Where Should I Park My Savings For A House?

[Music] michael's in houston texas hey michael how are you i'm doing just fine thanks so much for taking my call guys sure what's up i got two things for you um number one i wanted to at least provide a testimonial for some of the advice that you're giving on here my wife turned me on to your show about four years ago and um in four years we are completely debt free we've paid our house off 36. thank you and um our net worth now is about 1.2 million wow so way to go baby steps millionaire i'm proud of you thank you thank you it took a lot of work it took a lot of sacrifices but uh yeah we are completely in the green touchdown man incredible way to go hero thank you thank you so what this kind of leads me to um it's kind of a two-part question number one as far as our retirement goes we have about 730 000 at this point um with an investment company and that's already been invested and our next goal is that we're still living in the house that we bought together it was our first house and um we're just starting to feel a little bit cramped so we're looking for an upgrade good so while i'm saving up enough money for the house and let's say that i need to save up about another um and fifty to two hundred thousand dollars my question for you is this should i feel as i'm saving up that much money because it's a lot should i feel the pressure to continue putting that towards my 730 000 in retirement and then the other question is that if this is going to take me about two to three years i'm a little bit unsure in how to invest it and i know that you can't call the stock market i know that you can't time it but my biggest fear is that i invested in something and then you're two or three years from now um i have less than what i put into it yeah so uh the 750 000 is in retirement accounts right yes like if you take it out you get a penalty right yes so you can't put it in that if you want to use it to buy a house no no the uh the idea was that i wanted to take that money and start to invest it somewhere else and then open up like a secondary are you saying you're going to stop contributing to that retirement account to save up for this house that was kind of my question is that while i'm saving up for the house should i continue to still be putting money in my retirement accounts or do i have your blessing to say you're in a really good place right now um you should put it towards the house you're a millionaire you don't need our blessing for anything but we would tell you as a matter of course just to continue to put 15 aside and above that save for your upgrade that shouldn't make or break your upgrade to lose out on that 15 exactly that you're investing so i would yeah on anything above that 15 i would be putting away and if it's two to three years that i don't i wouldn't be putting it in mutual funds that's a little bit short of a time horizon um but when we saved up for our house if it's three to five years we worked with smartvestor pro we invested that and it grew it grew a little bit which really helped us with our down payment situation so one to three years is a little bit tricky on the market so here's the here's the here's your here's your probability so you can split it up do some of each if you want in terms of whether you put it in money market or whether you put in mutual funds if you leave a mutual fund a general market mutual fund good growth stock mutual funds across the four types we talk about alone for five years 96 of the time it will make money if you leave it alone three years sixty seven percent of the time it'll make money one out of three times it'll lose money okay but it won't lose a lot i mean it might lose it might you know you might put in a hundred thousand dollars it might be worth 95 you know or something so it's not like you're gonna lose all your house money but you probably won't you won't make any money that's appreciable and so that's why i said you might play the market on some of it and some of it you might not play the market but even by playing the market in air quotes i'm going to be in some very conservative mutual funds and money markets or i'm going to be all in money markets if i just don't want to worry about it at all but if i really want to take a little bit of risk you might lose a few thousand dollars if you're only leaving it alone three years yeah and with a high yield savings account i mean you're looking at a half percent so it's not the sexiest thing but it is guaranteed and so you have that um as far versus losing money in the market in a short period of time exactly and the way i look at it is you know typical mutual fund year in and year out averages 10 to 12 okay a decent decent track record mutual fund all right and so it's got to do really sucky to get all the way down to a half a percent yeah and so i i personally am willing to play that but but i don't want you to lose a little bit of money and then go oh i lost all my house money you didn't lose like you instead of having a hundred thousand you got 95 you know but you might have had 120 you know too that's the other side of that that's your spread of risk it's not all or nothing this is not a roulette wheel so you're not playing you know you're not playing bitcoin you're not playing beanie babies and you're not playing gold here this is a a low risk scenario so your range of risk is really small really small so either way you go but if you're gonna get down under three years i start to get nervous and i just start to park it in money markets if i'm in your situation that's what i would do

Channel: Ramsey Everyday Millionaires

Views: 268,797

Keywords:

Id: 6lJ7vgOS0Ho

Length: 5min 27sec (327 seconds)

Published: Wed Dec 01 2021