Saving for a house - Investment advice
Apologies for a bit of a long one but here’s a bit a bout my background and situation - imagine some others are having similar thoughts.
I’m starting a grad role in IB in December but am currently a student.
I have accumulated some decent savings during my time at uni and have started thinking about saving for a house.
My girlfriend is also quite wealthy and has enough cash to cover a significant deposit on our first home.
I‘ve started saving so that we can put together a bigger deposit. Currently I have an ISA which is invested in a global equities index fund which I put money into every month.
Obviously over the long term this is a sensible strategy, but I could see us buying in about 4 years and therefore it’s slightly more of a risk to invest in equities. I feel like this is amplified by the way the markets are looking over the next year or so (interest rates, inflation, toppy valuations).
Would I be better off sitting on some cash until I have money coming in ? What do you guys reckon?
Side note: I was chatting with a hedge fund manager who used to be very senior at RenTech and he thought that over the next few year both equities and bonds were going to perform badly. Clearly this is a different perspective for a hedge fund as they have many more options than a retail investor in terms of investment strategies. Anyway, that is kinda what sparked my uncertainty in starting to put some money into equities.
Bump
If your time horizon was like, 12 months, I would keep it in cash (even with inflation being where it is). Just can't risk losing it.
Your time horizon of 4 years is a bit too long, given where you are in life, to be planning to buy a house as this requires you to be in highly liquid and stable investments. I think you are better off choosing the best risk/return possible (and ignoring the goal of the house for now). That means investing in the markets - not necessarily all at once, but certainly I would note have cash sitting around for that many years.
IDK anything about your personal life beyond your post but I wouldn't buy a place with someone unless we were married.
I'm going to go nope. I am in my 30s and can't afford to buy in Manhattan, so I rent (no debt) I've had a almost or two that would have involved moving cross-country. (AM is small) so mobility is key. Just be a liquid nomad like me. "oh, you want cash for that. hold up, how many tens of thousands? ok."
Exactly, because if you owned in Manhattan, you would say "oh you want cash for that? Hold up. How many millions? ok".
I don't have that kind of cash, and I've been told I had to move cities to keep my job before. I actually liked Philly, and was eyeing a newly renovated row house a block from the train in the cutest railroad town for a touch under $200k. Thankfully I didn't buy it because a house and no job would've stunk.
Yeah, was just messing around with you in the above post. Different strokes for different folks. I own a modest place that I bought right after college. Besides the market going way up, I’ve put in a ton of sweat equity into it. Fortunately, the mortgage is almost paid off and my income has grown substantially since graduating.
Can't wait till I have practically no housing expense. Property tax and HOAs suck, but it is what it is. Should I need to move, could rent a place, so I would be the same as anyone else. Not sure if I would want to be a single-unit landlord myself, but it's having equity in real estate that's out of sight, out of mind.
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