25 year old saving for house down payment

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Topic Author
krafty81
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Location: San Diego, CA

25 year old saving for house down payment

Post by krafty81 » Fri Mar 22, 2019 4:58 pm

My son just started a new job in Denver. Pays three figures. He wants to start saving for a house. He has the following

5K in previous company 401k
10k in Schwab Brokerage account - all stock
4k in Schwab Roth IRA - stock

Any recommendations? Probably look to buy in two years.

Thanks.

cherijoh
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Location: Charlotte NC

Re: 25 year old saving for house down payment

Post by cherijoh » Fri Mar 22, 2019 5:28 pm

krafty81 wrote:
Fri Mar 22, 2019 4:58 pm
My son just started a new job in Denver. Pays three figures. He wants to start saving for a house. He has the following

5K in previous company 401k
10k in Schwab Brokerage account - all stock
4k in Schwab Roth IRA - stock

Any recommendations? Probably look to buy in two years.

Thanks.
What do you mean by "pays 3 figures"? His rent is over $1000/month? I hope you don't mean his salary is in the thousands - since that is usally quoted on an annual basis. :wink:

At this point in the economic cycle and with a time line of 2 years I wouldn't want my down payment fund to be in stocks. A high-yield savings account would be appropriate for that time horizon.

Grt2bOutdoors
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Re: 25 year old saving for house down payment

Post by Grt2bOutdoors » Fri Mar 22, 2019 5:30 pm

Pays three figures, means anywhere from $100 to $999. He might need a few more years to save up before buying.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

mega317
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Re: 25 year old saving for house down payment

Post by mega317 » Fri Mar 22, 2019 5:30 pm

That's not a lot of information. (I assume he's making more than $999 per year.) I would say maximize available tax-advantaged savings at LEAST Roth, build a solid emergency fund, and then save for down payment on top of that until he has enough to buy what he wants with 20% down. Setting an arbitrary "two years" could lead to mistakes like ignoring all other savings or not buying the right house for him.

DrGoogle2017
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Re: 25 year old saving for house down payment

Post by DrGoogle2017 » Fri Mar 22, 2019 5:32 pm

Probably per week, the three figures.

barnaclebob
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Re: 25 year old saving for house down payment

Post by barnaclebob » Fri Mar 22, 2019 5:38 pm

DrGoogle2017 wrote:
Fri Mar 22, 2019 5:32 pm
Probably per week, the three figures.
Could also be 3 figures above 1000...

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aspirit
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Re: 25 year old saving for house down payment

Post by aspirit » Fri Mar 22, 2019 5:43 pm

Recomendations you say? :P
Stay away from females.
Why does he* want a house?
Time & tides wait for no one. A man has to know his limitations. | "Give me control of a nation's money and I care not who makes it's laws" | — Mayer Amschel Bauer Rothschild ~

Topic Author
krafty81
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Location: San Diego, CA

Re: 25 year old saving for house down payment

Post by krafty81 » Sat Mar 23, 2019 8:16 pm

Sorry he makes 100k per year.

mortfree
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Re: 25 year old saving for house down payment

Post by mortfree » Sat Mar 23, 2019 8:23 pm

krafty81 wrote:
Fri Mar 22, 2019 4:58 pm
He has the following

5K in previous company 401k
10k in Schwab Brokerage account - all stock
4k in Schwab Roth IRA - stock

Any recommendations? Probably look to buy in two years.
So he has 10k for a house. He shouldn’t touch the 401k or Roth money.

Does he plan to have 20% down payment?

That would help to determine how much to save and how quickly he can do it.

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Wiggums
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Re: 25 year old saving for house down payment

Post by Wiggums » Sat Mar 23, 2019 8:25 pm

it will be safe in CDs or money market even if the yield in only about 3 % since you have a 2 - 3 year horizon. Don't put your hard earned money at risk of loss.

If he can put down 20%, he won’t have PMI which is a waste of money if you can avoid it.

He should also make sure that he has an emergency fund since there are s lot of expenses for the first time homeowner.

Independent George
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Re: 25 year old saving for house down payment

Post by Independent George » Sat Mar 23, 2019 9:56 pm

My recommendation is that he not think about buying a house until either (1) he is engaged and can look at houses together with his wife, or (2) is absolutely, 100% certain he knows exactly where he wants to live for the next 10+ years (which may or may not conflict with '1'). I think it's more important he build up an emergency fund first, then maximize his tax deferred accounts, and then build up his cash savings for an eventual deposit.

Topic Author
krafty81
Posts: 139
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Location: San Diego, CA

Re: 25 year old saving for house down payment

Post by krafty81 » Sun Apr 14, 2019 7:31 pm

Thanks George great points.

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