Please critique my Vanguard holdings (non-retirement)

**violet80907** · 02-08-2013, 08:56 AM

It all depends on your risk tolerance. Ask yourself how you would feel 18-24 months from now if there had been another event like the 2008 financial crisis, and you lost 50% of that money?

Since you have a designated use for the money in a relatively short time period, I would think you would be better off in a bond related ETF. (https://personal.vanguard.com/us/fun...ssetclass=bond) Maybe BND (total bond market index), or BLV...

But it is a personal decision, with no "right" answer.

**feh** · 02-08-2013, 10:11 AM

Originally posted by rxtrom View Post

I am moving my family in 18-24 months and we will be buying a house. We have saved a little already but I did not want it all to sit in my savings account and earn .50% I consider myself on the riskier side and do not get upset with the market swings associated with these types of investments.

Any money you need in a couple years should not be invested in the market. You could easily have less money 18 months from now when you need it.

I realize the interest rate on your savings account stinks, but at least you know what the balance will be in the future. Buy CDs for a better return.

**bjl584** · 02-08-2013, 10:45 AM

I agree with feh.

This money os for a downpayment on a house. Don't be risky with it. Try building a CD ladder or use an online bank like Ally to keep your money. Don't put it in the market.

**rxtrom** · 02-08-2013, 11:15 AM

so just dump it back into a money market savings huh? Not exactly what I wanted to hear.....

**feh** · 02-08-2013, 11:31 AM

Originally posted by rxtrom View Post

so just dump it back into a money market savings huh? Not exactly what I wanted to hear.....

I'm sure it's not, but it's the prudent thing to do.

Look into CDs for a better interest rate.

**Gina23** · 02-08-2013, 12:23 PM

so just dump it back into a money market savings huh? Not exactly what I wanted to hear.....

Money market savings at Vanguard (assuming) are returning next to nothing, plus it is not FDIC insured. Put it in your online savings account with the .5% yield instead...

**rxtrom** · 02-08-2013, 01:47 PM

I was referring to an Ally bank or similar at near 1%

**scfr** · 02-08-2013, 05:51 PM

Agree with the others. Go for a money market acount with a better rate (you can get 1%), or a 18- or 24-month CD.

2 Year CD Rates - Compare rates on 2 year certificates of deposit.

**cascade11** · 02-08-2013, 06:06 PM

Very dumb and risky in my opinion. Money needed in 2 years for a specific goal should never ever be in the stock market, unless you are very wealthy and can risk selling your funds at a big loss when it comes time to purchasing your home. Otherwise, you could find yourself end up waiting months or years "hoping" the market comes back and then buying, and then home prices could be higher....who knows....

My recommendation is put $20k in I-Bonds (if married, $10k for each you and your wife, even kids, thus more than $20k, ) which currently pay 1.76% and are adjusted bi-annually by the government based on inflation. There is a 3m penalty for cashing out early after a year and up to 5 years, but the penalty is smaller than most bank early withdraw penalties (3m-6m and even longer) They have outperformed savings and CD's for the past few years. Recent rates were 3.06% and 2.2% last year. Rates can never be below 0% so there is no risk of losing your principal. The rest of your $$ keep in savings or buy CD's. Barclays offers online savings for 1.00% interest.

**Andrew Jackson** · 02-08-2013, 09:22 PM

One question that needs to be answered i think, is how much house do you think you will want to purchase? If you are planning on only purchasing around a $300,000 house I think you are perfectly safe leaving the money in the market. Even if the markets tank 50% you are looking at having over $60,000 in savings. Enough to put 20% down on a $300,000 house.

Now, on the other hand if your goal is to use the $100,000 as a down payment on a $500,000 house than you may want to be a little more cautious.

What are your goals in purchasing a home?

**rxtrom** · 02-09-2013, 06:57 PM

Originally posted by Andrew Jackson View Post

One question that needs to be answered i think, is how much house do you think you will want to purchase? If you are planning on only purchasing around a $300,000 house I think you are perfectly safe leaving the money in the market. Even if the markets tank 50% you are looking at having over $60,000 in savings. Enough to put 20% down on a $300,000 house.

Now, on the other hand if your goal is to use the $100,000 as a down payment on a $500,000 house than you may want to be a little more cautious.

What are your goals in purchasing a home?

Thank you all for your replies. I am already looking at more conservative/safeguarded alternatives. I will look into I-bonds.....

Andrew Jackson, We are more likely to purchase a 600-700k house by that time. Thanks.

**~bs** · 02-09-2013, 08:04 PM

Originally posted by rxtrom View Post

Thank you all for your replies. I am already looking at more conservative/safeguarded alternatives. I will look into I-bonds.....

Andrew Jackson, We are more likely to purchase a 600-700k house by that time. Thanks.

Is that affordable for you? Are you looking to make a 20% down payment? Lots of lenders are still pretty skittish nowadays about making such large loans.

**rxtrom** · 02-11-2013, 11:53 AM

Originally posted by ~bs View Post

Is that affordable for you? Are you looking to make a 20% down payment? Lots of lenders are still pretty skittish nowadays about making such large loans.

Assuming we buy something for 700k we will be putting down 28.5% with a fifteen year mtg payment taxes/utils at about 20% household monthly income - depending on property tax variables. I think that outcome falls within Dave Ramsey's criteria.

Actually some lenders give a interest rate drop to those putting down 30% or greater. 20% is the minimum these days.

Please critique my Vanguard holdings (non-retirement)