Want to save for a 1.25 million $ home

Microsoft yayo
Feb 11 38 Comments

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

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TOP 38 Comments
  • LinkedIn / Engbored🐷
    You make 550K. You can save the down payment of 250K in a year.
    Feb 113
    • Microsoft yayo
      OP
      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
      Feb 11
    • LinkedIn 紅色貓咪
      SMH
      Feb 11
    • Amazon desiiii
      Why do you want to buy a condo in the first place?
      Feb 18
  • Facebook public2
    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.
    Feb 118
    • Intel DrmCmTrue
      Like this suggestion
      Feb 11
    • Microsoft iiieeegemm
      Agreed. Sell the condo and take the equity towards your down payment on your house. You will begin earning on your house the sooner you buy it.

      Being a landlord can really suck.
      Feb 11
    • Wayfair / Eng
      jwxs26

      WayfairEng

      PRE
      Microsoft
      jwxs26more
      We are closer to a peak than trough
      Feb 11
    • Microsoft iiieeegemm
      A house will appreciate faster than a condo. And there will be times you're making two mortgage payments.

      The payment to the condo would get you farther if made to the house.

      And trust me being a landlord sucks especially in a condo.
      Feb 11
    • Facebook public2
      If we are closer to a peak (no one actually knows) then it's an even better time to get rid of the condo. Condos crash the fastest, hardest, and are slowest to recover. Being a landlord is amazing but yes not on a condo (if they even allow that).
      Feb 11
    • Microsoft iiieeegemm
      They may allow a small percentage of people to rent within the condo association.

      If you're going to do it (rent the condo out), make sure you check with the association first to make sure you can.
      Feb 11
    • Microsoft yayo
      OP
      We have no rental cap in this condo and the HOA wants to keep it that way. I really don’t want to clean a 2500 sq ft house any time soon and we travel for 2 + months in the year. Selling the condo now is not an option
      Feb 12
    • Facebook public2
      You said a bunch of things and then a completely unrelated thing in that selling is not an option. Why is selling not an option? It's a good option. How does traveling or hiring a cleaner impact the decision?
      Feb 12
  • Amazon ConorMcGre
    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.
    Feb 117
    • Virgin Hyperloop One JVew62
      OP is in Seattle area
      Feb 11
    • Amazon ConorMcGre
      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.
      Feb 11
    • Salesforce hfgnntunv
      And house does not have maintenance costs, right?
      You still have to pay to those “HOA” fees, except in your house it will be called “water bill” “roof repair” etc
      Feb 12
    • Microsoft yayo
      OP
      I love my condo ! It’s in a great location, I walk to work , restaurants , movies and groceries. HOA fees are around 250$ and completely justified. They take care of water, maintenance, hazard insurance. They also pay for the snow to be shoveled out from our walkways now.
      Feb 12
    • Amazon ConorMcGre
      Let's hope the HOA fees don't magically increase annually by 15% due to "special" circumstances...
      Feb 12
    • Salesforce hfgnntunv
      There are 2 scenarios when HOA go up magically:
      a) if your board is a bunch of crooks. Which is highly unlikely since most HOA have to perform independent audit. Do happens occasionally
      b) if you live in your little world and do t pay attention to what’s going on in the building - most probable scenario. Board works for you and if building needs more money, you are well within your right to ask why. If you do you will get explanation. See! No magic
      Feb 12
    • Amazon ConorMcGre
      I see your point... But we once lived in a community that somehow decided to add a swimming pool and gym facilities and increased HOA fees. Was inconvenient for my family... But in general you're right...
      Feb 12
  • Facebook Probe
    VTSAX (and then someone will reply to my comment suggesting VOOV instead)
    Feb 117
    • Qualcomm dynasty001
      SCHX, SCHB, FXAIX
      Feb 11
    • Microsoft yayo
      OP
      Is that an insured fund ?
      Feb 11
    • Netflix / EngBlndrThngs
      No risk no reward.
      Feb 11
    • Qualcomm dynasty001
      What is an insured fund? You mean like Bonds/US treasuries? You need to he exposed to the stock market to make money. Which by definition means, you can lose your money too
      Feb 11
    • Workday / Engefficient
      If 4~5 year is the limit, I would maybe only put 30% of money in stock and keep reducing the amount every year.

      OP blind is the wrong place to ask for financial advise. You should head over to bogleheads.org if you are serious.
      Feb 12
    • Microsoft pJcW86
      Yes take financial advice with a grain of salt here. That said, 4-5 year timeline is short for the stock market so you need to be diversified in stocks, bond, savings, etc. You don't want to be stuck in a situation where you are down on the market but found the perfect home but can't get it. Do you intend to keep your place? How much is it worth right now?
      Feb 12
    • Microsoft yayo
      OP
      Thanks folks, I think I will check out bogleheads
      Feb 12
  • Autodesk VoPr12
    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.
    Feb 112
    • Salesforce hfgnntunv
      And meanwhile they should go live under the bridge, right?
      Feb 12
    • Microsoft pJcW86
      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.
      Feb 12
  • F5 Networks Op64em
    Bogleheads.org
    Feb 110
  • Salesforce hfgnntunv
    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
    Feb 121
    • Microsoft yayo
      OP
      That’s good advice , thanks !
      Feb 12
  • Amazon quantume
    How expensive is your current condo? Do you plan on keeping it or selling it with the new house?
    Feb 111
    • Microsoft yayo
      OP
      It’s about 700k$. We plan on renting it out
      Feb 11
  • New / Engmintha
    With higher returns comes higher risks. Go with CD or treasurydirect.gov
    Feb 110

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