Got into high TC roles pretty late in life, was a graduate student with debt making minimum wage for most of my 20s and got into my first six figure job at almost 27. TC progression - 150k to 310k Roth IRA : 60k 401k : 50k HYSA @ 5.4% : 70k (emergency fund and home down payment) I-bonds : 20k HSA : 8k Vested Stock : 12k I know this is peanuts for blind standards but I'm just grateful to be single and debt free. Trying to understand if I should continue to contribute to 401k and Roth for the next few years, or keep maximizing cash for house down payment. I don't have a brokerage account, perhaps I should sell RSU and diversify? 401k and Roth IRA are in index funds and Target date funds which have done just ok over the last 2 years. I plan to buy a home in the next few years as rent is exorbitantly high where I live and is only going up (~3.5k).
Max your 401k. Put it in a Roth. Put as much money as you can in S&P500 index fund. But have a plan to save cash for down payment. So like 80% in S&P500 rest in cash
Are you suggesting index fund for house down payment as well? To liquidate investments when buying house?
No I’m saying keep some of your house down payment in cash. Let’s say you wanna save another 100k for a down payment and you save 100k a year. I’d maybe put 30-40k a year in a HYSA rest in the index fund. So let’s say a crash occurs, you can still save up the down payment in 2.5 years. The index fund will definitely increase in value in the long term even if a crash occurs so you can just hold it. If market continues to go up then you can liquidate the index fund and get the house down payment a lot quicker. So you’re kind of hedging your bet. Does that make sense? Idk if I did a good job explaining my advice.
How are you adding money in Roth when your TC is $310k? It has a CGI income limit of under $150k for single individuals. Also, Roth has a 6k max limit to contribute every year. How did you add 60k in that if you started working at 25? Did your investments double in 2 years ? Something doesn’t add up here
Mega backdoor Roth, FAANG and some companies allow you to do that. You can do 66k including 401k, employer match and Mega backdoor Roth. Then you can do 6k backdoor Roth too (non tax deductible), so in total you're allowed 72k and the limit goes up every year
I always get the same suspicion. Surprising how uneducated the general public is on MBDR.
VTI and magnificent 7. You can start doing research in houses early. By the way, your NW isn’t peanut, still better than so many here.
Thanks let me look that up.
+1 not peanuts I'm 40 paid off debt, switched to tech later in life (mid 30s) I also worked lower salaried positions prior to switching to swe. Nw is around 150k after taking care of some family hardships. You're doing good and i hope folks provide the guidance you're looking for.
Thanks so much, I hope things work out for you as well
@H-E-B, do you have any concerns about aging out? I ask because I'm in my early 40s and considering switching.
I had 0 nw at 29. Have 1.5 mil at 40
You are giving me hope 🥹
The trick is you gotta leave State Farm.
Congratulations on your efforts! I wish I would have been better with my finances at your age 👍
Don’t hold so much cash. 80-20 , with 80% in the market. Then when you have enough cash, buy a home. Buy a starter home if the housing market turns in your favor and you don’t have enough cash saved and can’t liquidate, but stay invested.
Are you saying not to use the 80% of the money that’s in the market for down payment for a house?
Not the entire 80%.
It’s not peanuts even for blind.
In HCOL areas it is cheaper to rent vs buy
Might buy in some suburbs and commute, or even if I buy in the HCOL and increase TC to afford payments I'll still need liquid cash for down payment.
the american dream
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Not peanuts for blind standards. I am the epitome of peanuts for blind standards.
It's cause you work at state farm
No sh*t