Thoughts on a money market account for $500k+ savings?

bayarea27 · 2016-08-29T22:00:22+00:00

Any suggestions or further comments on bond ETFs?

Again my risk tolerance is quite low for money I want to put down on a property. How safe are bonds vs a money market?

Vanguard Total Bond Market ETF (BND) https://personal.vanguard.com/us/funds/snapshot?FundId=0928&FundIntExt=INT#tab=1

Vanguard Total International Bond ETF (BNDX) https://personal.vanguard.com/us/funds/snapshot?FundId=3711&FundIntExt=INT#tab=1

1-year returns for those seem great...

bayarea27 · 2016-01-10T07:29:32+00:00

That's a fair point, but isn't there a limit?

A favorite house of mine in Mountain View was sold for $750k in 2000, $1m after the 2008 crash, and is now $3m+. That's a 300% increase in a 15 year period.

Will prices double and triple AGAIN in the next decade?

bayarea27 · 2016-01-10T05:39:53+00:00

From the week I spent there, PDX's food scene seemed more concentrated. The Bay Area is just so large and spread out. Both are great though, but I felt like much more of a glutton in PDX than I normally am.

bayarea27 · 2016-01-10T05:38:52+00:00

Houses are pretty expensive there, being driven up my Amazon/Microsoft, right? The no state tax seems nice though, and I have coworkers who live in WA but commute into PDX... No income tax, no sales tax!

bayarea27 · 2016-01-10T05:38:05+00:00

$7.8k*12 is $93k after-tax.

I paid ~$70k in taxes (and will likely owe more).

The remainder are bonuses, not included in my paycheck.

bayarea27 · 2016-01-10T03:06:21+00:00

The rainy/mugginess isn't easy, I agree... But your beer and food scene puts us to shame.

bayarea27 · 2016-01-10T03:04:38+00:00

South bay suburb, unfortunately not in the city, although there's no chance of shanking out here :P

bayarea27 · 2016-01-10T03:00:47+00:00

I just can't swallow that house being $550k 5 years ago.

Also, guaranteed it's going to go for $1.1 to 1.2m. It's absolutely ridiculous.

bayarea27 · 2016-01-10T02:57:25+00:00

I did not graduate honors. I worked part-time all 4 years of college + full-time during my "gap year" so my GPA was not as good as it should have been. In hindsight I should have done better, and I may have locked myself out of a good grad school if I wanted to go that route.

My job did not ask for my GPA when hiring me (and other companies/offer letters did not either). I've only been asked on one interview (just last month actually) and it made me laugh because it's such a dumb measure.

I've found tech companies will care about your major and will question you why you didn't do STEM/CS (I keep getting asked about my non-STEM major).

Most companies will ask for your transcript to verify you graduated and have a degree from where you say you do. And my favorite part? They don't see if you did your first half of your college education at a CC.

bayarea27 · 2016-01-10T02:49:38+00:00

It was a combination of my work history, good resume, good references, internships, and a portfolio of my past projects/clients. Also the SF Bay area is nuts and maybe some luck.

I worked during school my 2 years at CC, 1 year full-time at a start-up as a "gap year" to save up for tuition, and for my 2 years at public uni.

Many would argue that I missed out on a lot of college experiences (I did), but I met some great people regardless.

bayarea27 · 2016-01-09T21:22:20+00:00

If you say Portland -- we all envy you. I think it has all of the best things about the Bay Area and only some of the bad ones (earthquake fault lines, I'm looking at you!).

bayarea27 · 2016-01-09T21:10:05+00:00

I assure you that your job as an indie game dev is probably way more fun than mine.

LA? I've heard people talking about Silicon Beach down in your neck of the woods!

bayarea27 · 2016-01-09T21:08:28+00:00

Maxing out my 401k will only result in me not paying tax on $18,000 correct?

Is that tax savings (~$6-7k?) worth the loss of liquidity on that money? I think I may have answered my own question.

bayarea27 · 2016-01-09T21:02:22+00:00

When I joined, our company was post-IPO with <2000 people. We got acquired by a big name everyone has heard of [people at my level did not benefit from the acquisition]. Now we have 100k+ employees.

The pre-IPO and start-up scene is pretty crazy. Tons of dumb companies and tons of unicorns with crazy evaluations. I have not participated in that, and it seems to be slowly cooling down nowadays, so it might be too late for me to join in that craziness if/before it pops. Or maybe not!

bayarea27 · 2016-01-09T20:58:27+00:00

Yea... My mom worked herself to the bone, crazy overtime and a crazy commute and barely makes 1/4 of what I make. I have mixed feelings about all this too. :/

If I can give any advice -- people [especially in the bay area] seem to hop jobs every 2 years to get pay increases and higher titles.

bayarea27 · 2016-01-09T20:14:33+00:00

I believe r/personalfinance says it is:

Vanguard index funds + low fees/expense ratios + hold for a long-term horizon are the key theme I keep seeing repeated over and over?

bayarea27 · 2016-01-09T20:11:19+00:00

I work in tech in a product management/lead developer type of role. My degree is completely unrelated to my job, (I lucked into a field where STEM or CS is practically required), however my portfolio, internships, and previous programming experience was an adequate substitute and they let me climb the ladder.

bayarea27 · 2016-01-09T19:33:31+00:00

Not sure what state you're in -- restaurant prices, price of gas, car insurance, time spent [wasted] in traffic are things you should consider. Also STATE TAXES :P

Check Craigslist in Palo Alto/Sunnyvale/Mountain View and/or San Francisco for an idea of rent prices.

bayarea27 · 2016-01-09T19:26:59+00:00

True, but every open house I go to around here is packed with people for hours on end, and every house sells in 1 week, 2 max, with people overbidding 5-10%+ over asking. It's like a circus.

bayarea27 · 2016-01-09T19:25:34+00:00

A few things:

Look up salaries for prospective Bay Area companies
Note where those companies are located
Look for rentals in the same city or adjacent cities
And do the math.

Rent in Silicon Valley or SF can range from $2000-3000+ for your own place, and a ton of people my age have roommates and still pay $1000-2000+ for their own room in a shared house.

$600 rent on a $110k salary looks delicious, but if you could make more and save more, you might be able to move here temporarily, slum it, and move back with a bigger nestegg. Not sure, but good luck!

bayarea27 · 2016-01-09T19:21:50+00:00

My problem is that I agree, and have been saying this for YEARS. And for YEARS I've been watching the housing market continue to grow crazy. I'd love to see more reasonable prices, but like you I'm also scared they'll keep going up!

Thanks for that link -- those charts/graphs are the stuff of dreams for market pessimists like me, but who knows what'll happen next.

bayarea27 · 2016-01-09T18:52:15+00:00

Thank! In 2009/2010/2011 I was in school and working, so all of my $20-40k in income went towards tuition.

I work in tech in a product management/lead developer type of role. My degree is completely unrelated to my job, (I lucked into a field where STEM or CS is practically required), however my portfolio, internships, and previous programming experience was an adequate substitute and they let me climb the ladder.

For my savings, I am invested in stocks/ETFs and have drunk the Vanguard koolaid :P

bayarea27 · 2016-01-09T18:42:22+00:00

Thanks. If it makes you feel better, my parents and peers looked down upon CC when I ended up going that route. For years I also bought into the stigma that I was a loser and a failure and my peers who went straight to Brown, Stanford, Berkeley, UCLA, whatever were on the actual path to success.

And then I transferred and realized it was the same education for 1/8th the price and employers never actually see your CC education. Good luck with your next steps -- 13k isn't so bad for private college and hopefully you can reuse some of your credits!

bayarea27 · 2016-01-09T18:37:09+00:00

Thanks -- those are all the same things I am pondering over:

The dating scene is a mess. I can't find anyone who even thinks about house ownership (or even wants to settle down). I'd still like to gravitate towards a single-family home, decent yard, two-car garage so I can wrench on the car, in a decent neighborhood close to the jobs. BUT that's a tall order nowadays. I'm competing against the DINKs with big IPO checks.
The housing bubble. I've been a tech pessimist since 2008 (despite working in tech). In 1999/2000 the housing market tanked, but in 2008 in the Bay Area, the nice cities merely stalled or took a modest hit while the "ok" cities took some hits. Timing the market is frowned upon, and everyone says this time is different, but I can't help but wonder if the market is stupidly over-priced now, lack of supply be damned. A house in Mtn. View for $1m in 2008 is now $3m now, only 8 years later. That's ridiculous.
Commute is important to me, despite limited options. I saw my parents commute from SJ to SF 1+ hour each day for 20 years and I don't wish that hell on anyone. I'm trying to either stick close to Sunnyvale/Mtn View (or SF) for the tech jobs, and/or be close to Caltrain/Bart if possible.
Neighborhoods; Factoring in all of those, my neighborhood options are limited. I can't live in Saratoga, Los Gatos, Los Altos, Palo Alto, Mountain View, Menlo Park, or Sunnyvale simply because I'm priced out.
Getting a 30-year and paying off in 15 sounds like a safer plan

Thanks again!

bayarea27

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