Building a New 2MM Home... Good Idea?

[Jluke]

Adding on to Corn’s post about bogleheads/Vanguard.

If you want an advisor Vanguard has a Personal Advisory Service (PAS) for 0.3% AUM (plus the low ER’s for vanguard funds). They can set you up and eventually you could manage it yourself without the 0.3%.

At your financial level there may be some other perks at Vanguard that I am not aware of.

[disneysteve]

If you want an advisor Vanguard has a Personal Advisory Service (PAS) for 0.3% AUM (plus the low ER’s for vanguard funds).

I just got an email inviting me to use that service a few days ago. While I'm not interested in doing so, I thought the 0.3% rate was quite reasonable. I might consider at least getting a good review with them when I'm closer to retirement.

[bjl584]

If it's something you want then go for it. You can certainly afford it. I'd worry more about selling it if you ever needed or wanted to.

[Fishindude77]

If I was going to spend that kind of money on a house it would be somewhere lakefront or where the demand is high so I would stand a decent chance of selling it at a profit down the road. In my area we see the occasional big spender throw up a multi mil $ home and there just aren't enough buyers around with pockets deep enough that they can sell it when things change and they need to move on. It's not unusual for these to sell at 50% of construction cost.

Personally, I'd rather have a sweet (large) piece of land with an average home on it than a lot with a mcmansion. In the right place $2 mil could get you a couple hundred acres of ground with a nice house, plus a nice annual income forever.

Good luck with whatever you decide, and congrats for being in the position you are in.

[Justin24]

FishinDude, I hear you! One reason I’m very excited to build is because the lot is super awesome. 7 acrces on a river with a huge water fall that the back of the house will overlook. Doesn’t really get better.

Luckily it’s in a township where there are plenty of mult-million dollar homes. But like I said, I’m still being cautious and don’t want to pretend like I can’t get burned. Have to think of worse case scenario sometimes.

ill keep you all posted.

1) I definitely want to talk with the guy you recommend who can give you real estate tips.

2) I want to learn more about vanguard and other investment options. I have to do something!

[disneysteve]

2) I want to learn more about vanguard and other investment options. I have to do something!

Bogleheads.org is a great resource.

For something that really couldn't be much simpler, someone already mentioned doing the 3-fund portfolio. Here's a good article about it: https://mymoneywizard.com/3-fund-portfolio/
Investing isn't, or at least shouldn't be, nearly as complicated as many people make it. This plan will match or beat pretty much any other stock investment plan out there.

[Atretes1]

I agree with simplicity. I am following a 3 fund portfolio concept at Vanguard. I however, am omitting bonds for now due to my risk tolerance. I am only in 2 funds now. I put my money in and forget about it.

VTIAX Vanguard Total International Stock Index Fund Admiral Shares
VTSAX Vanguard Total Stock Market Index Fund Admiral Shares

[LivingAlmostLarge]

I too would love a $2M house. I would love a dream home. I am not a car person though. So even though I could buy a $2M house I would. I would not buy the $120k tesla because it doesn't do it for me. However I might splurge on a trip. Nothing wrong with enjoying what you can afford. Just make a decision and be satisfied with it.

FWIW, I think you may lose money on the house for $2M even long term. Depending on where it is you are building. However, you want to live there then do it. It's you happy and you can afford it. So the only person who it will hurt is your pocketbook. And the reason you work hard is to enjoying your life. And if this brings you pleasure you should build the house.

[scfr]

To address your worst-case-scenario fears, figure out what those scenarios are and make a plan to deal with them. Do you and your wife have similar incomes, and would either of you be able to carry the load of the house if something happened to one of you? If not, make a plan for that.For example, when one partner is the primary earner, a worst case scenario might be the permanent disability of the primary income earner. The lower income earner not only has to support the regular household expenses, but also the care of the former primary earner. Get your safety nets (life insurance, disability insurance, EF) solidly in place so that you can proceed with confidence.

Personally I wouldn't own a $2M house unless I had a net worth of at least $10M, but that's just me.

[disneysteve]

Personally I wouldn't own a $2M house unless I had a net worth of at least $10M, but that's just me.

I'm curious how you arrived at that. I've never heard anyone tie the cost of your house to your net worth, only to your income (max of 2-3 times income).