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My husband and I started saving for real estate last year (in a high yield savings account), but I think we're coming to the realization that we won't buy any new property until our youngest is close to exiting the school district in 7 years.
That's an awkward amount of time. The standard advice is not to invest money you will need within 5 years, which is fine, except, I can't exclude the possibility that we won't find a great new home toward, say, beginning of my son's junior year of high school and we just suck it up, buy a year or so early and try to rent it out until my kid finishes up high school.
I'm contemplating opening up a CD ladder, starting with a 5 year CD with everything we've saved to date. At this time next year I'll open another, a 4 year.. and repeat the process arranging it so that all CDs will expire 5 years from now. I can get 2.6% today on a 5 year, which is 1% more than my savings account.
My husband and I started saving for real estate... in 7 years.
I'm contemplating opening up a CD ladder...
That'll work well enough.
Mostly it's about doing it: Making the deposit and being done.
Then getting on with your lives and not obsessing over a possible half point of interest here or there.
Rares are going up, I would not go too far out at this point, why go 5 when you can go 2. https://www.purepoint.com/online-ban...sit/high-yield
36 monts 3%
24 months 2.75%
18 months 2.5%
12 months 2.3%
Almost not worth going longer than 18 to 24 months IMO since we know we will likely have at least two more rate increases this year alone.
I agree with a short time frame you are less looking at the rate of return but just saving as much as you can. Sometimes people make the effort to find the best interest rate and then don't end up actually saving. And by saving I mean really saving, by cutting back and reducing expenses as much as possible, and saving every single windfall you get like tax returns or monetary gifts. You have a goal so make it happen, and it will if you have the desire and discipline.
Rares are going up, I would not go too far out at this point, why go 5 when you can go 2.
[url]https://www.purepoint.com/online-banking/certificates-of-deposit/high-yield[/url]
36 monts 3%
24 months 2.75%
18 months 2.5%
12 months 2.3%
Almost not worth going longer than 18 to 24 months IMO since we know we will likely have at least two more rate increases this year alone.
Wow. I need to look at that...
Ally allows for 1 rate increase on a 2 year and 2 increases on a 4 year. I would need to check and make sure they don't allow for decreases... need to read the fine print!
I'm happy that this seems like a reasonable plan at least and I'm not being suggested something outside of CDs altogether.
I agree with a short time frame you are less looking at the rate of return but just saving as much as you can. Sometimes people make the effort to find the best interest rate and then don't end up actually saving. And by saving I mean really saving, by cutting back and reducing expenses as much as possible, and saving every single windfall you get like tax returns or monetary gifts. You have a goal so make it happen, and it will if you have the desire and discipline.
We have a set amount that we are saving each month towards a down payment. Some months we have extra savings aside from our normal contributions towards the down payment, taxable and travel. I'm more comfortable sending extras (either from monthly saving or a windfall) into our taxable instead of the down payment. If we want to have an early retirement we will need to depend on non-retirement investments until we age into other vehicles like IRAs, 401k and social security, etc...
All variables remaining constant we should have about $400k. In seven years it would be closer to $550k. That may or may not equate to a 50+% down payment. It's an expensive area, and we may or may not wish to remain in it.
We have a set amount that we are saving each month towards a down payment. Some months we have extra savings aside from our normal contributions towards the down payment, taxable and travel. I'm more comfortable sending extras (either from monthly saving or a windfall) into our taxable instead of the down payment. If we want to have an early retirement we will need to depend on non-retirement investments until we age into other vehicles like IRAs, 401k and social security, etc...
All variables remaining constant we should have about $400k. In seven years it would be closer to $550k. That may or may not equate to a 50% down payment. It's an expensive area, and we may or may not wish to remain in it.
Any reason why you want 50% down? Seems like a lot of money just losing out on earning potential.
Any reason why you want 50% down? Seems like a lot of money just losing out on earning potential.
A couple reasons I guess.
First of all, we are rather debt adverse. Keeping our expenses low makes us feel more at ease and that feeling is pretty valuable.
Secondly (and probably more pragmatic), we probably couldn't qualify for a mortgage over $500k. So if we're looking at possibly buying a water front condo in a quaint Seattle/Puget Sound neighborhood, we might very well need both $500k down payment and $500k mortgage.
If it were me, I'd probably put some of it in equities. However, I have a high tolerance for risk. For someone who is risk averse, I'd still suggest 10% in equities.
It is easy for me to say the above. It isn't my money we're talking about.
If it were me, I'd probably put some of it in equities. However, I have a high tolerance for risk. For someone who is risk averse, I'd still suggest 10% in equities.
It is easy for me to say the above. It isn't my money we're talking about.
Well... each month we buy VTSAX, about 25% of the amount that goes towards the down payment.
And then there are the monthly 401k contributions and a substantial proportion buys into equities too.
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