I'm 24, have no debt and have $20,000 in my bank account. I am thinking about purchasing a home within the next couple of years. The only investments I'm current doing are single stocks (low value usually around 1k per stock.. still learning). I've opened a high interest savings account (4%) and am considering holding all of my money there for the time being. Is there some other type of investment that I should be looking at instead? Perhaps RRSPs? From what I understand, I can withdraw up to $20,000 from RRSPs tax free, if the money is used towards the down payment of a house. I like the fact that the high interest savings account doesn't lock me in, but I can't help but wonder if there is something else that may be better for my situation.
What is the best way to save for a home?
- Thread starter jfall
- Start date
JRock
Platinum Member
- Apr 19, 2001
- 2,742
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I am 24 and just bought a house about a month ago. Open an account with Vanguard or Fidelity and put 10k in there. Put the other 1/2 in high yeild savings.
http://www.vanguard.com
http://www.fidelity.com
http://www.vanguard.com
http://www.fidelity.com
I'm a Vanguard fanboy (I :heart: VFINX) but investing for just 2-3 years I'd park all of the money at INGDirect.com or similar instead.
Long term, stock index mutual funds or ETFs are the best low-risk investment you can make, and if you were saying you'll buy in 5 years it would be fine. 2 years is a bit short to risk stocks compared to the guaranteed short-term returns of high-interest savings.
Be sure to put money into a 401k and Roth IRA though, for retirement. $8K now in VFINX will give you another $85-$130K to live on at age 60. Tax-free if it's in your Roth.
Long term, stock index mutual funds or ETFs are the best low-risk investment you can make, and if you were saying you'll buy in 5 years it would be fine. 2 years is a bit short to risk stocks compared to the guaranteed short-term returns of high-interest savings.
Be sure to put money into a 401k and Roth IRA though, for retirement. $8K now in VFINX will give you another $85-$130K to live on at age 60. Tax-free if it's in your Roth.
yeah... ing direct has a 12mo CD that's at 5.1. hey!!!!!!!!!!! lemme refer you, OP! i'll make 10 bucks and you'll make 25! gimme your email address so i can make some chump change.... i'm poor.
also, fannie mae first time homebuyers program
I think he's Canadian... the home buyers program could be a good idea because you will get the immediate tax benefit. You do need to pay the money back though, over 11 years (or something like that).
I hope I can catch you! I'm 24 and have abot $3k in the bank, but I'm about to blow it all.
Bank robbery seems the best way to achieve home ownership.
Oh man, pontifex. You're posts are always self-centered and more importantly, self-deprecating. I love it. Cheer the hell up already.
:beer:
If this is serious, get a grip. I'm about to be 33, have less than $1k in savings (INGDirect), still renting, and have been out of school for less than 2 years. Make the appropriate changes you can as you're able.
i just try to save it up. My fiancee has about 6k in a CD at 7.1% i think it is. Needless to say, it will stay that rate and we are probably going to double or triple the amount in there come this fall. It is hard to save money when you are in an apartment and want to live a little by buying new things. Loan payments (car, college, etc.) really kill the flow of things. Nevertheless, just keep saving you rpennies. You can get your first house with zero down, but i would put some down if you can afford to do it. Our plan is 20-30% down in 2-3 years. I am 24 by the way.
Yeah, my wife and I are paying on our student loans which really hurts the savings plus I'm not willing to completely give up all luxuries. We just started saving 10% of our net pay. Next year I hope to be able to start Roths for both of us while still saving for a house (and probably a new (to us) car for her).
The market right now will cause you heartburn if you don't know what you doing. Just put into CDs (currently at 5%) like I did. Hopefully we will save enough for 20% down in 2-3 years time. BTW, 7.1% CD is very good, what bank offers that?
My suggestion, to start is to put half your savings in a high yield savings (ING Orange, for example) and the other half in a local or online CD. Also, begin a set direct deposit amunt to a seperate savings account (the high yield account would be logical).
If you're actively saving for the house, with a timeframe in mind, look at your budget. If you're willing and comfortable with it, cut out some of the "luxury" or unneccesary expenditures you make on a regular basis. They tend to add up faster than most others.
And continue doing the other investing you're doing. Try not to tap them for a down payment, unless you've got retirement assets elsewhere. This is especially true for those 401(k)s and IRAs.
If you're actively saving for the house, with a timeframe in mind, look at your budget. If you're willing and comfortable with it, cut out some of the "luxury" or unneccesary expenditures you make on a regular basis. They tend to add up faster than most others.
And continue doing the other investing you're doing. Try not to tap them for a down payment, unless you've got retirement assets elsewhere. This is especially true for those 401(k)s and IRAs.
meltdown75
Lifer
- Nov 17, 2004
- 37,548
- 7
- 81
Back in July 2003 we (wife & I) put down 10% on our home which amounted to a few grand less than what you have saved up... frankly, it's more house than we need right now but there is room for expansion when the time is right 
I guess my point is... what are you waiting for?
Owning a home (well, paying a mortgage instead of rent) is great!
plus, it gives me an excuse to be a geeky hermit
I guess my point is... what are you waiting for?
Owning a home (well, paying a mortgage instead of rent) is great!
plus, it gives me an excuse to be a geeky hermit
HSBC online savings is 6% now. If you don't know what to do or concern yourself with investing, I can't think of a better option.
Originally posted by: meltdown75
plus, it gives me an excuse to be a geeky hermit
A germit? :laugh:
Scarpozzi
Lifer
- Jun 13, 2000
- 26,392
- 1,780
- 126
Honestly, check your area for real estate market trends. In my area, houses are still increasing in price at the rate of about 10-20k every 3-4 years. I doubt you can earn that by investing that little.
I bought my first house when I was 24 and ended up renting a room to another guy in college. I charged $350 a month for the room and it ended up making a big difference in my mortgage payment. If you can at least save up enough to put 10-20% down on your house it will help you get a better rate. Just 20% or more can help you save the mortgage insurance fees...
I bought my first house when I was 24 and ended up renting a room to another guy in college. I charged $350 a month for the room and it ended up making a big difference in my mortgage payment. If you can at least save up enough to put 10-20% down on your house it will help you get a better rate. Just 20% or more can help you save the mortgage insurance fees...
I got my house when I was 24. Just go for it, not much point in waiting. You can always look for roommates if you think money will be tight.
murphy55d
Lifer
- Dec 26, 2000
- 11,542
- 5
- 81
My fiance and I(we're both 24) just signed the papers on a house yesterday. 6.1 interest rate, 30 years. We put $500 down, our payment with taxes, PMI and insurance and all that is like $400. Houses in this area are pretty reasonable, we're not a big city or anything. It's a modest sized house(4br 1 bath) with a small yard, the total amount we financed was almost 49,000. Depending on where you live, you just have to wait for the right house and deal to come along. We looked at a lot of crappy houses that cost $75,000, and ended up buying this one which was 1000x nicer than anything we looked at for 20,000 less. In 5-10 years, we'll have most, if not all our debt paid back(student loans, car payments, etc), and we'll be able to sell this, and move to a larger house.
it's all about having a good real estate agent, and waiting it out.
it's all about having a good real estate agent, and waiting it out.
dainthomas
Lifer
- Dec 7, 2004
- 14,936
- 3,915
- 136
Since prices are going up faster than most people can save, it's certainly not the best strategy.
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