Announcement

Collapse
No announcement yet.

Another house down payment question

Collapse
X
Collapse
First Prev Next Last
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Another house down payment question

    I've read through the forum and seen lots of threads regarding where to stash money for a down payment for a house, but most seem to be rather short term. I'm not looking at purchasing a house for at least 5 years, after PSLF hopefully takes care of my student loans.  Does it make no sense to put the down payment money in Vanguard Total Bond Market or Vanguard's Target Retirement? I know that the common suggestion is taking 2.5% from a savings account, but the money isn't needed in the next year. TIA for your suggestions!

  • #2
    If you're using the money within 5 years, high yield savings.

    Comment


    • #3
      You won't get direct answers because your timeline falls in a grey area. If it were me, >5 yrs I'd do equities in the form of a total stock market fund. But I got no other debt and can cashflow if the market tanked right before I needed the money. Not sure a target retirement fund would be the best option, especially for tax implications, but I guess, if you choose the appropriate target date, might limit a possible downturn.

      Comment


      • #4
        If your time frame is approximately 5 years, I’d use a high-yield savings, Vanguard MM, or on the more aggressive side (for such a short timeframe) Vanguard Wellesley Income Fund.

        Comment


        • #5
          Can you invest all the money now and then (re) save for the down payment in the next couple years?

          Comment


          • #6
            How much are you saving?
            Say 100k.
            1666 monthly for 5 years.
            Best case you get 10% returns. That is 30k in gains. But wait you have to pay taxes on those gains! So knock off 20%. You also would have make 5k at 2% in a mmf. So even under the best circumstances you are only going to be ahead 20k.
            More likely you will have lower gains or possibly negative. If is just not worth the risk when you need to obtain a particular dollar amount at a particular time.

            Comment


            • #7
              Depends how much money we're talking about and how much you think you'll be able to save in the near future. Unless it's an incredibly large sum or you're in a low paying specialty, you may just be able to cash flow it once you get a little closer to when you may buy.

              Comment


              • #8
                Yes taxable. No none of those options you picked.

                Comment


                • #9
                  If you don’t need the $$ for “at least” 5 years, that tells me you’re flexible. In that case, I’d put it in an appropriately diversified equity fund portfolio that you are prepared to liquidate if the market is up when you want to buy or keep invested until the market recovers. If you have a hard buy date of 5 years, my answer would change somewhat.

                  btw, I wouldn’t leave 100% of the funds invested for the full 5 yrs if you really hope to buy then. I’d gradually liquidate until the purchase date. I realize this is not definitive but, in this situation, I cannot be precise without having some pretty exhaustive conversations and running projections. However, I hope this helps get you at least part of the way toward making a decision.

                  And I’m really not a fan of TBM or TDFs but I’m in the minority, so take that opinion with a grain of NaCl.
                  Financial planning, investment management and CPA services for medical and high-income professionals | 270-247-6087

                  Comment

                  Working...
                  X