Hoping to settle down in 5-8 years...
My current plan is to save up enough for a good down payment for a SFH in the suburbs somewhere near Seattle in around 5-8 years. I currently have around 100k saved, and I am expecting to save quite a bit in the next few years. I am clueless about finances so I was just gonna dump everything (besides half a year of emergency fund in CD ladders) into VTSAX/VTWAX. Is 5-8 years too short of an investment period to dump everything (all my savings and future ongoing savings after 401k) into those index funds? Would it be wiser to mix in safer options? I feel like I need a better plan than dump everything into index funds, but I don't know what my options even are 😣 Any advice or even learning materials would be appreciated on this subject matter.
Dumping everything into low cost index funds is a pretty damn good plan. A better plan would be to spend it on hookers and blow.
I see. I just wasn't sure what the risks are. I haven't invested much before so I don't know how badly and for how long index funds can be hit for, say during a recession.
They will be hit over the length of the recession, it can be 10 years overall flat — but longer term (30 years) you will be ok. The thing that’s great about index funds is you are matching the market,no worse no better. So don’t worry about it.
Can’t you buy a condo with that $100K today?
Not sure if I want a condo, and I also havent settled down where I wanted yet (not in Seattle atm).
5-8 years is a long period for rental but short period to throw everything in Index funds. The middle ground is use the $100k and buy a condo literally where jobs are (prime properties). This condo will appreciate in value over 5-8 years. Then don’t sell the condo when you are ready to buy SFH after 5-8 years. Instead, put the condo on rent (the renters will payoff your remaining mortgage on the condo). Refinance condo and take out equity and use it for a downpayment (if possible) for SFH. Another option is buy a 3-4 bedroom SFH now with less downpayment (10%?) and rent out other rooms. Those roommates will payoff your mortgage and you’ll be living for free!