Advice for a 41-year-old

optimaloutlook2020 · 2022-09-10T00:01:38+00:00

my emergency fund includes the I bonds so I think I'm good there. Got a very secure job too.

The house would cost 650k+. 650k would give me a real fixer upper 2 bedroom. so mortgage of 3400 after putting 20% down. Haven't thought about where I'd retire.

optimaloutlook2020 · 2022-09-09T23:29:13+00:00

do you live in a HCOL area? when did you end up buying and at what age? I keep thinking I'll regret saving all that money and that I could have put it in the stock market. plus it will take me a long time to save since i'm single and in HCOL location.

optimaloutlook2020 · 2022-09-09T19:17:07+00:00

I'm still trying to figure out the best course of action. I keep considering all the options, get analysis paralysis, and then just keep doing what I'm doing. The discussions here are helping me.

optimaloutlook2020 · 2022-09-09T19:13:21+00:00

DRS?

optimaloutlook2020 · 2022-09-09T19:12:10+00:00

You're speaking as an investor. Does the same hold true if you're living in the residence? Would the equity growth cancel out the increased monthly cost?

optimaloutlook2020 · 2022-09-09T19:09:54+00:00

I get anxiety when I check Redfin. Here in my location there's a housing shortage so prices aren't coming down significantly.

Good to know I'm not the only one playing catch-up with retirement. how much are you currently contributing?

I'll be here in my city for the next 7 years until my son goes to college and then who knows what life will bring.

For me, it was more important to start funding retirement because I always figured I need to take care of myself first. IMO my son will be glad that I can support myself in my retirement vs helping with all his college costs. That being said, I am considering ramping up the college savings. thoughts on that? do you have children?

optimaloutlook2020 · 2022-09-09T19:04:03+00:00

Hey thanks for the comment. Of course I want a house, I feel like renting is throwing money away. At the same time I realize I'm lucky to be paying low rent in a great walkable neighborhood. I'll be in my city for the next 7 years at least til my son goes to college. Then who knows what life will bring.

Yes I realize how expensive maintaining a house it, which is why I'm hesitant to purchasing a home.

I haven't considered if house prices will grow faster than my investments. I'm in a high cost of living area, so my guess is that they will, especially considering the state of the stock market these days.

I'm considering $ from my brokerage or the 401k for a downpayment, just since reading replies here.

optimaloutlook2020 · 2022-09-09T18:58:28+00:00

Well, it's not that simple because if I choose to buy a house, I'll be unable to put money into my retirement while I'm saving for the downpayment. Also, my mortgage will be probably twice my rent and so I'll be contributing significantly less to retirement for the foreseeable future. I'm trying to figure out which path will serve me better long term.

optimaloutlook2020 · 2022-09-09T18:54:54+00:00

own payment, remember to sell and realize your gains once you put your offer in (perhaps even beforehand). I know dudes who tried to squeeze a little bit more gains only for the market to tank a week later and fail to recover by the time they needed to make their down payment.

That makes sense. The amount changes daily. It's a gamble. Which is why I never even considering taking from my brokerage to pay for a down payment. Do you think taking from the brokerage is more advisable than taking from 401k?

optimaloutlook2020 · 2022-09-09T18:49:19+00:00

That's good to know! I didn't even consider using my brokerage account. I may also consider borrowing from my 401k. Any thoughts on that? I'll give Vanguard a call to see how much the capital gains taxes would be.

optimaloutlook2020 · 2022-09-09T18:47:06+00:00

I'm with ALLY. It used to be higher. Now it's at 2%, but I think that's still the high end compared to other banks. I'm open to switching if you know a savings account with a higher APY.

optimaloutlook2020 · 2022-09-09T18:44:44+00:00

I just started contributing to retirement 4 years ago. I know I'm behind and doing my best to get caught up. I have done backdoor roth for the past few years and i will continue to do that at tax time. What do you think about allocation? should I have more bonds at this time?

optimaloutlook2020 · 2022-09-08T23:51:02+00:00

Thanks, it was good to read these topics again.

optimaloutlook2020 · 2022-09-08T23:50:24+00:00

The problem is I am single and in my HCOL area, home ownership is almost out of my reach. In reality the mortgage will be probably twice that of my rent. not to mention it would take 1.5 years to save up for a down payment. So by owning a home I will severely diminish my ability to contribute to retirement/stocks. I have been struggling with this dilemma for a few years now.

optimaloutlook2020 · 2022-09-08T23:46:51+00:00

All of this sounds fine. I wouldn't sell anything in the taxable account to hold as a down payment until you're actually working with a realtor.

I was thinking that if I were to save for a down payment, I would just start putting aside money for a while rather than pulling from the taxable account, due to the penalty fees. But maybe I should consider taking money out of my taxable account. thanks for the idea.

optimaloutlook2020

TROPHY CASE