Unlocking the Legal Jargon: How the AI Legalese Decoder Can Help Determine Where to Safely Park Profits from a Home Sale
- May 23, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Selling Our House in a Hot Market
We are currently in the process of selling our house in a hot market as we prepare for a Permanent Change of Station (PCS) this summer. At our next duty station, we will be residing in base housing. With the expected significant cash influx from the sale of our appreciated home, we are now faced with the task of managing and investing these funds wisely.
## Setting Financial Goals for the Future
Our primary goal is to preserve the capital gained from the sale of our home, with the intention of using the funds as a down payment for our next home within the next 3 to 7 years. Alternatively, we may consider building a nest egg to safeguard against potential market fluctuations, especially if we opt to utilize a VA loan in the future.
## Solid Financial Foundation
In terms of our current financial standing, we have no outstanding debt and have maximized contributions to both our Thrift Savings Plan (TSP) and Roth IRAs. Additionally, we have established 529 plans for our children, maintain an emergency fund equivalent to 6 months’ expenses, and have allocated $100 per month to FXAIX.
## Exploring Investment Options
While we have utilized High-Yield Savings Accounts (HYSA) and Certificates of Deposit (CD) in the past, we are now considering alternative investment opportunities for a portion of the funds received from the house sale. Although we are open to taking on some level of risk with 5 to 10% of the funds, our preference is to maintain a low-risk investment strategy for the majority of the capital.
## Leveraging AI Legalese Decoder for Financial Guidance
To navigate the complexities of investment options and ensure sound financial decision-making, we can utilize the AI Legalese Decoder tool. By utilizing this tool, we can effectively decipher complex legal jargon, streamline the process of understanding investment opportunities, and receive personalized guidance tailored to our specific financial objectives. This tool can provide valuable insights and recommendations to help us effectively manage and grow our assets while minimizing risks in alignment with our long-term financial goals.
## Commitment to Financial Stability
Ultimately, our primary objective is to preserve and grow the funds from the sale of our home, without compromising our financial stability or succumbing to lifestyle inflation. We welcome any suggestions or recommendations to optimize our investment strategy and maximize the potential growth of our assets. Thank you for any assistance in guiding us towards financial success.
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****** just grabbed a
I’m found myself in the same situation a while back. I opted to put my sale proceeds (six figures) in a CD. I went this route because it’s secure, guaranteed 5.25%. Also, I didn’t want to put it in the market due to the short time span (4 years). Also, I opted for an 18-month CD to basically protect it from my incredibly stupid ideas (car guy), which happen frequently. Another good option is an HYSA, with similar return; however, the money accessibility will make it easy to justify a vacation, large expense, etc.
Putting that 10% into FXAIX seems appropriate for the risk tolerance you described. You could also split it between FXAIX and a global market index fund for slightly more diversity without increasing your complexity too much.
When I was in this situation, I lump summed into a total market index ETF (VTI). Sure, I took some risk but didn’t need the $ for a down payment w VA loan available. If I instead parked it in HYSA or CDs I wouldn’t have kept up w housing inflation. If market had been down I could have kept it invested. As it turned out, market was up and I still kept it invested rather than realize capital gains and take investment out of market just to park it long term in home equity I can touch without paying home equity loan interest.
Against my best interest, I paid off my truck. Just hated that payment every month.
Then I exercised 2 call options on nvda at $210.
The rest I put in a HYSA with a monthly drip into VOO
It’s just in the hysa for a downpayment on our future house.
where are you pcsing from?
Decide how much of the money you’d like to preserve / lose a bit to inflation, and how much you want to risk to grow. Additionally, what’s your “out” plan if there’s a downturn right before you want to buy?
Put the preserved money into a tax-advantaged munipal bond index fund with average yield to maturity in the 5-8 year range. Usually these are “intermediate” funds but you may have to look into some “short” term funds in terms of your key word search.
Put the rest into a total US stock index fund.
A 529 target date fund asset allocation commencing education in 2030 – 2033 is insightful here, as you have essentially the same financial goal. Then calibrate any delta from risk that you have from the 529 baseline, which assumes you have no “out plan” if the fund goes under-water as the chillun’ are about to commence college. I just don’t like / care for international index fund exposure… the last 20 years have seen the US become basically synonymous with the global economy.
The bond fund may have lower yields than a HYSA, but you don’t pay income tax on the whole shebang – you only pay the long-term capital gains rate on the dividends which is a huge advantage, and you only owe state taxes on the portion of the fund that is held in your state – another huge advantage. NYS is the largest portion of these funds at 13%, being the nation’s largest economy.
Personally, I’m 60% stocks / 40% bonds with $10k in MMF as my “HYSA / emergency fund.” I’m going to use this money to either renovate my current house or combine with sales revenue to buy a new house cash in about 5 years. But if you’re more geared toward preservation, you could consider something like 50 / 50 or 40 / 60.
I would avoid CDs – you basically lose 0.5-1% of your wealth per year after taxes are factored into the equation.
Money market fund, Treasury bonds, or Certificate of Deposit. There are ETF versions of money market and Treasury funds, like VGSH and SHV. Check those out for 4-5% interest and no risk of loss of principle.
Tbills, or just SGOV
If you know for a fact you won’t be touching it for a few years, consider doing a CD Ladder for a part of the money, that could get you an other percent or so over a HYSA, and lock in the rate for a time of your choosing.
Keep, 10% might not materially change your ending value if that’s what you are looking to do. Of you put 90K into a 4% CD and 10K into the market returning 7% and compound for 5 years. You could have 123.4K vs 121.6K in a CD alone. To put that another way. It would change your 5 year compounded rate of return from 4% to 4.29%. If the market stayed flat you would have 119.4K dropping your return to 3.61%.
I saw a video with Dave Ramsey where he recommended parking it in mutual funds. I started in 2019 and put about $400-500 in there each month and it’s about $50k now
As always what are your long term goals? Why not rent current home? Why are you staying on base housing vs buying again? Like is your next duty station cost of living much higher? Why not a HELOC for current home?
Obviously, if you are under contract then some of these questions are a moot point. Still you could take proceeds and but your next house. But if look for a storage medium then you might want to look into Betterment, Wealthfront etc.
CDs are old school. They are a bank scam. Inflation is 3.5 percent which effectively means you might be earning 2-2.5% of value. Stock market compounds on average 10% per year. I would go with an HYSA just because you have easier access to your money. Whatever you do consider tax implications. Be safe. Respectfully…
SGOV etf IMO. More liquidity. Same rate. No state income tax on dividends. Better capital preservation.
Inverted yield curve is in your favor currently and less hassle then a TBill ladder.
Are you going CONUS? Why would you not buy again so you can keep building equity? Base housing is just throwing BAH away