I just sold $50k worth of stock including some shares of VTI. I still have $120k left so im happy with my portfolio total for now. My question is, should I pause all investing and focus on saving up for a home or start investing a little again? Looking to buy a home end of next year hopefully.
Anyone sell stocks and index funds and pause investing to save up for home in short term?
byu/joeroganthumbhead infinancialindependence
Posted by joeroganthumbhead
8 Comments
I liquidated almost my entire portfolio to buy my house. Gradually getting back into the market now
I think your interest rate matters. If you can save more money by buying as much of the house in cash and financing less than you can on a conservative return in the market, then cash out and buy the house.
Hard to say without knowing how much of a down payment you want to have or what your savings rate is. Down payment + closing + moving + reserve for needs immediately after moving = amount to be saved. Maybe you can do a bit of both or maybe you’ll have to funnel every dollar into savings for the next 15 months.
Why did you sell some if you are thinking about buying more? that would jsut result in paying CG tax for nothing. (assumptions, because market high). Just save in cash or short bonds (depending on timeline) untill you have your target down payment + some buffer for emergency fund and move in needs; then start investing again.
Any money that you are planning to spend in the next 5 years should not be invested in stocks.
That is general advice. Kinda goes for double when the stock market has nosebleed high PEs and is hitting all time highs.
Did you sell AND transfer the 50k somewhere? What type of account are you selling from? Taxes may be due.
If the 50k is still in your brokerage account, I would buy and let it grow until you actually need the 50k. If taxes are due on the stock sale, consider incremental sell and transfer over the years so not to move your income into a higher tax bracket.
>My question is, should I pause all investing and focus on saving up for a home or start investing a little again?
Yes, I would pause investing past 401k match, HSA and Roth IRA to save for a home down payment.
Do the math.. in my case I could have gotten 7% on the stock market on 400k deposit (28k) or got 60k in rental value minus 30k in costs, plus 3% per year appreciation on 2 million after considering wear and tear (60k), and I could invest rather than amortise making the mortgage effectively interest only. So it was like 7% vs 22.5%. Said like that it was a total no brainer! With twice the deposit or twice the interest rates it would have made it no longer as viable. If it is not clear cut the, then you need to redo the math until it is, or just accept there’s not much in it.