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
- 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.
- 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.
- 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
- 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?
- Autodesk VoPr12You 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.
- 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
- Amazon quantumeHow expensive is your current condo? Do you plan on keeping it or selling it with the new house?