Unique Situation - Need Advice

**creditcardfree** · 03-14-2010, 12:07 PM

You could look into a high yield checking account that might pay more interest. Or CD's.

I would only put this money in a mutual fund if you knew for certain that it would be more than 5 years. And it sounds like you don't know. So, I'd play it safe.

**kork13** · 03-14-2010, 12:22 PM

I agree with CCF... Given the potentially short timeline of you needing this money, I would maintain it (or at least most of it) outside the markets.

When are you planning to actually start building? I'm not sure how long it takes to build a home, but I'm guessing it's at least a year or so... Perhaps you could actually plan to start building within the next year or two, then it will be built and ready for you once you actually need it to move into. And until then, you could even rent it out and make some money from it.

**cards66** · 03-14-2010, 12:55 PM

I am not looking to actually build the house currently. I don't think it would make sense to incur a mortgage at this time even though they are so low now. i don't think my wife would appreciate building her dream home and letting someone else live in it first either. ha ha.

I think my best options are money markets, CD's and interest checking accounts. Even though rates are so low I think this is my best option so I don't lose my down payment. It is just a crap shoot for me without a certain time line to invest.

**mom-from-missouri** · 03-14-2010, 08:56 PM

My cousin was in a similar situation several years back--stayed with his grandma to keep her out of a nursing home. They paid no rent or utilities and had their land paid off. In addition, my aunt paid them around $1000 a month (his wife had given up her part time job and this was to make up for that). It was cheaper for my aunt than a nursing home.

They built their basement foundation only. Then about 6 months later finished it off as a basement house and rented it out, bringing in around $1200 a month. Several years later, after my aunt passed away, they moved the renters out and moved into the basement while they built the upstairs.

When it was done, they had never had a mortgage - having built it with cash as they had it.

Now they live upstairs and divided the basement with a temp wall, giving them several rooms downstairs and are again renting the other portion bring in about $800 a month. They intend to keep this arrangement for awhile as his job requires overnight travel, and that gives her the security of someone else being there at night.

They have never had high paying jobs, but live below their means. Never have they had a car payment or a house payment. Always cash and they buy high quality items and take good care of them so that they last--very smart money wise.

**RAYT721** · 03-15-2010, 05:27 AM

Check bankrate.com to find a vehicle paying more interest than you currently have. Investing isn't a bad idea but only invest for a long-term strategy like retirement and for that you should consider a 401K and/or IRA depending on your situation. It never has to be all or nothing with what you do with your money. Market market checking for some, higher rate ratings for some, CD for some, and even risking a little with independent stocks on your own with some. Just make sure you don't tie up every dime you'll need for when the time is right. But I would get out of the low end interest rate situation as soon as possible. Check out bankrate.com for unbiased rate comparisons.

**jIM_Ohio** · 03-15-2010, 06:07 AM

Play it safe with all money you NEED for a SPECIFIC purpose.

If you can build a house with 45k down, and you have 50k, consider putting 5k of it with MODERATE risk. Moderate would be something like Wellesley, Permanent Portfolio, or spectrum income to ME. To you moderate might have another meaning.

If you have 50k and think "the largest possible down payment is what I want", then put none of it at risk.

If you have 50k and think "a 40k down payment is enough to get what I want now", so put 10k at risk.

I would not wait until house caretakers decide to sell, I would move out on your own terms, not theres. There is peace of mind doing things on your terms.

**cards66** · 10-03-2010, 04:53 AM

I now know my time frame is about 2 years to build a house. I am wondering if I should stop contributing to my wife's and mine Roth IRA's and save this money for the house? Or if I should contribute it to the Roth and still be able to remove the principle up to $10k for both when I need the money? WOndered if anyone had experience using money from a Roth for a down payment. I would still be contributing to my 401k at work.

**asmom** · 10-03-2010, 05:01 AM

Originally posted by cards66 View Post

I now know my time frame is about 2 years to build a house. I am wondering if I should stop contributing to my wife's and mine Roth IRA's and save this money for the house? Or if I should contribute it to the Roth and still be able to remove the principle up to $10k for both when I need the money? WOndered if anyone had experience using money from a Roth for a down payment. I would still be contributing to my 401k at work.

You should not stop contributing to Roth. Do you know how much you plan to spend to build your house? Do you know how much your down payment needs to be? You should have some numbers. If you are planning to build 250K home with 50K down payment then leave your 50K in a safe place like CDs or "high-yield" savings. You can plan to invest the extra in mutual funds depending on your risk tolerance as jim said. If you think you will need more for a down payment then continue to save as you have been doing and leave money in safe place as I stated earlier.

**littleroc02us** · 10-04-2010, 05:13 AM

Are you prepared to take a loss if you put it in the stock market. Otherwise, if you need guarenteed money for a down payment, I would either go the CD route or continue with the Money market.

**cards66** · 10-04-2010, 05:53 PM

The $50k is money I am going to use to build the home. I would assume it is going to cost between $200 to $250k. I guess with mortgage rates so low continuing to invest in the Roth's and such would be a good idea. Just trying to have the littlest mortgage possible as I hate owing people money.

Unique Situation - Need Advice