Where to invest home downpayment which I am not certain when to buy if ever?!

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KlangFool
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by KlangFool » Tue Nov 07, 2017 4:58 pm

OP,

You are in NJ. Please check the property tax rate in your area before considering buying a 300K house.

https://smartasset.com/taxes/new-jersey ... calculator

The above URL could help you to do that.

KlangFool

Topic Author
BogleMelon
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by BogleMelon » Tue Nov 07, 2017 6:55 pm

retiredjg wrote:
Tue Nov 07, 2017 4:48 pm
Boglemelon, if you've been in poor shape in the past and have cleaned up your act, that is all you need to say. A house may be in your future. But if you (still?) have bad habits and a significant amount of debt, you should listen to Klang Fool and get more realistic about the future.
Just an FYI, never been in a bad shape, only income was lower than now. Always debt free. Always on budget. Always saving for retirement. Never had a bad financial habit. "When I say always I mean since I came to US though!"
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

Topic Author
BogleMelon
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by BogleMelon » Tue Nov 07, 2017 6:59 pm

KlangFool wrote:
Tue Nov 07, 2017 4:58 pm
OP,

You are in NJ. Please check the property tax rate in your area before considering buying a 300K house.

https://smartasset.com/taxes/new-jersey ... calculator

The above URL could help you to do that.

KlangFool
Thanks for the link. That is actually less than what I have estimated. I estimated $8K/yr
In case of renting, whom do you think bear the final cost of the property tax?
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

KlangFool
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Joined: Sat Oct 11, 2008 12:35 pm

Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by KlangFool » Tue Nov 07, 2017 7:10 pm

BogleMelon wrote:
Tue Nov 07, 2017 6:59 pm
KlangFool wrote:
Tue Nov 07, 2017 4:58 pm
OP,

You are in NJ. Please check the property tax rate in your area before considering buying a 300K house.

https://smartasset.com/taxes/new-jersey ... calculator

The above URL could help you to do that.

KlangFool
Thanks for the link. That is actually less than what I have estimated. I estimated $8K/yr
In case of renting, whom do you think bear the final cost of the property tax?
BogleMelon,

You are 38 years old now. You are only in the USA for the last 5 years. In another 5 years, you will be 43 years old. And, your net worth would be X. So, at that point in time, before your retirement is anywhere close to being fully funded, you want to spend 300K in a house. I wish you best of luck.

A young person may have the time and the earning power to recover from that kind of mistake. But, does that apply to you?

KlangFool

Topic Author
BogleMelon
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by BogleMelon » Tue Nov 07, 2017 7:27 pm

KlangFool wrote:
Tue Nov 07, 2017 7:10 pm
BogleMelon wrote:
Tue Nov 07, 2017 6:59 pm
KlangFool wrote:
Tue Nov 07, 2017 4:58 pm
OP,

You are in NJ. Please check the property tax rate in your area before considering buying a 300K house.

https://smartasset.com/taxes/new-jersey ... calculator

The above URL could help you to do that.

KlangFool
Thanks for the link. That is actually less than what I have estimated. I estimated $8K/yr
In case of renting, whom do you think bear the final cost of the property tax?
BogleMelon,

You are 38 years old now. You are only in the USA for the last 5 years. In another 5 years, you will be 43 years old. And, your net worth would be X. So, at that point in time, before your retirement is anywhere close to being fully funded, you want to spend 300K in a house. I wish you best of luck.

A young person may have the time and the earning power to recover from that kind of mistake. But, does that apply to you?

KlangFool
Comparing to living at streets, owning a home makes no financial sense of course! But i compare it to renting which i pay anyways.. I have used couple of calculators to review that comparison... May be after 5 years housing market decline too.
Age though is a good point. Anyways i am not buying a house tomorrow. I am only saving for it in case one day it made more sense. If changed my mind, the money will be there for me to do something else with it.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

KlangFool
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by KlangFool » Tue Nov 07, 2017 7:36 pm

BogleMelon wrote:
Tue Nov 07, 2017 7:27 pm
KlangFool wrote:
Tue Nov 07, 2017 7:10 pm
BogleMelon wrote:
Tue Nov 07, 2017 6:59 pm
KlangFool wrote:
Tue Nov 07, 2017 4:58 pm
OP,

You are in NJ. Please check the property tax rate in your area before considering buying a 300K house.

https://smartasset.com/taxes/new-jersey ... calculator

The above URL could help you to do that.

KlangFool
Thanks for the link. That is actually less than what I have estimated. I estimated $8K/yr
In case of renting, whom do you think bear the final cost of the property tax?
BogleMelon,

You are 38 years old now. You are only in the USA for the last 5 years. In another 5 years, you will be 43 years old. And, your net worth would be X. So, at that point in time, before your retirement is anywhere close to being fully funded, you want to spend 300K in a house. I wish you best of luck.

A young person may have the time and the earning power to recover from that kind of mistake. But, does that apply to you?

KlangFool
Comparing to living at streets, owning a home makes no financial sense of course! But i compare it to renting which i pay anyways.. I have used couple of calculators to review that comparison... May be after 5 years housing market decline too.
Age though is a good point. Anyways i am not buying a house tomorrow. I am only saving for it in case one day it made more sense. If changed my mind, the money will be there for me to do something else with it.
BogleMelon,

How much will this decision costs you?

Your current net worth is around 80K to 100K. Over the next 5 years, you will invest a large portion of your savings (60K) conservatively because you believe that you can afford a 300K house.

You hardly have enough savings for retirement even if you invest aggressively. Now, you are going to do 20/80 on 60K aka a large portion of your saving? Can you afford this kind of decision?

KlangFool

Sockeye
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by Sockeye » Tue Nov 07, 2017 7:37 pm

Owning a house is one of the single most joyous and rewarding things you can do with your money, as long as you buy within your means. Start small, and if you can afford more, flip it. Or keep it as a rental and move up. Just stay disciplined and be aggressive about estimating ownership costs beforehand. 1st timers, don't buy the max that some crazy lender is willing to loan.

It is plenty possible to afford a 300k house on a 80k salary with 60k down. Do your homework on expenses and don't buy an obvious bubble property.
Last edited by Sockeye on Wed Nov 08, 2017 1:54 am, edited 1 time in total.

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ray.james
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by ray.james » Tue Nov 07, 2017 8:22 pm

To answer your question, I chose Vanguard limited term tax exempt. Total bond if tax rate is less than 25%(state + fed marginal.)

If the term is 5 years plus, I would do a 20-30% stocks but that is just me. I can loose 10% of down payment and still be fine. I would scale down stocks, as I get closer to buying. YMMV
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939

dozer183e
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by dozer183e » Sun Nov 12, 2017 2:29 pm

nyclon wrote:
Tue Nov 07, 2017 2:37 pm
BogleMelon wrote:
Mon Nov 06, 2017 8:29 pm
Have read a couple of threads here about "Where to invest home downpayment", but was thinking that I may need a tailored advice, so thank you in advance!
Have start setting aside some cash to buy a home one day. My target is to save $50K~$60K. Part of our income is variable, so not sure if I will achieve my goal, in 2, 5 or more years!
Should I just stack the money up in the saving account? Or I will be better off investing in a couple of index funds? And if so, what asset allocation you'd advise me to have with that uncertainty regarding the period?
(I already maxing out our Roth IRA's but that will be only for retirement purposes, so any investing for the home will be in a taxable)
I'm in a similar predicament. We know that owning a home is something we want to do at some point, and we've identified the price point, but we don't know when due to a variety of reasons.

I came to the realization in the past month that having all of the down payment money in 5-year CDs simply didn't sit well with me. So, I looked around for investment ideas which were appropriate for a 3-5 year outlook. I found two comps:
1. LifeStrategy Income Fund: 80/20 equities/fixed income
2. Vanguard Target Retirement 2010 Fund (VTENX): 70/30 equities/fixed income

...
So I ended up re-allocating our down payment from 100% CDs to this:
30% equities (60/40 US/int'l)
40% intermediate-term municipal bonds
30% CDs

I've also instituted a similar strategy on our emergency fund.

...
I am thinking along the same lines.
I'v been looking at Vanguard Target Retirement Income Fund (VTINX) for possible 3-7 year needs? It has a 30/70 allocation and the break down is as follows:
1 Vanguard Total Bond Market II Index Fund Investor Shares* 37.2%
2 Vanguard Total Stock Market Index Fund Investor Shares 18.2%
3 Vanguard Short-Term Inflation-Protected Securities Index Fund Investor Shares 16.7%
4 Vanguard Total International Bond Index Fund Investor Shares 15.8%
5 Vanguard Total International Stock Index Fund Investor Shares 12.1%

Returns before taxes are 5.26% (1yr) 4.28%(3yr) 4.68%(5yr) 4.87%(10yr)

i have some room for risk tolerance (I would be okay if lost 15% in a year because it really isn't ALL needed at one time.
I am in 15% tax bracket and live overseas so my income is excluded from taxes, but earnings (interest/Dividends/Cap Gains) are still taxable.

Is it logical to use this one fund for my savings in taxable, even if I am not "retired" as the fund name suggests?
Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.

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rustymutt
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by rustymutt » Sun Nov 12, 2017 2:32 pm

bloom2708 wrote:
Mon Nov 06, 2017 8:51 pm
One option:

Start a taxable account at Vanguard (If you don't already have one).

40% Total US Stock index
60% Int-Term Tax-Exempt bond index

I don't know your tax bracket or what other funds you have. This is just a "it might work" idea.

We have a taxable account with Total US, Total International and Int-Term Tax-Exempt. About 50-50 stocks to bonds.

If this seems "risky", then stick with a savings account or a CD.
Hey I agree with with the above quote. Simple ideals are the best. We use 60/40 All US equities, All bonds. VBIAx.

It's like the appliance TV ad, "You just set it up, and FORGET IT!"
I'm amazed at the wealth of Knowledge others gather, and share over a lifetime of learning. The mind is truly unique. It's nice when we use it!

nyclon
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by nyclon » Sun Nov 12, 2017 10:10 pm

dozer183e wrote:
Sun Nov 12, 2017 2:29 pm
nyclon wrote:
Tue Nov 07, 2017 2:37 pm
BogleMelon wrote:
Mon Nov 06, 2017 8:29 pm
Have read a couple of threads here about "Where to invest home downpayment", but was thinking that I may need a tailored advice, so thank you in advance!
Have start setting aside some cash to buy a home one day. My target is to save $50K~$60K. Part of our income is variable, so not sure if I will achieve my goal, in 2, 5 or more years!
Should I just stack the money up in the saving account? Or I will be better off investing in a couple of index funds? And if so, what asset allocation you'd advise me to have with that uncertainty regarding the period?
(I already maxing out our Roth IRA's but that will be only for retirement purposes, so any investing for the home will be in a taxable)
I'm in a similar predicament. We know that owning a home is something we want to do at some point, and we've identified the price point, but we don't know when due to a variety of reasons.

I came to the realization in the past month that having all of the down payment money in 5-year CDs simply didn't sit well with me. So, I looked around for investment ideas which were appropriate for a 3-5 year outlook. I found two comps:
1. LifeStrategy Income Fund: 80/20 equities/fixed income
2. Vanguard Target Retirement 2010 Fund (VTENX): 70/30 equities/fixed income

...
So I ended up re-allocating our down payment from 100% CDs to this:
30% equities (60/40 US/int'l)
40% intermediate-term municipal bonds
30% CDs

I've also instituted a similar strategy on our emergency fund.

...
I am thinking along the same lines.
I'v been looking at Vanguard Target Retirement Income Fund (VTINX) for possible 3-7 year needs? It has a 30/70 allocation and the break down is as follows:
1 Vanguard Total Bond Market II Index Fund Investor Shares* 37.2%
2 Vanguard Total Stock Market Index Fund Investor Shares 18.2%
3 Vanguard Short-Term Inflation-Protected Securities Index Fund Investor Shares 16.7%
4 Vanguard Total International Bond Index Fund Investor Shares 15.8%
5 Vanguard Total International Stock Index Fund Investor Shares 12.1%

Returns before taxes are 5.26% (1yr) 4.28%(3yr) 4.68%(5yr) 4.87%(10yr)

i have some room for risk tolerance (I would be okay if lost 15% in a year because it really isn't ALL needed at one time.
I am in 15% tax bracket and live overseas so my income is excluded from taxes, but earnings (interest/Dividends/Cap Gains) are still taxable.

Is it logical to use this one fund for my savings in taxable, even if I am not "retired" as the fund name suggests?
This fund could work too - I chose tax exempt bonds due to my tax situation.

aristotelian
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by aristotelian » Mon Nov 13, 2017 8:23 am

Back on topic, with a truly indefinite timeframe, I would just invest according to your normal allocation. Don't invest in a "separate account" that could limit your return for years to come.

When you get close to the point of being ready to buy, then consider either savings, CD, or short term bond fund.

nyclon
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by nyclon » Mon Nov 13, 2017 10:19 am

aristotelian wrote:
Mon Nov 13, 2017 8:23 am
Back on topic, with a truly indefinite timeframe, I would just invest according to your normal allocation. Don't invest in a "separate account" that could limit your return for years to come.

When you get close to the point of being ready to buy, then consider either savings, CD, or short term bond fund.
This approach can make sense if you have a significant amount above what you've earmarked for a down payment or other goal.

But, if you don't, and your goal money is the majority of your investments, then risk should be adjusted for the timeframe.

If I need $50k and I have a $300k portfolio, maybe 80/20 equities/fixed income makes sense - even in a downturn the $50k would be there despite selling at a loss.

But, if my portfolio is $60k and I need $50k in the future - well, 20/80 equities/fixed income may make sense.

Ultimately it doesn't hurt to start off conservative - say put the $60k into a 20/80 allocation for example, and as you add to the balance, it eventually becomes 80/20 as the balance grows. At this point, sure, invest per the normal allocation.

A Boglehead
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by A Boglehead » Thu Mar 28, 2019 9:58 pm

I'm also hoping to buy a house in the next 2-3 years, but am not sure when. I have a lot of cash sitting in the bank earning 2.2% APY. I'm debating whether to invest some of that in a municipal bond in my taxable account, and am considering Vanguard Tax-Exempt Bond ETF (VTEB). Last year I was in the 24% tax bracket, but in the last 5 years I've been in the 10-28% tax brackets.

1. Do you think it's worth the risk of investing some of my down payment in a municipal bond? VTEB's 30 day SEC yield is
2.35%, whereas I'm getting 2.2% pre-tax in the bank.

2. What do you think of VTEB, if you think I should invest some of the down payment? I'd prefer a shorter duration bond since I might buy a house in 3-5 y, but VTEB had a lower expense ratio than some of Vanguard's other municipal bonds.

Thank you!

KlangFool
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by KlangFool » Thu Mar 28, 2019 10:07 pm

A Boglehead wrote:
Thu Mar 28, 2019 9:58 pm
I'm also hoping to buy a house in the next 2-3 years, but am not sure when. I have a lot of cash sitting in the bank earning 2.2% APY. I'm debating whether to invest some of that in a municipal bond in my taxable account, and am considering Vanguard Tax-Exempt Bond ETF (VTEB). Last year I was in the 24% tax bracket, but in the last 5 years I've been in the 10-28% tax brackets.

1. Do you think it's worth the risk of investing some of my down payment in a municipal bond? VTEB's 30 day SEC yield is
2.35%, whereas I'm getting 2.2% pre-tax in the bank.

2. What do you think of VTEB, if you think I should invest some of the down payment? I'd prefer a shorter duration bond since I might buy a house in 3-5 y, but VTEB had a lower expense ratio than some of Vanguard's other municipal bonds.

Thank you!
A Boglehead,

You should start your own topic.

1) In general, you do not have to save for a house down payment.

2) If you have to save for a house down payment, you probably buying too much house. Aka, you are buying a house that you cannot afford.

KlangFool

pasadena
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by pasadena » Thu Mar 28, 2019 10:16 pm

Question: how bad would it be if you cannot buy the house in 3 to 5 years? I mean, how flexible is your timeline here?

The answer to your question depends heavily on your answer to that question. You will get many different answers, none of them tailored to you.

For instance, I can tell you what I did :). My goal is 3-5 years. But it's been 3-5 years for 5 years now :oops:

I am using both my Roth IRA and taxable accounts for that money. Across both account, it's invested in 48% US Stocks, 12% Int'l Stocks, and 40% Bonds.

Why? Because my timeline is very flexible: I realized that my real goal is to live in a paid-off home upon retirement (in ~15 years). If I can buy one long before that, I'll be happy. If I can't, oh well, I'll just keep saving until it happens, as long as it happens when I retire. I shifted the timeline for a number of reasons that may or may not apply to you.

All this to say, your strategy depends on more than just how fast you think you can save what would be a 20% downpayment if you bought now.

pasadena
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by pasadena » Thu Mar 28, 2019 10:22 pm

KlangFool wrote:
Thu Mar 28, 2019 10:07 pm

1) In general, you do not have to save for a house down payment.

2) If you have to save for a house down payment, you probably buying too much house. Aka, you are buying a house that you cannot afford.

Wait. How do you come up with a downpayment if you don't save for it?

KlangFool
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by KlangFool » Thu Mar 28, 2019 10:42 pm

pasadena wrote:
Thu Mar 28, 2019 10:22 pm
KlangFool wrote:
Thu Mar 28, 2019 10:07 pm

1) In general, you do not have to save for a house down payment.

2) If you have to save for a house down payment, you probably buying too much house. Aka, you are buying a house that you cannot afford.

Wait. How do you come up with a downpayment if you don't save for it?
pasadena,

A) My annual savings and the emergency fund is big enough to cover the 20% down payment. So, I only need to save less than 1 year to buy the house.

B) In order to buy a house,

i) You need an emergency fund before you buy the house.

ii) You need an emergency fund to keep the house. Aka, big enough to cover the additional house payment plus your normal expense.

iii) Your annual savings need to be big enough to cover the extra house payment beyond your current rent.

iv) Your annual savings need to be big enough to cover the additional house maintenance and cost of furnishing the house.

After you go through (B) (i) to (iv), you get the conclusion of (A).

KlangFool

A Boglehead
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by A Boglehead » Thu Mar 28, 2019 11:51 pm

Thank you both!

I already have 20% saved up in a taxable brokerage account all in stock, but still have more cash in the bank. I'm trying to decide whether to invest any of that.

I'm flexible on when to buy. I live in a pricey area, and am a little worried I won't be able to buy if I don't buy soon, but my job isn't stable enough for me to buy now. I'm OK w/continuing to rent, but eventually would like to buy.

stocknoob4111
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by stocknoob4111 » Fri Mar 29, 2019 1:14 am

don't do it unless you are certain you are going to buy and that you don't live in a dysfunctional market like LA or SF I kept a large amount of cash out of the market in anticipation of buying a home here in LA, however during the time prices increased to the Andromeda galaxy way more than I could afford (median is almost a million here now which is absurd).

Keeping money on the sidelines during the biggest bull market was a total waste of capital, never ever doing that again!

A Boglehead
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by A Boglehead » Fri Mar 29, 2019 2:20 pm

Thx! It sounds like you wish you'd invested the money, rather than leaving it in cash.

I'm torn between investing the down payment in a municipal bond, stock or CD. Sallie Mae has 1 year CDs with 2.75% APY. Vanguard Tax-Exempt Bond ETF has a 30 day SEC yield of 2.35%. Since I was in the 24% federal tax bracket in 2018, I think the after-tax APY on the CD is 2.09%, but it's risk free, versus there's a little risk w/a municipal bond. I've been investing the down payment in stock up until now, and leaving the rest as cash, but am always unsure whether to continue investing the down payment, and if so, whether I should invest in municipal bonds or stocks.

I really appreciate all of your input!

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dm200
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by dm200 » Fri Mar 29, 2019 2:56 pm

I might consider moving a chunk of this to retirement funding.

If/when you do buy, you can probably just get a bigger mortgage.

Salmonid
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by Salmonid » Fri Mar 29, 2019 2:58 pm

aristotelian wrote:
Mon Nov 13, 2017 8:23 am
Back on topic, with a truly indefinite timeframe, I would just invest according to your normal allocation. Don't invest in a "separate account" that could limit your return for years to come.

When you get close to the point of being ready to buy, then consider either savings, CD, or short term bond fund.
This is what I was going to say. Unless there's an inflexible timeline, I don't see any reason to treat this money any differently than the rest of OP's investments. I'm generally against bucketing money into separate pools unless there's a compelling reason to do so.

inbox788
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by inbox788 » Fri Mar 29, 2019 3:53 pm

Salmonid wrote:
Fri Mar 29, 2019 2:58 pm
aristotelian wrote:
Mon Nov 13, 2017 8:23 am
Back on topic, with a truly indefinite timeframe, I would just invest according to your normal allocation. Don't invest in a "separate account" that could limit your return for years to come.

When you get close to the point of being ready to buy, then consider either savings, CD, or short term bond fund.
This is what I was going to say. Unless there's an inflexible timeline, I don't see any reason to treat this money any differently than the rest of OP's investments. I'm generally against bucketing money into separate pools unless there's a compelling reason to do so.
I never liked the idea of putting a down payment in a low yielding investment for up to 5 years, but if the purchase of a home is imminent, then you've got to leave it somewhere low risk. The problem I have is that sometimes home prices can be as volatile as stock prices, especially in fast growing areas, so while you may be close to reaching your down payment amount soon, in 5 years, the target has moved away from you. Sometimes, and maybe more often, rising markets drive home prices higher. There's speculation that Lyft and other IPOs will further expand the Silicon Valley real estate bubble. It's risky, but sometimes you've got to bite the bullet and pay up. The market may crash or it may deflate, but it could take a decade and if you're living and working there, and can afford it, it may turn out for the better.

https://www.nbcnews.com/tech/tech-news/ ... et-n950136

Given the uncertain time period, agree with investing it in taxable with the rest of the investments. If the purchase timeframe is more definite, then shift over.

JM555
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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by JM555 » Sun Mar 31, 2019 2:51 pm

pasadena wrote:
Thu Mar 28, 2019 10:22 pm
KlangFool wrote:
Thu Mar 28, 2019 10:07 pm

1) In general, you do not have to save for a house down payment.

2) If you have to save for a house down payment, you probably buying too much house. Aka, you are buying a house that you cannot afford.

Wait. How do you come up with a downpayment if you don't save for it?


That’s a great question. I guess people do not want others buying homes. What if I just paid off’s for school and I making $200,000 a year? I don’t have a down payment right now, so I shouldn’t buy a house? Give me a break lol some people just have nothing else better to do then come up here and be negative

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Re: Where to invest home downpayment which I am not certain when to buy if ever?!

Post by Grt2bOutdoors » Sun Mar 31, 2019 3:41 pm

pasadena wrote:
Thu Mar 28, 2019 10:22 pm
KlangFool wrote:
Thu Mar 28, 2019 10:07 pm

1) In general, you do not have to save for a house down payment.

2) If you have to save for a house down payment, you probably buying too much house. Aka, you are buying a house that you cannot afford.

Wait. How do you come up with a downpayment if you don't save for it?
What poster KlangFool is trying to convey is that money is fungible. You can take the downpayment from many different sources, it could be a brokerage account or a taxable account of mutual funds, or in KlangFool's situation from his annual earnings. OP - you are on the right track, ultimately you need to be able to save to invest and/or consume. Most home buyers do save for a down payment. I would not recommend financing more than 80% of your total home purchase price.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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