Board 8 > Invest in stocks, or try to get a condo?

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Zachnorn
03/29/21 8:22:10 AM
#1:


I'm 31. I have about 60k, a bit less than 10k already in stocks and cash to buy stocks (I could liquidate it if needed) and 50k in a savings account earning 0.35%. LA is becoming more expensive, but according to lenders, I can afford a condo now and may not next year. I have an 800 credit score, worked for this employer for almost 6 years, so I'm good for that. If I buy a one bedroom condo, my payment is looking like $1,500-1,800+ (rent would be $1,600-$2,300+)

But where I am now, my mom wants me to stay and is having me pay $450 for rent. While I will eventually inherit the house, the land it's on (it's a house on leased land) costs $1,300 + 7% increase annually. The home needs repair, I don't have much personal space (just a bedroom), and even before the pandemic I couldn't have visitors. My mom is not willing to move unless it's for a house, and she won't get on the mortgage for one, so I can only do a condo unless I get a 2-3 hour commute or quit and move out of state. According to mortgage lenders, I can get the cheaper one bedroom condos, two bedrooms if I'm lucky. I'm asexual/aromantic so the typical financial advice of "get married" doesn't really work for me, and I don't want a roommate; might as well stay here if I have to get one.

Or instead, I can just keep throwing money into stocks and stay here. I'd stagger how much I put in to do cost averaging, probably 1k per week until I only have my emergency fund remaining (this would take 18-24 months). Thing is, the rate of return for stocks is usually 8% and housing values here go up by 10-12%. So it's a now or never thing for being a homeowner, and it's possible I may not be able to do it already.

What do you think? Stocks, a condo, or should I just give up on LA and move out of state?

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KingButz
03/29/21 8:37:09 AM
#2:


What about the condo fee? Or is it a really tiny condo that the payment comes out to that little?

Edit: sorry for the edit but whenever you inherit that mobile home you should just sell it asap. What a racket
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Eddv
03/29/21 8:40:21 AM
#3:


Always wear a condom

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masterplum
03/29/21 8:45:38 AM
#4:


My biggest concern is location. With remote work, more and more people are leaving high cost of living areas.

I would make sure you really want to live in LA for the next 15 years.

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neonreaper
03/29/21 8:57:43 AM
#5:


Zachnorn posted...
LA is becoming more expensive, but according to lenders, I can afford a condo now and may not next year.

I guess my initial reaction is that if this is truly the case, and you're able to catch a dip on the market and your equity will be a really nice story, I'd go for it.

There's a lot more to it, for sure. Are the condos nice? neighbors? location?

If you moved out of state, what does that look like?

I guess I would look to get the condo and if it isn't what you wanted, it sounds like you can sell in a year and not really be in bad shape.

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Zachnorn
03/29/21 9:02:55 AM
#6:


KingButz posted...
What about the condo fee? Or is it a really tiny condo that the payment comes out to that little?

Edit: sorry for the edit but whenever you inherit that mobile home you should just sell it asap. What a racket
That includes the condo fee. These are one or two bedroom, one bath. About 550-900 square feet depending on the area.

I definitely want to get rid of this place someday. It's such a scam.

masterplum posted...
My biggest concern is location. With remote work, more and more people are leaving high cost of living areas.

I would make sure you really want to live in LA for the next 15 years.
I work remotely but it's a temporary position for now. If it becomes permanent, I'm probably moving to a cheaper area. But I do work for the Los Angeles Unified School District and my permanent job (which I'll roll back to if I don't become permanent here) involves visiting school sites and doing work that's impossible to do remotely.

I like LA, though I'm annoyed with the cost of living and the traffic.

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Zachnorn
03/29/21 9:13:05 AM
#7:


neonreaper posted...
I guess my initial reaction is that if this is truly the case, and you're able to catch a dip on the market and your equity will be a really nice story, I'd go for it.

There's a lot more to it, for sure. Are the condos nice? neighbors? location?

If you moved out of state, what does that look like?

I guess I would look to get the condo and if it isn't what you wanted, it sounds like you can sell in a year and not really be in bad shape.
The condos are okay. I've been in some that look nice and some that are dumps. None of them are luxury condos, but there's some that are nice. Not sure on the neighbors. With my job, location doesn't matter that much as long as I'm in or near school district boundaries and since the district is very large, I'm okay.

If I move out of state, I'd probably be in Las Vegas or Phoenix. I'd have to quit my job unless I'm offered remote work permanently. I'd have to give up my secure union job with a pension. That's a whole other thing too because this job doesn't require a degree, which I have, so I might have potential to get a better job if I risk it (I've had housing instability as a kid and job instability as an adult so I'm uneasy about risking it).

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masterplum
03/29/21 9:36:22 AM
#8:


Zachnorn posted...
.

I work remotely but it's a temporary position for now. If it becomes permanent, I'm probably moving to a cheaper area.

100% do not buy

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MZero
03/29/21 9:48:56 AM
#9:


Don't move to Phoenix

staying at home sounds terrible, but if you can bear it, it's probably the better move until you have some clarity on your job/whether you're moving

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CaptainOfCrush
03/29/21 10:18:40 AM
#10:


Based on the numbers you've provided, I'm guessing these condos are going for roughly 300k? If so, are you sure you can afford that on 60k income? Seems like that mortgage might stretch you a little thin. The security of your "permanent" job sounds great, and I feel bad giving you pessimistic advice, but after looking into the LA housing market for a while...

Move out of LA. My brother has been trying to buy a house there for years (he can't move because his job keeps him there) and is always priced out. I advised him to save his money over the last 12 months, anticipating a Covid real estate dip, and of course, prices spike. Small homes in Highland Park that were 800k a couple years ago are now running 1m+. The damn city - or at least the hotspots near downtown - is seemingly impervious to market dips because of the unending torrent of foreign buyers, young DINKs using mommy and daddy money, and people sitting on piles of money making cash offers (if you look at this housing market long enough, you start to live in a warped reality where you assume *everyone* has a million dollars in free cash they can just offload into a home).

It may seem like guaranteed equity since, as you said, prices have just continued to climb, but the cost per sq ft is so ridiculous compared to almost anywhere else in the country. Also, if a realtor actually told you that you'd be able to afford anything on 60k, I suspect they might be selling you a bill of goods.

Also regarding your mom's trailer: yes, sell that as soon as it's yours. I've seen the industry from the inside (my first boss was a co-owner of several mobile home parks) and it's one of the most ridiculous rackets I've ever seen. It's amazing for the land owners and woeful for the people who actually own/rent the homes. It's so advantageous for the land owner that I used to think about saving up and trying to partner with said boss on a park, but I've given that up because I know it would make me feel like a gross slumlord.

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Zachnorn
03/29/21 10:23:08 AM
#11:


masterplum posted...
100% do not buy
One idea I have is that I could rent out my condo if I move to a cheaper area. Then at least I'm not paying for it, my tenant is if it's occupied.

MZero posted...
Don't move to Phoenix

staying at home sounds terrible, but if you can bear it, it's probably the better move until you have some clarity on your job/whether you're moving
Why not move to Phoenix?

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Bartzyx
03/29/21 10:23:41 AM
#12:


Because Phoenix is literal hell

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masterplum
03/29/21 10:31:19 AM
#13:


Long distance landlording is not what you want to do. Source: My spouse and I have a combined 3 houses. Even though they are all within 30 minutes of us driving over to fix a lock or evict someone is a total pain in the ass. Cant imagine trying to do it from hours away

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Bartzyx
03/29/21 10:38:00 AM
#14:


Well in that case you would hire a property manager.

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azuarc
03/29/21 11:18:11 AM
#15:


My reaction is go for it if you decide that getting out is that important to you. Otherwise, 100% stay.

I lived with my parents until 29 because I didn't want to be a proverbial 30-year-old in their parent's basement. (I did not live in the basement.) I had two friends looking for a roommate, though, and my share of the rent wasn't going to be too bad. Plus I was getting a really nice-sized room. Like, really nice. And it wasn't far away. We lasted together for 5 years before I had to make other arrangements.

In your situation, though, I don't know if I'd have been able to justify. I don't live in the cheapest part of the country, but it's peanuts compared to where you are. I also had no real change to my commute. All that changed was that I didn't have Mom making dinner and doing my laundry. Well, and I had to pay a bunch of rent, whereas living at home was free.

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banananor
03/29/21 11:58:56 AM
#16:


If you don't have any friction with your mom, I'd probably stay. Aromance is a financial blessing.

from a purely financial perspective, I would avoid the condo unless you are confident you'll be able to flip it at an insane rate.

Make sure to factor in condo maintenance fees, property repair costs, and other bullshit when doing the math. i have friends with condos and those things add up to another set of rent.

To fairly compare to stocks (and more strategically, a good index fund) you should take all the money you would have spent on the mortgage, fees, repairs, etc and dump them into the stock as well

$1300 per year is a reasonable property tax rate. The 7% annual increase is bullshit though, so you will have to move eventually.

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swirIdude
03/29/21 12:54:59 PM
#17:


Build up your emergency fund first. 3-6 months worth of expenses should be in there.

Does your job offer a 401k or similar investment plan? If so, put as much money into that as you can afford to. Use the money to buy index funds and/or ETFs. If you have extra money after that, you can do a different type of investment plan (which one would depend on what your financial goals are).

$450 for rent is amazing, especially in Los Angeles. Stay there as long as you can, unless it becomes too unbearable to live there. You can take advantage of all the money you're saving to pump up your retirement and investments.

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ZeldaTPLink
03/29/21 1:13:58 PM
#19:


Man, I'll never get used to hearing about Americans charging rent from their children. It's just too alien for me. Where I live people stay with their families because they like their families, not because it makes them money.

I'm 29 and living with my parents, I don't intend to leave unless I get married or have to go work in a different city (which has happened before, but then I returned). There's nothing bad about it, every day together me and my family can treasure is priceless.
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Bartzyx
03/29/21 1:22:48 PM
#20:


It's not about making them money. In many cases these are working-class parents who need help from their children to make ends meet. I don't think Zach's mom is getting rich off of him living with her.

If your parents are well-off in the US, they probably are not charging their kids rent.

There's also the cultural difference where children are not expected to support their parents in retirement here. So it's a trade-off in a way.

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red sox 777
03/29/21 1:28:38 PM
#21:


I would not invest in property in California at this time. If it becomes less affordable in a year or two because the interest rates go up, that is going to affect everyone else too - and that tends to put downward pressure on the price. So you'd have a low interest rate locked in, but if you want to leave the area, you might not turn a profit on the sale.

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foolm0r0n
03/29/21 1:34:35 PM
#22:


I just bought a house that's technically a condo. I think it's a good investment but it really has to be in the right market. All the markets are insanely inflated and hard to buy in right now, but LA is going to be one of the worst buyers' markets in the entire country, plus so many people are fleeing the city that the future returns are not as attractive. For example I heard San Diego is really good due to all the LA exiles going there.

But in general, yes invest in stocks by default. It's 8-11% per year, despite massive economic depression, and shows no indication of changing. Not sure why you have 50k in savings. You should have 3 months worth in liquid emergency cash at most. (Stocks are highly liquid anyway so it can even be 1-2 months)

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foolm0r0n
03/29/21 1:35:51 PM
#23:


Oh and of course one of the main benefits of buying a house is that you can live in it, and it's an upgrade from your previous housing. Doesn't seem like a podunk 1 bedroom condo in LA would be an upgrade.

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Zachnorn
03/29/21 1:43:50 PM
#24:


CaptainOfCrush posted...
Based on the numbers you've provided, I'm guessing these condos are going for roughly 300k? If so, are you sure you can afford that on 60k income? Seems like that mortgage might stretch you a little thin.
Yeah, 250-300k. If I can get something cheaper, I will. It would definitely stretch me thin though. My logic is that I'd have to pay something like that for the rent once I inherit this house anyway and that just goes to the landlord. A mortgage would hurt, but at least I'd keep some of the money I put in.

CaptainOfCrush posted...
Move out of LA. My brother has been trying to buy a house there for years (he can't move because his job keeps him there) and is always priced out. I advised him to save his money over the last 12 months, anticipating a Covid real estate dip, and of course, prices spike. Small homes in Highland Park that were 800k a couple years ago are now running 1m+. The damn city - or at least the hotspots near downtown - is seemingly impervious to market dips because of the unending torrent of foreign buyers, young DINKs using mommy and daddy money, and people sitting on piles of money making cash offers (if you look at this housing market long enough, you start to live in a warped reality where you assume *everyone* has a million dollars in free cash they can just offload into a home).
In all honesty, my plan last year was to spend my summer looking for jobs and visiting other cities. COVID put a stop to that, and then I suddenly had a doubling (and now tripling) of savings which gave me hope for LA. But damn, it's a struggle to actually find anything despite my finances and job history being good enough to buy a house in most parts of the country. LA is so disheartening and I'm shocked it hasn't crashed yet. I guess because of the investors buying it all and renting for ridiculous prices.

CaptainOfCrush posted...
It may seem like guaranteed equity since, as you said, prices have just continued to climb, but the cost per sq ft is so ridiculous compared to almost anywhere else in the country. Also, if a realtor actually told you that you'd be able to afford anything on 60k, I suspect they might be selling you a bill of goods.
The price of a whole house in some areas of the Midwest cost as much as a down payment for a condo in LA, it's insane.

CaptainOfCrush posted...
Also regarding your mom's trailer: yes, sell that as soon as it's yours. I've seen the industry from the inside (my first boss was a co-owner of several mobile home parks) and it's one of the most ridiculous rackets I've ever seen. It's amazing for the land owners and woeful for the people who actually own/rent the homes. It's so advantageous for the land owner that I used to think about saving up and trying to partner with said boss on a park, but I've given that up because I know it would make me feel like a gross slumlord.
I'm glad you didn't get into that industry. I've dealt with the owners/reps/managers here and they're all scum. I absolutely despise Frank Rolfe. I don't think he has anything to do with my park, but he's a scumbag that turned mobile homes from a good alternative to traditional housing to a money trap.

Bartzyx posted...
Because Phoenix is literal hell
Certainly felt like it when I went in the summer one time! So does Vegas though.

masterplum posted...
Long distance landlording is not what you want to do. Source: My spouse and I have a combined 3 houses. Even though they are all within 30 minutes of us driving over to fix a lock or evict someone is a total pain in the ass. Cant imagine trying to do it from hours away
Oh I'd definitely hire a property manager and hope I'd make a profit still.

azuarc posted...
In your situation, though, I don't know if I'd have been able to justify. I don't live in the cheapest part of the country, but it's peanuts compared to where you are. I also had no real change to my commute. All that changed was that I didn't have Mom making dinner and doing my laundry. Well, and I had to pay a bunch of rent, whereas living at home was free.
Honestly, the best part of staying at home is that my mom wants to cook for me and such. For a time, she wasn't home much because he job had her all over the country and I gained weight from eating out and eating frozen food so much. She was happy her cooking made me lose weight. I've lived on my own before (temporary job 400 miles away), but still, she doesn't seem to think I'm capable of it. I don't feel like I'm 31, but I do get homemade food and cheap rent, so I guess that's okay.

When I moved before, she was very sad and I think she missed doing some of the mom stuff. We're also pretty close because she's a single mom and I'm her only child.

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Zachnorn
03/29/21 2:02:53 PM
#25:




banananor posted...
If you don't have any friction with your mom, I'd probably stay. Aromance is a financial blessing.
While we are still close, there's been some friction lately because I've also been spending time hanging out with my online friends and because we don't see eye-to-eye on things like housing. We've had a few arguments about leaving this house. I've also gotten annoyed about certain statements regarding my life such as "apparently the car insurance would have been cheaper if you got a degree in information technology instead of business." But overall, we have a good relationship.

banananor posted...
Make sure to factor in condo maintenance fees, property repair costs, and other bullshit when doing the math. i have friends with condos and those things add up to another set of rent.
Good to know. Some of these HOA fees are ridiculous. $600/month for JUST the HOA, not even mortgage or taxes? I might as well rent.

banananor posted...
$1300 per year is a reasonable property tax rate. The 7% annual increase is bullshit though, so you will have to move eventually.
$1,300 per month, unfortunately. If it were per year, I'd have no problem with it.

swirIdude posted...
Does your job offer a 401k or similar investment plan?
I have a pension that does investments. I have an option for a 403b and 457b with no match so I'm not sure why I'd do it except for minor tax benefits, especially since I have both a pension and Social Security. I have a few brokerage accounts. I'm considering opening an IRA.

swirIdude posted...
$450 for rent is amazing, especially in Los Angeles. Stay there as long as you can, unless it becomes too unbearable to live there. You can take advantage of all the money you're saving to pump up your retirement and investments.
One thing I'm thinking of is putting my money into this TD Ameritrade account (or maybe another account if I ever decide to play with margin) and have it earn money. Then cash out as needed for big purchases, like when I do decide to buy a home.

ZeldaTPLink posted...
Man, I'll never get used to hearing about Americans charging rent from their children. It's just too alien for me. Where I live people stay with their families because they like their families, not because it makes them money.
We used to be financially codependent. If I weren't paying rent, she wouldn't have been able to make the rent payment. But this changed recently because she got Social Security income coming in, which is way more than the $450 I pay.

red sox 777 posted...
I would not invest in property in California at this time. If it becomes less affordable in a year or two because the interest rates go up, that is going to affect everyone else too - and that tends to put downward pressure on the price. So you'd have a low interest rate locked in, but if you want to leave the area, you might not turn a profit on the sale.
I didn't really consider that part, thanks for bringing that to my attention.

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Zachnorn
03/29/21 2:02:56 PM
#26:


foolm0r0n posted...
I just bought a house that's technically a condo. I think it's a good investment but it really has to be in the right market. All the markets are insanely inflated and hard to buy in right now, but LA is going to be one of the worst buyers' markets in the entire country, plus so many people are fleeing the city that the future returns are not as attractive. For example I heard San Diego is really good due to all the LA exiles going there.
I really hope that the housing market just stops growing. There's no way it's sustainable at this point.

foolm0r0n posted...
But in general, yes invest in stocks by default. It's 8-11% per year, despite massive economic depression, and shows no indication of changing. Not sure why you have 50k in savings. You should have 3 months worth in liquid emergency cash at most. (Stocks are highly liquid anyway so it can even be 1-2 months)
Story time: My goal was originally to have 20k in emergency savings (my expenses are low, but my mom's job wasn't stable so I needed to have savings for both of us), and right as I hit that in October 2019, someone hit me. The accident messed up my back and I was recovering and doing physical therapy, not knowing whether I'd make a full recovery, until around March 2020. Then the pandemic happened and my mom lost her job. She is starting a new one and now also has Social Security. Meanwhile, I got my student loans forebearanced, I stopped eating out, I got a lot of overtime, got summer work, went on no vacation, my car got paid off, just lots of stuff. I decided to go look for a home and I didn't have the W2 income showing yet so I had a hard time with getting, but I do now and could try again.

If I honestly didn't believe that I could buy a home and had I known how easy and free that investing in stocks is (I wanted to before but I didn't want to pay $7.95/trade when I could only put $50 or $100 at a time), I wouldn't have kept the money idle. Now it's a matter of what to do with the money that makes the most sense financially.

foolm0r0n posted...
Oh and of course one of the main benefits of buying a house is that you can live in it, and it's an upgrade from your previous housing. Doesn't seem like a podunk 1 bedroom condo in LA would be an upgrade.
It kinda seems more like a sidegrade. I'd have my own space completely and that's important because I barely have any room for my stuff here.

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Bartzyx
03/29/21 2:08:55 PM
#27:


Stocks are liquid, but are not risk-free. Having 3-6 months emergency cash is a good idea, especially if you are single. It's to protect you if you lose your job.

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masterplum
03/29/21 2:10:48 PM
#28:


Property manager for one condo is not worth it.

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Zachnorn
03/29/21 2:25:18 PM
#29:


Okay, so let's say I don't get a condo - I either wait and see about getting a place or I decide to just stay here paying cheap rent. What's the best way to invest about $50,000 that remains uninvested?

Do I do it in chunks (like 1k per week for 1-2 years until I'm down to 10-20k for my emergency fund) to do cost averaging, or throw it all in at once? Do I throw it all or mostly into ETFs like SPY and VOO? Is it really better to open a 403b or 457 when there is no employer match and I have a pension (I'm vested and guaranteed to get at least a small one now) anyway?

Years ago, I was also thinking of opening an IRA just to get taxes lowered. Good idea if I already have a pension account?

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masterplum
03/29/21 2:28:43 PM
#30:


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red sox 777
03/29/21 2:29:23 PM
#31:


Theoretically if you have no sense of the direction of the market other than that it goes up in the long run it's better to throw it in all at once. That said, I've come around to dollar cost averaging as being psychologically much easier to handle.

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masterplum
03/29/21 2:30:13 PM
#32:


IRA isnt what you want to do if you are planning on using the money before retirement. I would just throw it in an index fund for now

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Bartzyx
03/29/21 2:30:22 PM
#33:


If you do not intend to use the money before retirement age, then always use a tax-advantaged account. You can only put in $6000 into an IRA, but you could dump 19.5k into your employer-provided account.

There are penalties associated with early withdrawal from a traditional IRA, and your 403b might not allow early withdrawals at all. You will want to check the plan document to make sure. A Roth IRA is after-tax so has the most flexibilityyou can take out your contributions at any time if you need to.

As far as lump investing vs cost averaging, it all depends on your risk tolerance. Cost averaging is much safer, but on average your returns will be lower than if you just invest all your money immediately.

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Zachnorn
03/29/21 3:07:56 PM
#34:


masterplum posted...
Throw it all in SCHD
Now those are some good-looking returns based on this!

https://www.schwabassetmanagement.com/products/schd

red sox 777 posted...
Theoretically if you have no sense of the direction of the market other than that it goes up in the long run it's better to throw it in all at once. That said, I've come around to dollar cost averaging as being psychologically much easier to handle.
That's my thing right now. I've been so broke that I couldn't afford a $5 college textbook and I was homeless at one point (with significant money, but not enough to rent/own according to lenders/landlords so my mom and I stayed with family/friends for a few months when I was a kid until we got this place). I'm looking at my TD Ameritrade account right now and it bugs me that I'm down $71 today and down $335 since I started. Like, I studied business (information and operations management, not finance) and I know stocks go up and down, but uncertainty scares me. That's how I ended up with so much cash, I guess.

masterplum posted...
IRA isnt what you want to do if you are planning on using the money before retirement. I would just throw it in an index fund for now
Considering doing that. Is it a good idea to have a bunch of different index funds as a means of diversification or just focus on a few? I hear of people putting money in SPY and nothing else.

Bartzyx posted...
If you do not intend to use the money before retirement age, then always use a tax-advantaged account. You can only put in $6000 into an IRA, but you could dump 19.5k into your employer-provided account.

There are penalties associated with early withdrawal from a traditional IRA, and your 403b might not allow early withdrawals at all. You will want to check the plan document to make sure. A Roth IRA is after-tax so has the most flexibilityyou can take out your contributions at any time if you need to.

As far as lump investing vs cost averaging, it all depends on your risk tolerance. Cost averaging is much safer, but on average your returns will be lower than if you just invest all your money immediately.
How worth it is it to lock away funds for retirement? In a way, I like the flexibility and knowing that I could just take money out if I wanted to, but I don't know how much I'm really hurting myself in taxes that way.

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foolm0r0n
03/30/21 2:38:04 AM
#35:


Throw in all your cash into an index stock. Then you can DCA that amount gradually into individual stocks that you're interested in (if you want to play that game, which is not great tbh).

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foolm0r0n
03/30/21 2:40:11 AM
#36:


Zachnorn posted...
I really hope that the housing market just stops growing. There's no way it's sustainable at this point.
It's not sustainable but it will keep growing, or at worst plateau for a bit. That's the definition of our keynesian economy. Even when there's a mega crash like in 2020 or 2008 or 2000, it bounces back in a year and continues growing.

That's why you need to get into an index stock, so you can ride the wave. It's an absurd market but you can't fight it.

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Zachnorn
03/30/21 7:40:30 AM
#37:


foolm0r0n posted...
Throw in all your cash into an index stock. Then you can DCA that amount gradually into individual stocks that you're interested in (if you want to play that game, which is not great tbh).
Yeah, I feel like I'm going to deemphasize my individual stocks. I like playing with them, but it's more of a hobby than a serious investing strategy.

The main reason I'm thinking about doing DCA even with index funds is because I've lost money on index funds. My current losers (QQQ, QQQJ, SFYX, SPY) are down $95 from what I put into them. I feel the sting from those losses (and I'm holding) but it would be worse if it were a grand or more. Think it's a bad strategy to go for DCA on index funds for someone feeling bearish on the market over the next few months?

foolm0r0n posted...
It's not sustainable but it will keep growing, or at worst plateau for a bit. That's the definition of our keynesian economy. Even when there's a mega crash like in 2020 or 2008 or 2000, it bounces back in a year and continues growing.

That's why you need to get into an index stock, so you can ride the wave. It's an absurd market but you can't fight it.
True. I want more of a slowdown in growth, I guess. It hurts to get priced out of the metro area you see as home. Where you try cheaper neighborhoods you never considered and have barely been to, and you did the things they say to do (go to college, keep a job for a few years, save lots of cash, get a high credit score) and still can't buy a home without making your finances tight.

I'm just hoping the California exodus drives prices down or slows growth while my finances improve. I'm keeping other states in mind in the meantime. I've even considered buying a cheap condo in Vegas while rates are low and the California exodus hasn't created a Portland, OR or Denver there, in case I were to move there this year and rent it out if I don't.

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Seanchan
03/30/21 8:47:21 AM
#38:


The good thing about dollar cost averaging is that you're automatically having the money move every...week/two weeks/month/whatever. You don't have to think about it at all, it just becomes your new normal.

You need to stop looking at your index funds so often. They're "invest and forget".

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Zachnorn
03/30/21 8:52:09 AM
#39:


I have to look into a way of investing in ETFs automatically. I believe Robinhood has a feature and I know TD Ameritrade must as well. Probably better than my strategy of dumping some cash into my account and buying stocks that look good to me and adding to positions that I see potential in.

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Colegreen_c12
03/30/21 9:23:27 AM
#40:


imo open up a Roth IRA and put in 6k for last year immediately and then 6k this year over the year.

You can take out initial contribution any time (Like when you go to buy a house) and the gains will be tax free.

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Zachnorn
03/30/21 9:44:45 AM
#41:


I'm strongly considering that, thanks. Which kinds of stocks are best in a Roth IRA? I'm considering going in with dividend ETFs (my favorite right now is DIVO) but I'm not sure that's the best move.

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Colegreen_c12
03/30/21 9:47:34 AM
#42:


So iras and the like are the best place to make short term gains in (short term holds, selling options, dividends, etc) as you don't have to worry about the higher tax rate so a dividend etf is a good choice for it if you want dividend stocks somewhere.

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Zachnorn
03/30/21 10:01:59 AM
#43:


Sounds really good. I dismissed IRAs a few years ago because I didn't want my money locked up until retirement and my credit union only offers 0.15-1% on IRAs. I honestly had no idea that IRAs could be used in investing stocks (I thought that was a 401k/403b thing) and that it's not necessarily locked until retirement. I thought it was more of a savings account.

Probably going to drop 6k into one and buy short term gainers. Turn it into a secondary housing fund if I need that cash and keep the returns for retirement.

I wish I knew all this and had the money sooner.

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Seanchan
03/30/21 12:14:46 PM
#44:


Just to be clear, with a Roth you can only take out the PRINCIPAL (i.e. the money you invested) without penalty. Any gains on that money you remove before retirement would suffer a penalty.

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Zachnorn
03/30/21 12:22:31 PM
#45:


Oh yeah, I understand that part. I'm cool with not getting any gains, it's locking away thousands that I can't access if I want/need to that bothers me. I barely get any interest with my money in savings anyway, might as well have some in an IRA if I can take it out if I need to and still have something saved.

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SwiftyDC
03/30/21 1:31:25 PM
#46:


If anything, buy a house not a condo.

Get out of LA.

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Zachnorn
03/30/21 1:48:09 PM
#47:


Any particular reason to get a house over a condo?

I mean, my preference was a house too but I've spent time learning about the pros and cons of houses and condos so I always like to hear reasons for it. My biggest reason to get a condo right now is purely cost, because yeah, I'm not a fan of sharing walls with neighbors. Less maintenance is nice though.

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Seanchan
03/30/21 1:58:32 PM
#48:


Others might not agree, but my ethos is that any money I put into retirement accounts, Roth or otherwise, is not to be touched until retirement. The only exception being if I would literally die without using that money, meaning that a down payment doesn't count as life or death.

SwiftyDC posted...
If anything, buy a house not a condo.

Get out of LA.

I've continued to rent in a high price market for exactly this reason.

I could afford a condo but the fees are ridiculous; like $300 to as much as $1000 a month. Why would I want to spend $2000/month on a mortgage, then add condo fees and property taxes on top of that, when I could just spend $1800/month, continue to rent and have no stress whatsoever if something breaks. I'd think about a house but they're simply too expensive without going into the outer 'burbs, which I don't view as a viable option at the moment.

But if my choice were between a condo and a house, and I could comfortably stretch the budget for the house, it's an easy choice. A house is going to retain value better, give more privacy, and you probably don't end up spending much more on maintenance once condo fees are taken into account (*unresearched opinion that may be completely wrong).

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SwiftyDC
03/30/21 2:08:04 PM
#49:


Ive bought and sold a house due to being in the military and moving around a lot. Ive made more money selling a house than I would have saving up money in the time I spent at that location. Right now the market is pretty crazy and if you were selling people would be paying 50k over your asking price.

You can also rent out rooms to ease the monthly payments.

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Zachnorn
03/30/21 2:21:03 PM
#50:


Seanchan posted...
Others might not agree, but my ethos is that any money I put into retirement accounts, Roth or otherwise, is not to be touched until retirement. The only exception being if I would literally die without using that money, meaning that a down payment doesn't count as life or death.
Fair enough. For me, I'm vested in a pension and that's one thing I won't touch unless I'm completely desperate.

Seanchan posted...
I could afford a condo but the fees are ridiculous; like $300 to as much as $1000 a month. Why would I want to spend $2000/month on a mortgage, then add condo fees and property taxes on top of that, when I could just spend $1800/month, continue to rent and have no stress whatsoever if something breaks. I'd think about a house but they're simply too expensive without going into the outer 'burbs, which I don't view as a viable option at the moment.
It's insane too because of how cheap they are in other states. You still have an HOA fee, but they're closer to $150-250 and the unit itself costs 100-200k. That sounds about right for most people, not some of the nonsense in LA. I just saw one listed for 220k (1 bed, 1 bath, about 600 sqft), but the HOA is over $600.

But absolutely, houses are a better long term investment if you're comfortable with having a lot of money in it. I was confident that I wanted only a house, but the cost of it deterred me and just having a place I own is something appealing to me at this point, just to escape from the predatory landlords around the LA area.

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Zachnorn
03/30/21 2:22:42 PM
#51:


SwiftyDC posted...
Ive bought and sold a house due to being in the military and moving around a lot. Ive made more money selling a house than I would have saving up money in the time I spent at that location. Right now the market is pretty crazy and if you were selling people would be paying 50k over your asking price.

You can also rent out rooms to ease the monthly payments.

SwiftyDC posted...
Ive bought and sold a house due to being in the military and moving around a lot. Ive made more money selling a house than I would have saving up money in the time I spent at that location. Right now the market is pretty crazy and if you were selling people would be paying 50k over your asking price.

You can also rent out rooms to ease the monthly payments.
Good point. I've heard that condos generally appreciate more slowly and fall in price faster than houses. I'm not seeing too much movement in LA condos, though they're getting past what I can get loaned to me.

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