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All my savings went into CDs/Online Savings accounts. 4% on average over time beats -50% by a landslide. Many co-workers thought I was crazy to advocate keeping money in laddered CDs for any money needed within 10 years. (Even then my advice wasn't conservative enough as we have rolled the clock back 12 years on stocks).
man, you're one of those people i envy...many people are bleeding like crazy because of the stock market, not just their 401ks, but their personal stock accts. I'm one of those idiots
man, you're one of those people i envy...many people are bleeding like crazy because of the stock market, not just their 401ks, but their personal stock accts. I'm one of those idiots
Don't be envious. I've taken my lumps in the stock market. I got smacked hard really hard right out of college. I lost my life savings at the time when I put everything on a stock that eventually went chapter 7. That taught me that diversification was paramount. I then started saving everything in index funds. The dot com bust taught me another lesson, more expensive than the first. (A sector can take down the whole market.) I promptly went into bank accounts for anything I would want to use within a decade. (trying to just beat inflation).
Now the most recent events has me thinking even a 401k put completely in the market might not be the best idea
Thankfully these events have taught me to not follow the herd and think things through before laying up hard earned savings.
Don't be envious. I've taken my lumps in the stock market. I got smacked hard really hard right out of college. I lost my life savings at the time when I put everything on a stock that eventually went chapter 7.
That's an invaluable lesson to learn "right out of college." After all, how much could your "life savings" have been at 22?
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I promptly went into bank accounts for anything I would want to use within a decade. (trying to just beat inflation).
I'm in the same boat. Retirement funds won't be touched for 30+ years, and I'm going all-in on indexing/equities (not just U.S. though). But the rest of my stash that I might want to use within 10 years goes into conservative investments.
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Now the most recent events has me thinking even a 401k put completely in the market might not be the best idea
Just develop an age-appropriate asset allocation that shift toward a more conservative approach over time. You know the drill. I did read some analysis that there's little extra to gain in going over 80% equities, but that wouldn't have saved you much in your 401k anyway. Target retirement funds are a great hands-off way to do this if you don't have the time or the courage to rebalance at times like these..
Anyway good luck with the house. If not this one, you'll find one soon. You're one of the rare buyers out there who are truly qualified, and you're to be commended for your responsibility and diligence in saving.
This entire post is very funny. As the more I read the more my wife and I sound like the thread starter. Our jobs are stable as we are both teacher right out of college. We have over 800 credit scores no debt at all. 90 of our money is in CDs at anywhere for 5 to 3%. We are in the market for a house in the 400 to 400k and are way above the 20% needed. The thing is I refuse to jump in to the market. I am sitting on this for another year at least. I just dont see a point in buying right now. The tax savings would be nice but I dont believe they would offset the potential of falling houses prices.
The one thing you should also consider, given that you feel your job is not that secure, is if you lose your job, would you have to relocate? It sounds like everything else is in order. But if a year or two down the road you lose your job and can't find one in this area, what then? Happened to a relative of mine - they also were very responsible, bought right before the housing downturn and his company was bought out - he lost his job. Found a new one but he had to relocate and couldn't sell his house.
Just something to think about - wish you all the best.
Circa 2003 pricing probably isn't as low as it will go before this mess is over (and you probably know this), but it's not too bad. The real key is that you have the 20% down and you have several years of living expenses (including mortgage expenses) saved up. You're rock solid from a financial perspective, so you have to look at this question as:
What premium is it worth to me to pull the trigger and buy this house now so that we'll know where we'll be for the next X years?
There's nothing wrong with paying for that premium, so long as you do it knowingly and willingly, and are financially solid. You sound like you're well-informed, educated about the housing market, and willing and able to pay a premium to get into a house now.
I don't think you're making a mistake.
I would just caution you to draw a line in the sand and not increase your price very much beyond your current offer. Putting an offer on a house and starting to mentally picture you and your family in that house can mess with your reasoning, and before you know it you might be counter-offering for more than you would if you were to do some cold, hard calculations.
It's normal to have a moment of doubt when making an offer like this, but it's also normal to get caught up in negotiations and offer more than you should. Just be aware of both of those.
I hope you get the house at that price; but be prepared to for a counter-offer that's too high, and be prepared to walk away. There are plenty of fish in the sea.
Good luck!
I'm so proud of you, Lusitan. This was a positive post about buying a home...
See, you can do it!!
The thing is I refuse to jump in to the market. I am sitting on this for another year at least. I just dont see a point in buying right now. The tax savings would be nice but I dont believe they would offset the potential of falling houses prices.
Yes, I've heard it described as responsible would-be buyers are staying safely on the sideline until the government gives up on its price manipulation tactics. Which is really all they're doing at this point - trying to artificially prop up home prices. The smart money knows that in the end these efforts will fail, so buying a house now with a manipulated price involves a paying a heavy premium. Some that have the means and the desire to pay that premium can do so (e.g. the OP) but for most people, it's probably a good idea to wait until prices reach sustainable levels.
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