Money Market Investing and New Home Purchasing

[Cloned4Life]

Just remember, it is only a loss on paper when the market dips. You don't lock in the loss unless you actually sell when down. If you are investing long term, hang tight!

This.

When thinking long term - invest in the stock market. Buy good companies (ensuring to allocate wisely, not owning too much of one company, and maintaining a level of diversification in line with your comfort level on risk). Keep feeding them on a recurring basis, and buy into them more when/if they dip. Don’t sell until years down the road when you actually need/want to - you’ll be amazed at how much you’ve made.

 

[BWRhasnoAC]

Congrats on your freedom.

 

[capitalcityguy]

If you aren’t planning for the next downturn then you aren’t investing in reality. I don’t like the stigma that “timing the market” has gained after the last crisis. I always tell my people to “find THEIR top, and find THEIR bottom”.

Just had a guy the other day that came across my desk, worried about when the downturn was coming, but he didn’t want to try to “time the market”. My comments were that if he found his top right now, after producing 30% returns over the past five years, he wasn’t “timing the market”. He was selling high. Was he selling at the “highest”? No one knows, but I felt like he had found his top and it was time to start another journey that he felt comfortable with, which was moving in to a nice selection of fixed and bond investments with a sprinkle of LC and MC Index funds for something he could stay engaged with and every day he could pull up his five year chart and look at the 250k in free money he made over the past five years.

Then I wrote down that when he “finds his bottom” the next time things turn down to call us back and we’ll start another journey.

Now everyone come at me.

I was only referring to short term investors. I do get a little worried when people think they can successfully go in and out of the market when referring to their long term investments. Few, if any of us, are that smart...

Missing the five best days when you’re otherwise fully invested drops your overall return by 35%! And the results only get worse the more good market days you miss. Missing the best 10 days will more than halve your long-term returns.

https://www.thesimpledollar.com/inv...best-stock-market-days-can-tank-your-returns/

 

[keepngoal]

condoms are a good investment tool to ensure your plan in the OP works.

 

[SoapyCy]

Check with FHA. You won’t believe the amount of loans they are making. Seen them on 200k houses in a town like Mason City. Need about 3-5% down it appears and with the terrible way loans and realtors are screwing with things. You don’t even need that due to the 6% and larger closing kickbacks.

What's a 6% closing kick back?

 

[SoapyCy]

I was still in vet school during the recession, so financially I've never had to endure one as the primary source of household income. Currently most of our funds are in total stock market indexes, so I'll really need to steady myself when they drop. I know it's wrong but my knee-jerk reaction is gonna be to sell at a loss.

When people talk about their allocation are they talking about retirement/401k/Roth or general brokerage accounts?

 

[Dopey]

For low risk, mostly available savings, I like CD ladders.

 

[Jacktronic]

When people talk about their allocation are they talking about retirement/401k/Roth or general brokerage accounts?

Currently we have two 401ks, two Roth IRAs, an HSA I'm using as an investment vehicle, and one taxable brokerage account. Off the top of my head they are all primarily total stock market indexes, though the brokerage acct may be a target date Vanguard fund.

 

[BCClone]

I bet you are fun at party’s. The sky falling yet?

Is party’s a bar? Never heard of that place. Unless you are using hawk grammar and mean parties.

 

[BCClone]

What's a 6% closing kick back?

You Want this house that they are asking 100k for. You have 14k in cash so 14/94 is only about 15% so you agree to pay them list price but have them pay 6k of your closing costs (which you don’t have). So the loan is 80, you write your 14k that you have and the owner gets a 94k check which is holding out the 6% of kickback. The bank then holds it for the other 6k you need for the down payment. The appraiser is supposed to deduct that but it has become so common to have them in that 3-6% that several appraisers don’t even adjust for them anymore. So you now have 20% down.

 

[Gunnerclone]

Is party’s a bar? Never heard of that place. Unless you are using hawk grammar and mean parties.

best bar ever.

https://www.instagram.com/explore/locations/274096389881737/partys-bar

 

[brianhos]

If you have vanguard already, their money market pays pretty well also.

 

[SoapyCy]

You Want this house that they are asking 100k for. You have 14k in cash so 14/94 is only about 15% so you agree to pay them list price but have them pay 6k of your closing costs (which you don’t have). So the loan is 80, you write your 14k that you have and the owner gets a 94k check which is holding out the 6% of kickback. The bank then holds it for the other 6k you need for the down payment. The appraiser is supposed to deduct that but it has become so common to have them in that 3-6% that several appraisers don’t even adjust for them anymore. So you now have 20% down.

This seems way complicated.

 

[madguy30]

This seems way complicated.

All of this stuff seems too complicated.

 

[BCClone]

This seems way complicated.

To make it simple. I sell you a house, you say hey can you charge me more and then give the money back so I can show 20% down?

 

[Sigmapolis]

When people talk about their allocation are they talking about retirement/401k/Roth or general brokerage accounts?

All the above.

Just where do you have your money -- the mixture between cash, bonds, domestic equities, foreign equities, how much is in blue chip or dividend stocks versus upside growth stocks, etc., that sort of thing. Your allocation should be based on age.

 

[cyfan21]

If you have vanguard already, their money market pays pretty well also.

Do you use them and if so whats your experience been like with them (ie APY or ROI) been?

 

[SoapyCy]

All the above.

Just where do you have your money -- the mixture between cash, bonds, domestic equities, foreign equities, how much is in blue chip or dividend stocks versus upside growth stocks, etc., that sort of thing. Your allocation should be based on age.

I know, I was mostly asking because I was getting confused about people's questions. I use a taxable brokerage account as my cushion outside of my Roth and small 401k.

The Roths are retirement date funds and my 401k is 60% total US, 35% intl, and 5% small cap.

I saved my down payment in CDs and we put 20% down. We were lucky that houses are inexpensive where we live.

 

[motorcy90]

look into first time home owners loans or rural development loans, will save some of the larger 20% down payment stuff. you could even find minimal % down home loans for some places. I was lucky to be able to use VA loan with 0 down, with a decent APR%.

 

[IowaRealEstate]

Some potentially scary advice being given here in relation to down payments, getting to 20% when you are short of it etc.
Anything involving having a set purchase price and then inflating it only to get money back has the potential to get into mortgage fraud. That is very bad stuff. Prison type stuff.

I have never seen in 15 years a buyer with 15% down be able to get to 20% because of the seller. There are limits in place on what an "interested party" can contribute. A seller can give a buyer money towards closing costs. They cannot give them money towards the down payment typically. Be careful out there!