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Post by FD1000 on Mar 31, 2023 0:05:44 GMT
I thought he has already a certain amount dedicated to a house in the future.
DCA monthly is completely another question.
Use 2 funds PRWCX,VWINX. If he can't buy PRWCX, transfer him one share.
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Post by archer on Mar 31, 2023 0:13:43 GMT
I thought he has already a certain amount dedicated to a house in the future. DCA monthly is completely another question. Use 2 funds PRWCX,VWINX. If he can't buy PRWCX, transfer him one share. I'm still waiting for someone to transfer me a share of PRWCX!  |
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Post by Norbert on Mar 31, 2023 3:49:34 GMT
archerGiving your question more thought, I suggest changing the rules of the game. 1) I'm a big believer in family togetherness and cooperation in wealth creation. 2) R48 is correct that a young couple should be investing almost 100% in stocks for the long term, DCAing in every month. 3) The 10-year goal of house purchase may lead to a faulty less-than-optimal investment plan (going into cash or bonds at a young age) because of the fear of underperformance at the somewhat arbitrary 10-year mark. I suggest making a deal with your son. If he agrees to a plan of investing for the long term in stocks and sticks to that plan, offer to cover any temporary shortfall for house purchase. This approach should maximize family wealth over time. The fear of temporary downside price volatility will be removed. Furthermore, take advantage of any attractive real estate price opportunities should they appear by offering to help with the down payment at that moment. That's what my parents did for my family back in the early 1980s, when prices were in the basement and interest rates were high. We were able to buy a couple of acres in Marin County; and slowly built our house as time passed. It's one of the best investments I ever made. Some guy was anxious to sell to pay for his daughter's college, so we got a super deal. My parents made it work by offering 50% of the land price. Family wealth soared ten years later. So, I suggest being generous and flexible to encourage and enable optimal financial discipline by your son. It goes without saying that he has to have skin in the game. Maybe even gift him the down payment if it's a really good buy. Focus on the attractiveness of the deal and the potential appreciation, not the calendar. We can't accurately forecast cheap stock or real estate prices, but we can recognize them when they appear. N.
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Post by archer on Mar 31, 2023 4:39:55 GMT
Norbert, You make some good points. My and my ex wife's parent's helped us with the down payment for our first home. I expect I will likely do the same when the time comes. I want to wait until my SEP is smaller and my Roth is larger than today. I continue to make conversions. I don't want to take a substantial chunk of my SEP for tax reasons. Then there is also my daughter, and my desire to be fair. There is a balance to be found between the above and home prices becoming further out of reach. He doesn't have a lot of income. He just manages to be better at saving than spending on stuff that before you know it, disappears his money. Anyway, I like that idea of at least guaranteeing his stock portion if he is reluctant. I'll be visiting with him in a couple weeks and give him some ideas, solicited or not. :-) Where in Marin were you, if you don't mind? I'm currently in San Rafael and part time at Sea Ranch.
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Post by Norbert on Mar 31, 2023 8:32:11 GMT
Norbert , You make some good points. My and my ex wife's parent's helped us with the down payment for our first home. I expect I will likely do the same when the time comes. I want to wait until my SEP is smaller and my Roth is larger than today. I continue to make conversions. I don't want to take a substantial chunk of my SEP for tax reasons. Then there is also my daughter, and my desire to be fair. There is a balance to be found between the above and home prices becoming further out of reach. He doesn't have a lot of income. He just manages to be better at saving than spending on stuff that before you know it, disappears his money. Anyway, I like that idea of at least guaranteeing his stock portion if he is reluctant. I'll be visiting with him in a couple weeks and give him some ideas, solicited or not. :-) Where in Marin were you, if you don't mind? I'm currently in San Rafael and part time at Sea Ranch. We built on the Inverness Ridge, kept a sailboat in Sausalito. Will be in the area for three weeks in September, if you have time to meet up.
I could easily be talked into returning to Marin, which I dearly love; but can't afford the property tax hit. Plus the State could come after me too. Can't risk that.
Sea Ranch is lovely!
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Post by retiredat48 on Mar 31, 2023 14:41:31 GMT
Step up and take a seat at the bar, fishingrod ,...it's lonely up here! What are you drinking  |
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Post by retiredat48 on Mar 31, 2023 14:50:18 GMT
Nice post, Norbert. archer ,, I had planned to post this: If you had stated your son plans to buy a house in 9 years, 7 months, this would have been more "believeable." Numbers like 10 years is simply a SWAG. Like, yes in about ten years he hopes to buy a house. Well first that brings into play richardsok points that he may be divorced by then...or lost a job..etc. These are far more probable than the market tanked for a decade. Second, the ten years likely comes from being a time the money saved is enough to be used as a down payment. OK, this means investing in stock funds will likely grow better, and your son could buy a house in perhaps seven to eight years. And as a hedge, if the market/economy has tanked, there will be lower cost opportunities to buy real estate/homes available...some at deep discounts. What you do not want is to be in MM funds and CDs, and inflation rises a moderately, or a lot, and home prices go up a lot further...and banks are taking less risks, raising down payments. And your son struggles to ever buy. This is the most probable outcome for current country situation. Thus, 100% stock funds for now...DCAing. Best wishes... R48 |
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Post by archer on Mar 31, 2023 15:08:02 GMT
retiredat48, 10 years are what he threw out there in the one briefe talk I had with him on this. I guess it is far enough out to warrant a round number given the unknowns. Norbert, Thanks for the invite to meet up! I'll make a note on my calendar and send a PM when the time gets closer.
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Post by richardsok on Mar 31, 2023 15:21:52 GMT
In the end, after all my what-about-isms, I have to concur that long term dollar-cost averaging MAY offer the kid's best likelihood of success. If I had a bias, it would be toward equities that would benefit from the US dollar's long term erosion of buying power.
Of course, archie, it goes without saying we wish your boy the best of success and happiness.
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