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I won't lie, I've been following the recent volatility in the market and economic slowdown with the intent to take full advantage of it with the end result of b

I won't lie, I've been following the recent volatility in the market and economic slowdown with the intent to take full advantage of it with the end result of buying my first house. I graduated in 2013 and have lived in high (Boston) and growing (Portland, OR) CoL areas, my next move will likely be either Seattle or the Bay Area. Despite healthy savings for a down payment in a "normal" CoL area when calculating a 15-20% downpayment for homes that interest me and my partner it seems like we are on a treadmill, hustling harder and going nowhere. Rising interest rates are a concern when shopping for a mortgage, but we'll be ready to transition our funds from the market to a HYSA when the time is right. I lost ~5% percent last year but don't have any intention of drastically changing my asset allocation unless something big happens in the next 6 months.

lotsofpulp 8y ago
If you need some amount of money sometime within the next ~5 years, then parking it in a FDIC insured savings account is the most appropriate option commensurate with the amount of risk tolerable (i.e. none), in my opinion.
- ethbro 8y ago
  Why not invest in <5 year US Treasuries? Approximately same security, higher yield than savings accounts. (Asuming you're not going through the gymnastics / risk to balance across reward savings accounts)
  - lotsofpulp 8y ago
    You can, just more work. If you're saving for a smaller downpayment, it might not be worth the effort for 50 basis points.
    - charlesdm 8y ago
      Nothing you can't do in an afternoon of work if you're holding them until maturity.
    - meritt 8y ago
      More work? Simply park it in one of (yields as of Dec '18): * VMRXX - Vanguard Prime Money Market Fund, ~2.4% yield, fully taxable * VUSXX - Vanguard Treasury Money Market Fund, ~2.2% yield, no state tax * VMSXX - Vanguard Municipal Money Market Fund, ~1.6% yield, no federal tax * VCTXX - Vanguard California Municipal Money Market Fund, ~1.5% yield, no federal or California tax
      - lotsofpulp 8y ago
        I know, but I like to keep it simple and stupid for most people who aren't interested in the field. Marcus and others offer 2.25%. On a $100k downpayment, we're only talking about hundreds of dollars.
    - ethbro 8y ago
      At Fidelity at least, you can auto-roll direct buys from the Treasury. So it's pretty set and forget.
- 40acres 8y ago
  This is the big discussion right now, it definitely seems like some sort of downturn/correction is coming within the next 18 months. We'd like to buy within the next 5 years but are willing to stretch it out to a max of 7 (we've decided that no matter where we go we'll end up in a high CoL area). So for now we're keeping a chunk of our savings in the market and will keep an eye on asset allocation and continuing to re-evaluate our risk tolerance and the market.
  - lotsofpulp 8y ago
    Unless you have major insider information, the market will usually correct before you can cash out. If you have the cash available, you can jump on a good deal the second it becomes available, especially in a downturn when others are having trouble coming up with the cash. It all depends on how risk-free you want to be of course, good luck!
- bradleyjg 8y ago
  It’s too bad there aren’t any good investment vehicles that track particular residential real estate markets at least reasonably well.
- calebh 8y ago
  What about a 401k? On my Fidelity account I can choose where the money is allocated. Should I shift it into something more stable (money market fund)?
  - lotsofpulp 8y ago
    If you're young and you still have 10, 20, 30 years before retirement, then I would say be aggressive and go with some total market index funds like FSTVX. But that's because I believe the US government will always keep printing money to keep asset prices high in the long run.
whttheuuu 8y ago
Your position isn't unique. I own my home, but if the market drops I will purchase another property and rent it out. Also will probably gift my kids a downpayment so they can get in the market too. My point is, because there are a lot of people ready to jump in, I don't see a significant pullback coming
- 40acres 8y ago
  Ah good point, especially in high CoL areas as well. I know a lot of well paid millennials who are ready to jump in at the sight of first blood. We're not trying to time the market per se since we're on track to reach our target for a solid downpayment and enough reserve funds to avoid being "house poor". The market has never gone down while I've been invested so this is all new territory, we're just trying to get as much info as we can before pulling the trigger, also there is some uncertainty regarding our long term location so that has a chilling affect as well.
- cylinder 8y ago
  pullbacks happen when credit is pulled back by the financial sector (usually its regulators mandate it). credit is everything for housing.
dawhizkid 8y ago
I just opened this CIT bank 2.45% savings account (biggest nationally available one I've seen by far): https://www.doctorofcredit.com/new-leader-cit-bank-2-45-savings-account-on-balances-25000/ https://www.doctorofcredit.com/new-leader-cit-bank-2-45-savi...
jorblumesea 8y ago
The problem is, this is everyone's plan, for almost every type of investment. I am also throwing cash into a money market account instead of the market, as is everyone else. I believe that any correction will be stabilized by this kind of behavior.

lotsofpulp 8y ago

If you need some amount of money sometime within the next ~5 years, then parking it in a FDIC insured savings account is the most appropriate option commensurate with the amount of risk tolerable (i.e. none), in my opinion.

ethbro 8y ago
Why not invest in <5 year US Treasuries? Approximately same security, higher yield than savings accounts. (Asuming you're not going through the gymnastics / risk to balance across reward savings accounts)
- lotsofpulp 8y ago
  You can, just more work. If you're saving for a smaller downpayment, it might not be worth the effort for 50 basis points.
  - charlesdm 8y ago
    Nothing you can't do in an afternoon of work if you're holding them until maturity.
  - meritt 8y ago
    More work? Simply park it in one of (yields as of Dec '18): * VMRXX - Vanguard Prime Money Market Fund, ~2.4% yield, fully taxable * VUSXX - Vanguard Treasury Money Market Fund, ~2.2% yield, no state tax * VMSXX - Vanguard Municipal Money Market Fund, ~1.6% yield, no federal tax * VCTXX - Vanguard California Municipal Money Market Fund, ~1.5% yield, no federal or California tax
    - lotsofpulp 8y ago
      I know, but I like to keep it simple and stupid for most people who aren't interested in the field. Marcus and others offer 2.25%. On a $100k downpayment, we're only talking about hundreds of dollars.
  - ethbro 8y ago
    At Fidelity at least, you can auto-roll direct buys from the Treasury. So it's pretty set and forget.
40acres 8y ago
This is the big discussion right now, it definitely seems like some sort of downturn/correction is coming within the next 18 months. We'd like to buy within the next 5 years but are willing to stretch it out to a max of 7 (we've decided that no matter where we go we'll end up in a high CoL area). So for now we're keeping a chunk of our savings in the market and will keep an eye on asset allocation and continuing to re-evaluate our risk tolerance and the market.
- lotsofpulp 8y ago
  Unless you have major insider information, the market will usually correct before you can cash out. If you have the cash available, you can jump on a good deal the second it becomes available, especially in a downturn when others are having trouble coming up with the cash. It all depends on how risk-free you want to be of course, good luck!
bradleyjg 8y ago
It’s too bad there aren’t any good investment vehicles that track particular residential real estate markets at least reasonably well.
calebh 8y ago
What about a 401k? On my Fidelity account I can choose where the money is allocated. Should I shift it into something more stable (money market fund)?
- lotsofpulp 8y ago
  If you're young and you still have 10, 20, 30 years before retirement, then I would say be aggressive and go with some total market index funds like FSTVX. But that's because I believe the US government will always keep printing money to keep asset prices high in the long run.

whttheuuu 8y ago

Your position isn't unique. I own my home, but if the market drops I will purchase another property and rent it out. Also will probably gift my kids a downpayment so they can get in the market too. My point is, because there are a lot of people ready to jump in, I don't see a significant pullback coming

40acres 8y ago
Ah good point, especially in high CoL areas as well. I know a lot of well paid millennials who are ready to jump in at the sight of first blood. We're not trying to time the market per se since we're on track to reach our target for a solid downpayment and enough reserve funds to avoid being "house poor". The market has never gone down while I've been invested so this is all new territory, we're just trying to get as much info as we can before pulling the trigger, also there is some uncertainty regarding our long term location so that has a chilling affect as well.
cylinder 8y ago
pullbacks happen when credit is pulled back by the financial sector (usually its regulators mandate it). credit is everything for housing.

dawhizkid 8y ago

I just opened this CIT bank 2.45% savings account (biggest nationally available one I've seen by far): https://www.doctorofcredit.com/new-leader-cit-bank-2-45-savings-account-on-balances-25000/ https://www.doctorofcredit.com/new-leader-cit-bank-2-45-savi...

jorblumesea 8y ago

The problem is, this is everyone's plan, for almost every type of investment. I am also throwing cash into a money market account instead of the market, as is everyone else. I believe that any correction will be stabilized by this kind of behavior.