How you guys balance between contributing to tax advantage accounts and your brokerage account. I'm in a fortunate position to max my tax advantage contributions but won't have enough for a regular brokerage.

Would love to buy a home someday just not sure when so I was thinking about putting some cash in a normal brokerage account.

Btw anyone here come from Reddit? Would love to see this instance grow.

[–] runawaycorvid@lemmy.world 2 points 11 months ago* (last edited 11 months ago) (1 children)

I don’t have a great answer for you, but one thing I learned from buying my first house is that you don’t have to put down as big of a down payment as you might think. My wife and I did 3.5%. We were fortunate that we made a good amount and had good credit, but we had very little in savings. We were both putting a ton toward student loans.

Although a small down payment is tough to swallow these days considering that means you’re financing more house at 7% plus.

[–] SqueakyDoors@lemmy.world 1 points 11 months ago (1 children)

Did you have to pay PMI?

[–] runawaycorvid@lemmy.world 1 points 11 months ago* (last edited 11 months ago)

Yes, but again because of our credit score and good DTI ratio, the PMI was very reasonable. Like $40/mo IIRC.

We refinanced and got rid of PMI when the housing boom happened and our equity was suddenly over 20%. That was pure luck, but anyway it’s possible that rates will go back down during the next recession.

[–] yenahmik@lemmy.world 2 points 11 months ago

Since your timeline for buying a house is "someday" I would keep maxing tax advantaged accounts. Once you have a more firm timeline (within a couple of years), I'd start funnelling my money to a down payment fund.

[–] FancyPantsFIRE@lemm.ee 2 points 11 months ago (1 children)

I haven’t consciously done much to balance it. When I was fresh out of college I couldn’t afford more than tax advantaged space and so I just did that. 15 years on I’m fortunate enough that income has made it a non-issue.

I came over from Reddit during the API dust up and never really went back, but it’s very quiet here.

[–] SqueakyDoors@lemmy.world 1 points 11 months ago (1 children)

Definitely much more quiet here. Would love to see this instance grow.

[–] yenahmik@lemmy.world 2 points 11 months ago* (last edited 11 months ago)

To be fair, there's over 2million subscribers on Reddit and maybe 250 here (edit: I see we're up to 350 now!). It will just take time to build up enough people to get more activity here.

[–] sugar_in_your_tea@sh.itjust.works 2 points 11 months ago (1 children)

Your can use your tax advantaged accounts in most places to help with the down payment. That may be better than foregoing those contributions.

[–] yenahmik@lemmy.world 1 points 11 months ago (1 children)

My spouse used a 401k loan to shore up their efund between buying our house together and selling their old house. The terms were surprisingly decent.

[–] sugar_in_your_tea@sh.itjust.works 1 points 11 months ago

Yeah, a lot of people discourage it, but my opinion is that if you'd be redirecting savings from the 401k anyway, you might as well just invest in your 401k and take the loan so you save the 401k space.

[–] thecitywelivein@lemm.ee 1 points 11 months ago

I'm in a similar phase right now. We plan on moving in 3-4 years and I'm leaning towards turning our current home into a rental. We bought it at $300k and it's now worth $650k. We are now putting money into a regular brokerage to save for the next down payment. I don't think we'll have enough saved in time so we're leaning towards lowering our tax advantage contributions until then.

[–] CherenkovBlue@iusearchlinux.fyi 2 points 11 months ago (1 children)

I'm ignoring it in terms of decision making, but any explanations for why the markets are down right now (USA)?

[–] runawaycorvid@lemmy.world 4 points 11 months ago

My amateur attempt at explaining:

High interest rates —> financial indicators continue to be strong (inflation) —> Fed may raise interest rates much higher than previously expected —> panic sell from riskier companies that may struggle with higher borrowing costs and move to cash/treasuries.

Ride it out and pick up some cheap stocks.

[–] Sniffy@sh.itjust.works 2 points 11 months ago (1 children)

All this inflation has me worried about not getting enough raise next year to cover the rising cost of groceries. Feeling anxious.

[–] yenahmik@lemmy.world 4 points 11 months ago

I haven't gotten a raise in a few years. I did one of those inflation conversion calculators and now make less than when I was hired accounting for inflation ☹️

If only I could find somewhere that doesn't seem like a step down in terms of work life balance...