until we need to move and then probably even more equity.

The trick, of course, is that the PITI was on par with market rent in the beginning, even on a 15-year mortgage. In the OP's case, his PITI on a 15-year is probably going to be 5X market rent or something silly like that. In that case, the answer is rent and buy stocks since houses are too expensive there and now. But isn't that "timing the market"?

[bd7]

Real estate on the other hand, while housing prices could crash you still have a building you can live in.

Unless your house is in Ranch Palos Verdes....

https://abcnews.go.com/US/landslide-ran ... =113331688

As for being secure owning a house when times get tough, if you have it paid off or have a sinking fund or happen to have a VERY small mortgage, then you'll probably be OK. However, I've observed that very few people actually survive (financially) being upside-down in their home mortgage. You might expect more of them to make it since they could just keep making the payments, but somehow that doesn't usually happen.

[Rocinante Rider]

Many "normal people" might be under the mistaken assumption that the "property ladder" is the best way to build wealth. Historically, annual returns are about 3-4% on real estate and 10% on the stock market. The compound annual growth rate on my current home, which I've owned since 1998, is just under 4% while the S&P 500 has returned just under 9% per year since 1998.

What about OER? And necessary expenses such as maintenance and taxes, of course.

If I look at our house as having a cost basis of our down payment and maintenance/repair costs plus (or minus) any difference between PITI and market rent, that basis would probably be about $150k, certainly no more than $200k. Maybe even less considering rents have exploded lately. But now I have a paid-up house with my choice of well over $1M in equity or greatly discounted rent for our lifetimes. Or discounted rent until we need to move and then probably even more equity.

The trick, of course, is that the PITI was on par with market rent in the beginning, even on a 15-year mortgage. In the OP's case, his PITI on a 15-year is probably going to be 5X market rent or something silly like that. In that case, the answer is rent and buy stocks since houses are too expensive there and now. But isn't that "timing the market"?

Yes, lots of ongoing expenses associated with home ownership that can offset the cost of renting. If one views home ownership as an investment, the analysis can be complicated. Although I bought my homes for reasons almost entirely unrelated to investing, I think the money I put into index funds over the past forty years likely had a much greater return than the return on my real estate. There's certainly nothing cultish about a Boglehead saying that it's quite okay from a financial perspective to be a renter.

[muffins14]

Context: early 30s, kid is under five.

I think the reason a bank account doesn’t seem “secure” is it really is just some numbers on a screen. There’s no inherent usefulness to the stocks, and the value can fluctuate wildly from day to day. Real estate on the other hand, while housing prices could crash you still have a building you can live in. I guess that’s why a lot of people like to own a home even if it doesn’t “make financial sense”.

If the numbers in a screen crash, eventually rents will drop too.

What are your projected annual expenses in retirement? Is 2M really enough that you don’t need to accumulate any more? 2M could give you like 70-80k per year. I would think you plus your wife your kid may need more than that for your desired lifestyle, no?

Nothing wrong with renting in VHCOL. Also nothing wrong buy buying a 2M condo for your family.

[mtwistercapitalist]

I recently cracked the $2 million threshold and rent in a VHCOL area. I am the primary income with a kid, though I have no plans to send them to private school, etc.

House prices are so high that buying effectively means I cannot lose my job and continue to pay a mortgage. Between that and the fact that I can’t in good conscience pay so much money for so little home, leaves me with a question: what do I do with my money?

All my money is index invested, but to some degree it feels pointless — I have far more than I need for my family barring a lifelong injury or medical condition, but I’ll never earn enough to effectively self insure that case (disability insurance is unfortunately not an option for me).

What do people do short of buying a house when the goal is security and diversification rather than wealth accumulation?

The question I'd ask is: is your industry/skillset of such a type that you can earn a living in a MCOL/LCOL area? I know that certain industries [finance, venture capital for example] are only available in VHCOL/HCOL

[Coastfical]

If you are in your early 30s and have already saved $2m then it is likely that in 5 years (or less) you could have as much as $4m? In which case you could probably put down a substantial amount in a house if you want (with perhaps a mortgage of 750k). Not sure how you have accumulated so much at an early age but well done! those numbers on the screen provide the security you seek - but perhaps you are uncomfortable with your asset allocation. If you want more “guaranteed income” there are financial products that can give you that (annuities etc) but there are others that can advise in that issue.

[TipsQuestions]

This is what one poster has referred to as drinking the Boglehead Koolaid. You ask on Bogleheads and you get people who say that being a renter is OK. You ask normal people and they'll tell you to get on the property ladder while you still can.

I've seen how "normal people" handle money generally. I'll stick with Bogleheads.

[redfishbluefish]

Nothing wrong with renting in VHCOL.

Yeah, I have no problem renting, and I'm glad to be free of all the expenses and headache of property management. It generally seems to be worth the tradeoff of not having precise control over my space.

Not sure how you have accumulated so much at an early age but well done!

Thanks! Just the typical -- low expenses, high savings rate, plus high-paying job. I had never spent more than $40k/yr before having a kid. It's definitely tougher going now, and obviously at this point most of the gains come from stock appreciation rather than income. The biggest thing I can do to stretch my runway is manage my expenses.

2M could give you like 70-80k per year. I would think you plus your wife your kid may need more than that for your desired lifestyle, no?

Once kid hits public school age, 70-80k / year could cover expenses if we were willing to downsize our rental and trim back in a few places that are easy to trim back, even in my VHCOL area.

I definitely don't have "enough" to retire, but the security comes from the fact that I have a LOT of buffer for job loss and other life surprises outside of debilitating chronic illness. Even in that case, the buffer is pretty large. I'm probably approaching coast FIRE, given my general spending habits. I like my job (both the specific employer and the industry), which is also a stress relief.

The question I'd ask is: is your industry/skillset of such a type that you can earn a living in a MCOL/LCOL area? I know that certain industries [finance, venture capital for example] are only available in VHCOL/HCOL

Yeah this is definitely an option, and the "move to LCOL to stretch your money" is sounding like the main/only thing I could do that would provide the security I want. I just have to balance that with uprooting family and lifestyle.

[ScubaHogg]

There’s no inherent usefulness to the stocks, and the value can fluctuate wildly from day to day

Yes, it would be confusing if you thought of it as just “numbers on a screen” and not “partial ownership of productive assets.”

Are tractors useful? Are ocean going tankers useful? Is the ability to build iPhones useful? Are airplanes useful?

That’s just a tiny sampling of what you partially own when you own equities.

[ScubaHogg]

You ask normal people and they'll tell you to get on the property ladder while you still can.

Bogleheads are much richer than average people. So which should you listen to?

[redfishbluefish]

In the OP's case, his PITI on a 15-year is probably going to be 5X market rent or something silly like that. In that case, the answer is rent and buy stocks since houses are too expensive there and now. But isn't that "timing the market"?

It's at least 2-3x, from what I've seen.

I suppose it's timing the market, but also it could be more akin to considering "diversifying" into something like crypto. Real estate is just a fundamentally different asset than a stock, and the use-value of real estate (somewhere to live) has an alternative: renting.

[ScubaHogg]

All my money is index invested, but to some degree it feels pointless — I have far more than I need for my family barring a lifelong injury or medical condition, but I’ll never earn enough to effectively self insure that case (disability insurance is unfortunately not an option for me).

Are you sure? Even never saving another dime in 20 years you could easily be well on your way to $10M.

https://legacy.portfoliovisualizer.com/ ... 5iXzKCuipf

How much do you need to feel secure?

[muffins14]

Yeah this is definitely an option, and the "move to LCOL to stretch your money" is sounding like the main/only thing I could do that would provide the security I want. I just have to balance that with uprooting family and lifestyle.

If you like your town, stay in your town. You have 2M, are young, and still have high income.

In a few years you will have the financial cushion as well as the location you want, so I would say stay put and keep working a few more years. You have 2M and enjoy your job and city. You’re not in a bad situation by any means.

[HKexpat]

This is what one poster has referred to as drinking the Boglehead Koolaid. You ask on Bogleheads and you get people who say that being a renter is OK. You ask normal people and they'll tell you to get on the property ladder while you still can.

I've seen how "normal people" handle money generally. I'll stick with Bogleheads.

This made me laugh out loud

One upside of home ownership is that it's the one asset class where it's easy to get a LOT of leverage and where borrowing costs are heavily subsidized via tax incentives. If you make a $10k down payment on a $100k house and the value appreciates to $110k, you have a 100% ROI. And you don't get a margin call if the home value drops. But I suspect what's really driving it is that people underestimate the maintenance costs and overestimate how much housing prices go up, influenced by some parts of the country that have seen substantial price increases. People think of someone who bought a house in San Francisco 30 years ago, not someone who bought a house in Detroit.

[ReadyOrNot]

You must be pretty close to having enough for financial independence. So if you keep at it, you should soon be able to have choices with more financial security. If your money just doubles in a few years, you should have plenty. Then you could retire early, move to your ideal location, buy a home for cash, or something similar. The point is, $2 million may not be enough to do whatever you want, but it's still nice to have, and may be a step to getting what you want. You got this far, so you can probably get all the way.

[mtwistercapitalist]

There are federal government jobs that are hard to fill.

If you have a skill set that is needed — STEM and medical come to mind — you will get job security, a pension, and many health insurance options (even in retirement). There is a disability version of the pension that is similar to long-term disability coverage in the private sector, since you specifically mentioned that as a concern.

And you can probably find one in a lower COL area. You might be able to buy a house too. The tradeoff, of course, is a lower salary than your skills would probably command in the private sector.

But security is the first thing that you mentioned.

Where are they? DC?
I live outside the capital region and I m qualified by education and experience in STEM - I have done more than 300 applications and never seem to get an interview.
The only time, they called me was with a job offer in Clay Center NE, they did not even interview me, it seems the hiring manager said, they loved my resume.

I am feeling, it's almost impossible to land a senior level jobs at the federal government as an outsider.

Depends on the field and what you can do. I currently work in computer security and am familiar with the field, so will speak with heavy influence from my background

There are a few options outside Washington DC: DoD/NSA and contractors are concentrated around Fort Meade, Augusta Georgia, San Antonio, Colorado Springs, Aurora Colorado, and Hawaii mainly. Then there is CISA which got spun up recently in 2018 and has offices in regional places like -- gasp -- Atlanta. https://www.cisa.gov/resources-tools/re ... al-offices Otherwise every military base basically has ISSO people and cybersecurity contractors, even in places like Fayetteville NC, Hanscom Airforce Base, etc. This is not including regional offices of federal bureaucracies like USDA or etc who need IT and security people. I know that the Department of Energy has many regional offices in places like Savannah Georgia and Idaho Falls with people specializing in Industrial Control Systems Security for their nuclear stuff but also regular security for their traditional workstation/server computing assets.

If you just want to be in defense industry doing generic STEM work, not necessarily computer security, the main hubs are around Boston, Colorado Springs, Huntsville Alabama, San Antonio, Washington DC, Charleston SC, Norfolk Va. and a few other locations. There are both full-time and contractor options [think SPAWAR, NAVWAR, etc for full-time options].

Most of the bureaucracies [except for places like NIST, Department of Education, Agriculture, and the like which require a Public Trust] will require a Security Clearance.

[mtwistercapitalist]

There are federal government jobs that are hard to fill.

If you have a skill set that is needed — STEM and medical come to mind — you will get job security, a pension, and many health insurance options (even in retirement). There is a disability version of the pension that is similar to long-term disability coverage in the private sector, since you specifically mentioned that as a concern.

And you can probably find one in a lower COL area. You might be able to buy a house too. The tradeoff, of course, is a lower salary than your skills would probably command in the private sector.

But security is the first thing that you mentioned.

Where are they? DC?
I live outside the capital region and I m qualified by education and experience in STEM - I have done more than 300 applications and never seem to get an interview.
The only time, they called me was with a job offer in Clay Center NE, they did not even interview me, it seems the hiring manager said, they loved my resume.

I am feeling, it's almost impossible to land a senior level jobs at the federal government as an outsider.

Depends on the field and what you can do. I currently work in computer security and am familiar with the field, so will speak with heavy influence from my background

There are a few options outside Washington DC: DoD/NSA and contractors are concentrated around Fort Meade, Augusta Georgia, San Antonio, Colorado Springs, Aurora Colorado, and Hawaii mainly. Then there is CISA which got spun up recently in 2018 and has offices in regional places like -- gasp -- Atlanta. https://www.cisa.gov/resources-tools/re ... al-offices Otherwise every military base basically has ISSO people and cybersecurity contractors, even in places like Fayetteville NC, Hanscom Airforce Base, etc. This is not including regional offices of federal bureaucracies like USDA or etc who need IT and security people. I know that the Department of Energy has many regional offices in places like Savannah Georgia and Idaho Falls with people specializing in Industrial Control Systems Security for their nuclear stuff (a unique niche) but also the traditional computer security you might find in a bank or your local DMV, etc.

If you just want to be in defense industry doing generic STEM work, not necessarily computer security, the main hubs are around Boston, Colorado Springs, Huntsville Alabama, San Antonio, Washington DC, Charleston SC, Norfolk Va. and a few other locations. There are both full-time and contractor options [think SPAWAR, NAVWAR, etc for full-time options].

The U.S. Patent office is another place if you want to go work in general STEM stuff [first year in Alexandria Virginia, then you potentially can work from home or in a regional office around the U.S]. but I heard that working there is a sweatshop and burnout-prone gig -- with many people dropping out very quickly. However, the Patent office is entirely self-funded so you hopefully won't be hit with the national debt ceiling salary freezes and budget fights nearly as much or to the degree that other bureaucracies would.

Most of the agencies [except for less sensitive places like NIST, Department of Education, Agriculture, and the like which require a Public Trust] will require a Security Clearance.

[SurferLife]

I may have had a similar situation in that I was in the military and because I moved so much, was never able to buy a house. I suppose I could have bought a house at every duty station, but it didn't seem like the financially smart thing to do. What I did was focus on building wealth through index funds so I could buy a house when I finished my time in the military. I also focused on building my taxable account since I knew I was going to be an early retiree. This plan worked really well because I knew my time in the military was limited and I had a plan for what came next; it also gave me great flexibility because I didn't own a home. If you are just working with no end-point or long-term plan, then I think that could make the day-to-day routine of saving very difficult. If you haven't done so, I'd recommend you do some soul-searching to decide on what you want from life and then once you figure that out, then put the financial tools and practices in-place that work towards that goal. Once I knew what my plan was, the financial piece mostly fell into place on its own. I hope this is helpful.

[Olemiss540]

I recently cracked the $2 million threshold and rent in a VHCOL area. I am the primary income with a kid, though I have no plans to send them to private school, etc.

House prices are so high that buying effectively means I cannot lose my job and continue to pay a mortgage. Between that and the fact that I can’t in good conscience pay so much money for so little home, leaves me with a question: what do I do with my money?

All my money is index invested, but to some degree it feels pointless — I have far more than I need for my family barring a lifelong injury or medical condition, but I’ll never earn enough to effectively self insure that case (disability insurance is unfortunately not an option for me).

What do people do short of buying a house when the goal is security and diversification rather than wealth accumulation?

You have as much security as humanly possible given your level of assets versus expenses. Set an asset allocation that allows you to sleep well at night and keep at it while the sun is shining.

Try to relax, enjoy, and start planning what the next phase of your life looks like. You can buy whatever life you want to design (within reason) in a handful of years, enjoy the planning process and try to focus time and resources on things that bring you happiness.

You truly are lean FI at this stage and could most likely enjoy a life in 85% of the country if you were forced out of the workplace today and never earned another dollar.....

[Sandtrap]

I recently cracked the $2 million threshold and rent in a VHCOL area. I am the primary income with a kid, though I have no plans to send them to private school, etc.

House prices are so high that buying effectively means I cannot lose my job and continue to pay a mortgage. Between that and the fact that I can’t in good conscience pay so much money for so little home, leaves me with a question: what do I do with my money?

All my money is index invested, but to some degree it feels pointless — I have far more than I need for my family barring a lifelong injury or medical condition, but I’ll never earn enough to effectively self insure that case (disability insurance is unfortunately not an option for me).

What do people do short of buying a house when the goal is security and diversification rather than wealth accumulation?[/u][/u]

to op:

the goal is security and diversification rather (VS)than wealth accumulation?

1
Your question is best answered within "your financial context" vs generalized if you edit your original post (so all data is in one place vs in the thread narratives) using the pencil icon to include this data and format within your privacy tolerances.
Question in context of my Portfolio Review Request
https://www.bogleheads.org/forum/viewt ... =1&t=6212
2

...what do "people" do?

Not sure if your question is for everyone for themselves or comparisons or sharing or actionably and quantitatively applicable to your financials.
Please clarity to help responses if you can.
3

the goal is security and diversification rather than wealth accumulation?

Questions for you:
A
At what points do the goals of "security and diversification" converge or diverge with the goals of "wealth accumulation"?
Do you mean FI (Financial Independence) IE: secure pension, SS, etc, expenses covered in retirement or FIRE after successful employment?
or
B
Do you mean not having a career with financial security and investing diversification with the goal of "substantial wealth" (millions in excess)?
IE: Taking risks on one's own unique "career" path as a self-employed business owner building a corporation, etc, from scratch?
C
Can one have a goal of "substantial wealth" or "wealth accumulation" while not compromising "financial security and investing diversification?

Interested in your thoughts and clarifications to help others and ponder for yourself to be helpful.

**Note: 2 million at mid life or mid accumulation stages, or any stage, can be lost in a very short time with financial and personal "black swans" and "perfect storms". 2 million sounds like a lot, and it is, but then often, it is not.
j
dis laimer: zillions of ways to things and thinking of things. This is only one perspective.

[dknightd]

All my money is index invested, but to some degree it feels pointless — I have far more than I need for my family barring a lifelong injury or medical condition, but I’ll never earn enough to effectively self insure that case (disability insurance is unfortunately not an option for me).

What do people do short of buying a house when the goal is security and diversification rather than wealth accumulation?

Don't discount the possibility of disability insurance until you have actually tried to buy it from at least three companies. Unless you could already be considered disabled, it is still a possibility. It might be expensive, but if it makes you feel secure it might be worth it.

You might also consider buying a term life insurance product. Again, don't give up just becuase one insurer said no. You might also consider buying one for your spouse.

Early 30's with a young child can be a turbulent time. You might be looking for a sense of security that is hard to find at that time of life. Look at the positives. You are still young. You like your job, and industry (this is a huge advantage, people perform better at jobs they like), and you have what I'd consider a large buffer.

[dknightd]

In the OP's case, his PITI on a 15-year is probably going to be 5X market rent or something silly like that. In that case, the answer is rent and buy stocks since houses are too expensive there and now. But isn't that "timing the market"?

It's at least 2-3x, from what I've seen.

I suppose it's timing the market, but also it could be more akin to considering "diversifying" into something like crypto. Real estate is just a fundamentally different asset than a stock, and the use-value of real estate (somewhere to live) has an alternative: renting.

I'd have a hard time buying a house when I could rent something similar for 1/3 to 1/2 the price. Buying a house buys you stability, not security. Sometimes stability is a good thing, sometimes not. There is some security, but only after the loan has been paid off. When you can buy for about the same price as renting, it would be something to consider. Or if you were buying for other reasons. We bought our house so I could walk to work - there were no rentals available. It cost about the same as renting, so that was lucky.

I don't think I'd call it market timing. I'd call it rebalancing. Instead of investing in somebody else's property, I was investing in my own. But I have an imaginative mind.

I would never diversify into crypto. Especially if you don't like the concept of your wealth being just numbers on a screen! At least stocks and bonds have something real behind them. Crypto is all imaginary. Maybe consider Gold, or diamonds, or some other physical thing that actually exists. Maybe vacant land?

[redfishbluefish]

All my money is index invested, but to some degree it feels pointless — I have far more than I need for my family barring a lifelong injury or medical condition, but I’ll never earn enough to effectively self insure that case (disability insurance is unfortunately not an option for me).

Are you sure? Even never saving another dime in 20 years you could easily be well on your way to $10M.

I could be, but the scenario in which I'd need disability insurance requires me to withdraw money. I'd be well over a 3-4% SWR, which means the money would not last.

I would never diversify into crypto.

Oh god, me neither. It was just illustrative.

Not sure if your question is for everyone for themselves or comparisons or sharing or actionably and quantitatively applicable to your financials.

Curious what others do or how they think about things. Not necessarily looking for actionable advice.

Don't discount the possibility of disability insurance until you have actually tried to buy it from at least three companies

Fair enough!

At what points do the goals of "security and diversification" converge or diverge with the goals of "wealth accumulation"?
Do you mean FI (Financial Independence) IE: secure pension, SS, etc, expenses covered in retirement or FIRE after successful employment?

Probably I would prefer certainty and stability over accumulation and volatility. Definitely the FI part of FIRE. I like the structure of work, but ideally I never actually need to think about money.

[Sandtrap]

All my money is index invested, but to some degree it feels pointless — I have far more than I need for my family barring a lifelong injury or medical condition, but I’ll never earn enough to effectively self insure that case (disability insurance is unfortunately not an option for me).

Are you sure? Even never saving another dime in 20 years you could easily be well on your way to $10M.

I could be, but the scenario in which I'd need disability insurance requires me to withdraw money. I'd be well over a 3-4% SWR, which means the money would not last.

I would never diversify into crypto.

Oh god, me neither. It was just illustrative.

Not sure if your question is for everyone for themselves or comparisons or sharing or actionably and quantitatively applicable to your financials.

Curious what others do or how they think about things. Not necessarily looking for actionable advice.

Don't discount the possibility of disability insurance until you have actually tried to buy it from at least three companies

Fair enough!

At what points do the goals of "security and diversification" converge or diverge with the goals of "wealth accumulation"?
Do you mean FI (Financial Independence) IE: secure pension, SS, etc, expenses covered in retirement or FIRE after successful employment?

Probably I would prefer certainty and stability over accumulation and volatility. Definitely the FI part of FIRE. I like the structure of work, but ideally I never actually need to think about money.

but ideally I never actually need to think about money.

How can "not thinking about money" happen for you?
For anyone?
How can "thinking about money" (and financials) "not" happen for anyone in an economic society, unless one has the level of wealth of Elon Musk or Bill Gates, etc, per se?

thanks for your input.
j

[michaeljc70]

Context: early 30s, kid is under five.

I think the reason a bank account doesn’t seem “secure” is it really is just some numbers on a screen. There’s no inherent usefulness to the stocks, and the value can fluctuate wildly from day to day. Real estate on the other hand, while housing prices could crash you still have a building you can live in. I guess that’s why a lot of people like to own a home even if it doesn’t “make financial sense”.

The inherent usefulness of stocks is they go up which keeps up with inflation and provides an additional return (over the long haul).

Homes do go down in value. Especially in HCOL areas. Before 2008 most of the housing crashes happened in CA/FL. Over time, on average, homes just keep pace with inflation. The insurance situation (among other things) in places like coastal CA and S Florida makes me pretty confident prices will go down there sooner or later. I'm surprised they haven't crashed in places like SF with businesses leaving and people working remotely.

[ScubaHogg]

All my money is index invested, but to some degree it feels pointless — I have far more than I need for my family barring a lifelong injury or medical condition, but I’ll never earn enough to effectively self insure that case (disability insurance is unfortunately not an option for me).

Are you sure? Even never saving another dime in 20 years you could easily be well on your way to $10M.

I could be, but the scenario in which I'd need disability insurance requires me to withdraw money. I'd be well over a 3-4% SWR, which means the money would not last.

I recommend you try tpawplanner.com. You might like it

viewtopic.php?t=331368

Once you factor in things like Social security and reduced expenses once the kids leave, you might find >4% goes today further then you think

[an_asker]

Wow. 2 million in a VHCOL and you feel you have enough already.

I’m at 1.5 in a medium COL and feel I don’t have enough.

Just keep saving money. Life only gets more expensive.

If you want homeownership make a plan to move out of the area unless there are other factors tying you down.

There have been studies that show that no matter how high your net worth, most people feel they do not have enough. In most cases they "need" about 15% more than they have. In many cases, they already have more than enough. There are people on this forum who worry about retiring with 8 figures.

Some life experts (not necessary financial) have the saying: having "enough" is better than having "a lot and wanting more".