So when I sell the house, what do I do with the equity? (pay, rent)
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Okay, so I'm more and more convinced I need to sell my house and rent for 2 years, then reevaluate where to live.
Lets say I clear about $60K in equity from the house. At that point I will be debt free. I have a brokerage account at Ameriprise, Roth and Traditional IRAs at Fidelity, and an annuity at Fidelity. Also have a small 401K and a small state pension.
I would like to max out my Roth IRA for 2015 and 2016 because I have not made any contributions in the past 2 years (I have been contributing to my pension) That will be $11000. I can withdraw penalty free for health care expenses, education expenses, or $10,000 towards a home purchase.
Where do I put that six months of income emergency fund? ($10,800) Just stick it in a money market?
And then what do I do with the remaining $38,200? I want it to work for me, but also be accessible should I decide to buy another home. Or if I need to buy a car. (My faithful subaru is 10 years old/130,000 miles)
Location: Chapel Hill, NC, formerly NoVA and Phila
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Quote:
Originally Posted by Stagemomma
Okay, so I'm more and more convinced I need to sell my house and rent for 2 years, then reevaluate where to live.
Lets say I clear about $60K in equity from the house. At that point I will be debt free. I have a brokerage account at Ameriprise, Roth and Traditional IRAs at Fidelity, and an annuity at Fidelity. Also have a small 401K and a small state pension.
I would like to max out my Roth IRA for 2015 and 2016 because I have not made any contributions in the past 2 years (I have been contributing to my pension) That will be $11000. I can withdraw penalty free for health care expenses, education expenses, or $10,000 towards a home purchase.
Where do I put that six months of income emergency fund? ($10,800) Just stick it in a money market?
And then what do I do with the remaining $38,200? I want it to work for me, but also be accessible should I decide to buy another home. Or if I need to buy a car. (My faithful subaru is 10 years old/130,000 miles)
Ideas?
You can withdraw your CONTRIBUTIONS tax-free and penalty-free from a ROTH IRA for any reason and at any time. However, if you need that money for retirement, then you need to think of it as money for retirement, not money for you to do whatever you want with. But having it in a Roth does allow more flexibility should you absolutely need it.
You can put your emergency fund in a money market. If you are a member of State Employees Credit Union (SECU) in NC, then their money market pays 1% which is more than most.
With the other money, if you want to save it to possibly buy a home in two years or to buy a car in less than five years, then you really don't want it to go down in value. Figure out how much you think you would need for either (or both!) of those goals. Realistically, if you need it in less than 5 years, you shouldn't "invest" it. If you think you can put off buying a house beyond 5 years, and only need $20K for a new car in 3 years, then take the remaining of the the $38K and put it in a balanced mutual fund. Vanguard has some good ones - like Wellesley (60% bonds; 40% stock) or Welington (40% bonds; 60% stock). Or if you want to stick with Fidelity, they have a Balanced fund.
Before you do anything, I would really evaluate whether moving out to rent a home is the best step for you. You don't want to find yourself in the situation where the rent is going up so fast that it's more than the mortgage you were paying.
Location: Chapel Hill, NC, formerly NoVA and Phila
9,775 posts, read 15,775,291 times
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Quote:
Originally Posted by stan4
Well. First you'll pay capital gains tax.
There are no capital gains taxes when selling a residence that you have lived in for at least 2 of the last five years as long as your profit is under $250K for a single or $500K for a couple.
If you are pretty sure you will want that 38.2k within a few years for a down payment, then don't tie it up in investments. Just get the best rate that you can on an FDIC insured account.
MySavings Direct is paying 1.1% on savings accounts right now.
There are no capital gains taxes when selling a residence that you have lived in for at least 2 of the last five years as long as your profit is under $250K for a single or $500K for a couple.
I would just put the $10k in a money market account and use it as an emergency fund.
If you don't think you'll need much of it, you can also take 1/2 of it and put it into money market and the other half and put it into a 1 or 3 year CD. However, 1 year CDs are pretty much the same interest as savings accounts these days...
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