My husband and I have a combined income of 550k$ and we currently live in a condo in downtown Bellevue. We want to save for 1.25 million $ home in the Bellevue area 4 -5 years from now. We have decided to each save a fixed amount monthly and contribute to a fund. What are the best ways to invest this fund over a 4 year time horizon to minimize risk and maximize gains ? A CD yields about 2% and I was hoping for better
VTSAX (and then someone will reply to my comment suggesting VOOV instead)
With higher returns comes higher risks. Go with CD or treasurydirect.gov
How expensive is your current condo? Do you plan on keeping it or selling it with the new house?
It’s about 700k$. We plan on renting it out
Why did you buy a condo? How much are you paying in HOA fees? No matter how you look at it, if it's not in certain parts of SF like Russian Hill or Cow Hollow, condos are generally a liability and a bad investment.
OP is in Seattle area
Even worse! Condos at 700K provide low cash on cash ROI when renting it out. Especially in Seattle's CAP rate. This was a bad deal... OP sell your condo and use the profits for the new house.
Sell the condo and buy it now? Lock in while rates are still low? In 4 to 5 years that 1.25 home could be a lot more (or maybe less). Regardless too short for investments so a high yield savings like marcus or ally is your best bet.
You should go read The White Coat investor. I’d sell your place, stick it all in a low fee index fund for a couple years to outpace inflation, while you continue to add you your down payment nest egg. Also, I would take a deep hard look on how much/why you need a 1.25 mil home. Not spending unnecessary money is the easiest way to contribute to your overall wealth.
And meanwhile they should go live under the bridge, right?
Terrible advice especially the copy and paste "invest in an index fund" especially for a market that isn't going to suddenly increase 20% anytime soon and when you need to stay relatively liquid. Even worse with the sell your appreciating asset (for now) and sticking it all in the stock market. Hint: real estate and the markets are not inversely related. This is why you don't follow financial advice on Blind.
If you want guaranteed return, take a look at your condo’s mortgage. I bet you paying few grand a month in interest. You can guarantee yourself a return equal to the interest you are paying in the mortgage. With you income you should be able to pay it off in 2-3 years. Start saving for down payment for the house after that. If you decided to use it as rental up will have nice income and no stress in case you have issues with tenant
That’s good advice , thanks !
You make 550K. You can save the down payment of 250K in a year.
We are already paying mortgage for the current condo and it isn’t cheap. We also don’t need a bigger place till 4 years down the line
SMH