Author Topic: Sell index funds now for down payment during recession?  (Read 2313 times)

MusicNerd

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Sell index funds now for down payment during recession?
« on: October 05, 2018, 03:34:45 PM »
Hi fellow mustachians! Im a long time reader and follower, and first time poster. Id love your thoughts on my situation. I agree with MMM that a recession or market correction is coming soon. I live in an expensive coastal city, where Ive been renting for years. Id like to buy a house at some point in the next few years, and Id love for it to be when that recession is in full swing. The money I would use for a down payment is currently in Vanguard index funds. Would it be smart for me to withdrawal that money now so Ive got it ready to go? This means selling my shares at the relative height of the market. It also means not selling at the bottom, once the recession hits. It seems like the smart thing to do but Im having a hard time convincing myself to sell shares since all Ive ever done is buy and hold! Obviously this could backfire if the recession is several years off - I worry most about missing out on potential market gains.

The other scenario is that I continue to rent until I can FIRE, which is probably 7-8 years away for me. I am personally very tired of renting, cranky neighbors, etc. My plan is to buy something soon, live in the house until I can FIRE, them reassess where I want to live, and potentially sell the house then if I want to move somewhere cheaper. The concern is the opportunity cost - whether or not the house would maintain a value at least similar to what stock market gains would be.

Thanks in advance for your replies!

ixtap

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Re: Sell index funds now for down payment during recession?
« Reply #1 on: October 05, 2018, 03:40:17 PM »
People have been pulling out to prepare for the next recession since at least 2012. That's a lot of sitting around waiting.

What do you plan on doing after your career? Are you looking for a forever home where you are now or would you be selling again in a few years? I think the rule of thumb is to stay put for 5 years to make it worth the expenses of buying and selling and it doesn't sound like that really fits with your plans unless the recession starts really soon.

MusicNerd

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Re: Sell index funds now for down payment during recession?
« Reply #2 on: October 05, 2018, 03:48:20 PM »
It is potentially a lot of sitting around and waiting. But is it smarter to sell when the market is low? That wont feel good either. Down payment and closing costs will likely be around $300k. Id likely sell the house in 7-8 years to FIRE somewhere cheaper.

Adam Zapple

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Re: Sell index funds now for down payment during recession?
« Reply #3 on: October 06, 2018, 06:31:09 AM »
I have several thoughts on this but they are in conflict with each other.

-What if the next recession is 5 years away? 

-Most recommend you should not have "short-term" funds in the market unless you are willing to accept a big downturn.

-You could keep the money in the market and if there is a sharp downturn, put down the minimum downpayment so you are only selling a small percentage of your stocks at a "loss"

-If you know you will move in 7 years, are you better off just renting a house?

-If there is a recession, say, next year, when will you purchase the house?  A recession probably won't be fully realized in housing prices for 2 years or so due to the illiquidity of real estate.

Indexer

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Re: Sell index funds now for down payment during recession?
« Reply #4 on: October 06, 2018, 07:37:33 AM »
Let's break this into two questions.

1. Should you time the market?   No. Was MMM suggesting this in his recent post?  His recent post wasn't guaranteeing a recession is coming, it was a link to another post. http://www.mrmoneymustache.com/2017/06/20/next-recession/   That post was from 2017, and it was saying there is always another recession coming eventually so don't constantly worry about it.


2. Should you have money for a home down payment in the stock market?  What's your time frame? You said soon, so I'm assuming within 2 years. If it's less than 2 years, then no, you shouldn't have that money in the stock market regardless of whether you think a recession is coming. You should probably stick to money markets and CDs for short term goals.

DreamFIRE

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Re: Sell index funds now for down payment during recession?
« Reply #5 on: October 06, 2018, 07:47:10 AM »
I agree with MMM that a recession or market correction is coming soon.

There was already a market correction earlier this year (i.e. 10% drop).  That could happen anytime.  No one knows when the next recession will be, not even the "expert" economists.  They're usually wrong in their predictions.  And it takes quite a while before you even know you're in one.

RWD

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Re: Sell index funds now for down payment during recession?
« Reply #6 on: October 06, 2018, 07:48:46 AM »
Let's break this into two questions.

1. Should you time the market?   No. Was MMM suggesting this in his recent post?  His recent post wasn't guaranteeing a recession is coming, it was a link to another post. http://www.mrmoneymustache.com/2017/06/20/next-recession/   That post was from 2017, and it was saying there is always another recession coming eventually so don't constantly worry about it.


2. Should you have money for a home down payment in the stock market?  What's your time frame? You said soon, so I'm assuming within 2 years. If it's less than 2 years, then no, you shouldn't have that money in the stock market regardless of whether you think a recession is coming. You should probably stick to money markets and CDs for short term goals.

^^^ This

wageslave23

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Re: Sell index funds now for down payment during recession?
« Reply #7 on: October 06, 2018, 08:19:11 AM »
The stock market and real estate market aren't always linked, in fact usually they are not.  Plus a recession is a 20% drop in the market.  The market has gone up 20% in the last year.  So if you would have sold then thinking a recession was imminent you would already be behind a year later.  Since you don't want to buy a house right now but only when the real estate market drops which could be this year or in 10 years, why not keep doing what you are doing and play the averages and expect about 7% market returns while you wait.  It could be less of a return but it could also be more than 7%.  There are four possible scenarios: 1. The stock market goes up and the housing market goes up, you buy a house if you want no real change in relative prices.  2. They both go down, same as 1.  3. The stock market goes down and housing up, in which case you don't buy a house.  4. The stock market goes up and housing goes down, you thank your lucky stars and make a killing buying cheap housing. 

maizeman

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Re: Sell index funds now for down payment during recession?
« Reply #8 on: October 06, 2018, 11:16:49 AM »
The other scenario is that I continue to rent until I can FIRE, which is probably 7-8 years away for me. I am personally very tired of renting, cranky neighbors, etc. My plan is to buy something soon, live in the house until I can FIRE, them reassess where I want to live, and potentially sell the house then if I want to move somewhere cheaper.

I can sympathize a lot with this. When I lived in an expensive coastal city I got so sick of dealing with landlords, and poorly maintained apartments, and obnoxious neighbors. But buying a house was dramatically outside of my budget then, and still would be if I still lived there.

If where you live is making you miserable, don't wait for a recession and don't try to time the market. 7-8 years until you leave the city is just barely enough time for the conventional wisdom to say you won't lose money by buying a house. However, you try to wait until there is significant recession you might be waiting six months, or three years, or until you're ready to leave the city.

You could buy now, or you could try renting an actual house in a neighborhood you like (good neighbors) rather than an apartment. Because the rapid rise in coastal city property prices have drawn in a lot of speculators, my understanding is that, on the higher end, you can now often rent houses for barely the cost of the mortgage payment on the same property itself or sometimes even less than the cost of the mortgage payment. You given up the chance of benefiting from appreciation, and sacrifice having to pay rising rents year to year rather than a fixed mortgage, but if you're going to be getting out of town anyway in seven years, that's probably a good trade off as long as you can find a place to live that doesn't make you unhappy.

GuitarStv

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Re: Sell index funds now for down payment during recession?
« Reply #9 on: October 06, 2018, 11:39:53 AM »
2. Should you have money for a home down payment in the stock market?  What's your time frame? You said soon, so I'm assuming within 2 years. If it's less than 2 years, then no, you shouldn't have that money in the stock market regardless of whether you think a recession is coming. You should probably stick to money markets and CDs for short term goals.

I'd argue that you should always keep spare money in your investments in your predetermined asset allocation.  It doesn't matter if you need the money in 1, 10, or 100 years.

This doesn't hold true if you don't have much money . . . like if you need 10,000$ and have 15,000$ savings, then there is real risk that you won't have enough money if a very bad downturn were to happen.  If you've got a sizable chunk of savings though, I think that the risk of missing out is greater than possible gain by attempting to time the market using money market/CDs.

DreamFIRE

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Re: Sell index funds now for down payment during recession?
« Reply #10 on: October 06, 2018, 11:46:09 AM »
Plus a recession is a 20% drop in the market.

20% is usually associated with a "bear market" while a recession is typically defined as two consecutive quarters of negative GDP growth.

EnjoyIt

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Re: Sell index funds now for down payment during recession?
« Reply #11 on: October 06, 2018, 01:30:44 PM »
Plus a recession is a 20% drop in the market.

20% is usually associated with a "bear market" while a recession is typically defined as two consecutive quarters of negative GDP growth.

Market timing does not and will not work. Make all decisions without attempting to outguess the market.

pecunia

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Re: Sell index funds now for down payment during recession?
« Reply #12 on: October 06, 2018, 03:27:54 PM »
How about buying a duplex and renting one half out?  It has worked well for some folks.  All or part of the house payment comes to you every month.

Telecaster

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Re: Sell index funds now for down payment during recession?
« Reply #13 on: October 06, 2018, 04:35:33 PM »
Let's break this into two questions.

1. Should you time the market?   No. Was MMM suggesting this in his recent post?  His recent post wasn't guaranteeing a recession is coming, it was a link to another post. http://www.mrmoneymustache.com/2017/06/20/next-recession/   That post was from 2017, and it was saying there is always another recession coming eventually so don't constantly worry about it.


2. Should you have money for a home down payment in the stock market?  What's your time frame? You said soon, so I'm assuming within 2 years. If it's less than 2 years, then no, you shouldn't have that money in the stock market regardless of whether you think a recession is coming. You should probably stick to money markets and CDs for short term goals.

+1

wageslave23

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Re: Sell index funds now for down payment during recession?
« Reply #14 on: October 07, 2018, 07:55:56 AM »
Plus a recession is a 20% drop in the market.

20% is usually associated with a "bear market" while a recession is typically defined as two consecutive quarters of negative GDP growth.

You are correct, I should have said bear market, which is more relevant to this discussion than recession.

Maenad

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Re: Sell index funds now for down payment during recession?
« Reply #15 on: October 07, 2018, 09:05:24 AM »
The market has gone up 20% in the last year.  So if you would have sold then thinking a recession was imminent you would already be behind a year later. 

Exactly - the market could go up 30% before we have a bear of 20%, and if you sold now, even buying at the bottom of the bear would be a loss. And bull markets don't die of old age, they die because a bubble forms (e.g. Conglomerates, Nifty Fifty, Dot-Com, Mortgage CDOs) and then bursts. There's likely a number of possible sources right now, but we won't know for sure until afterwards.

Personally, if I was planning on FIRE in 7-8 years and moving to a LCOL location soon thereafter, I wouldn't buy a house. In my actual situation, I look at the amount of work my house costs me, and I wouldn't recommend this for anyone on the likelihood, but not certainty, that they'll make a profit. If you do want to have a down payment available, I agree with previous posters that anything short-term should be in CDs or high-yield savings accounts, so go ahead and sell some of your stocks so that you have cash available, but do it because you're in the phase of your life where you want to buy a house, not because you think you know where the market's going.

Because you're almost certainly wrong.*



*Don't worry, we're all in this boat with you.

PizzaSteve

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Re: Sell index funds now for down payment during recession?
« Reply #16 on: October 07, 2018, 09:51:18 AM »
2. Should you have money for a home down payment in the stock market?  What's your time frame? You said soon, so I'm assuming within 2 years. If it's less than 2 years, then no, you shouldn't have that money in the stock market regardless of whether you think a recession is coming. You should probably stick to money markets and CDs for short term goals.

I'd argue that you should always keep spare money in your investments in your predetermined asset allocation.  It doesn't matter if you need the money in 1, 10, or 100 years.

This doesn't hold true if you don't have much money . . . like if you need 10,000$ and have 15,000$ savings, then there is real risk that you won't have enough money if a very bad downturn were to happen.  If you've got a sizable chunk of savings though, I think that the risk of missing out is greater than possible gain by attempting to time the market using money market/CDs.

I partly disagree with this.  Stocks are long term investments.  Once you decide the portion of your assets to invest long term, then agreed, having that 100% in, 100% of the time is the way to go.

However, once you investment funds decline because you have a certain need to spend the money, I recommend removing those funds from the investment pool, because a large market drop would possibly cause you to cash out funds outside your investment time horizon.  The long bull has perhaps given the false impression that stock gains are linear, but this is far from the truth.  Ive seen multiple bear periods, and many on this site have never seen a real one, only a one year correction, unlike what we had in the 60s and 70s.  The 1990s Japan correction (i lived in Tokyo at its start) and  later bear market lasted something like 15 years, with almost 30 years needed to recover.  Friends had property and stocks drop 50% in 6 months and stay there a long time. im not predicting this will happen, but with China overtaking the US economically and trade war fears, a recession seems a slim, but possible outcome ahead.  The US is looking a bit like 1992 Tokyo to my eyes...hot property markets, full employment, losing manufacturing and tech to other asian 'tigers' like Korea, expensive labor, aging skilled workforce, etc.

That said, it depends on how certain the need for money is.  A vague idea that you might want a home is agreed, not a sufficient cause to reduce investments.  However, if you are actively looking and know you will need 50k within 6 months, I would have that in a money market, especially if it is a large portion of your investments, and if a large market correction would have you changing life decisions.

If the stash is over 1M and you need 50k within a few years, sure, let it ride.  If your stash is 100k and you definitely need 50k for a home or school within 1-2 years, I think a more conservative allocation to cash is a good idea.
« Last Edit: October 07, 2018, 10:00:01 AM by PizzaSteve »

Bateaux

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Re: Sell index funds now for down payment during recession?
« Reply #17 on: October 07, 2018, 01:02:37 PM »
I put about 10 percent of our stash in VTBLX and it is a dog.  Stick with VTSAX.

PizzaSteve

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Re: Sell index funds now for down payment during recession?
« Reply #18 on: October 07, 2018, 01:07:56 PM »
I put about 10 percent of our stash in VTBLX and it is a dog.  Stick with VTSAX.
Seriously...focusing on short term performance as your portfolio asset class decision making criteria is not good portfolio management.  Bonds thrive in deflationary periods and recessions, which one cant always see coming.

I recommend a written portfolio plan and a bit more research into why one holds VTBLX vs VTSAX.  The US is in the longest Bull market in history.  Sure VSTAX looks great, and it is.  It can also drop 1-2% in a day, just on low volatility.  VTSAX is only as good as stocks continue to grow in price.

Bateaux

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Re: Sell index funds now for down payment during recession?
« Reply #19 on: October 07, 2018, 01:14:36 PM »
I put about 10 percent of our stash in VTBLX and it is a dog.  Stick with VTSAX.
Seriously...focusing on short term performance as your portfolio asset class decision making criteria is not good portfolio management.  Bonds thrive in deflationary periods and recessions, which one cant always see coming.

I recommend a written portfolio plan and a bit more research into why one holds VTBLX vs VTSAX.  The US is in the longest Bull market in history.  Sure VSTAX looks great, and it is.  It can also drop 1-2% in a day, just on low volatility.  VTSAX is only as good as stocks continue to grow in price.

I like growth.  Growth in the good times will carry you through the bad.  I own nearly 200K of VTBLX now and I'm just going to keep it parked there.  Hopefully it keeps up with inflation at least.

clarkfan1979

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Re: Sell index funds now for down payment during recession?
« Reply #20 on: October 07, 2018, 03:58:38 PM »
It is important to know that recessions happen. However, predicting when they will happen is very difficult. Real estate investors purchase property when the numbers make sense, myself included. However, I don't try to speculate when the next recession will happen.

Most real estate is based on local markets, not macro trends. This allows real estate investors to sell or refi in appreciating markets and invest in depressed markets at the same time.

I own property in Florida, Colorado and Hawaii. I make reasonable assumptions about each market and those assumptions are going to be different for each city.


Radagast

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Re: Sell index funds now for down payment during recession?
« Reply #21 on: October 07, 2018, 08:29:27 PM »
Ask again when the inflation-adjusted 10-year treasury note yield is greater than the S&P500 Schiller earnings yield and the 30-day treasury bill pays more every month than the 30-year treasury bond. :D

GuitarStv

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Re: Sell index funds now for down payment during recession?
« Reply #22 on: October 09, 2018, 10:32:53 AM »
2. Should you have money for a home down payment in the stock market?  What's your time frame? You said soon, so I'm assuming within 2 years. If it's less than 2 years, then no, you shouldn't have that money in the stock market regardless of whether you think a recession is coming. You should probably stick to money markets and CDs for short term goals.

I'd argue that you should always keep spare money in your investments in your predetermined asset allocation.  It doesn't matter if you need the money in 1, 10, or 100 years.

This doesn't hold true if you don't have much money . . . like if you need 10,000$ and have 15,000$ savings, then there is real risk that you won't have enough money if a very bad downturn were to happen.  If you've got a sizable chunk of savings though, I think that the risk of missing out is greater than possible gain by attempting to time the market using money market/CDs.

I partly disagree with this.  Stocks are long term investments.  Once you decide the portion of your assets to invest long term, then agreed, having that 100% in, 100% of the time is the way to go.

However, once you investment funds decline because you have a certain need to spend the money, I recommend removing those funds from the investment pool, because a large market drop would possibly cause you to cash out funds outside your investment time horizon.  The long bull has perhaps given the false impression that stock gains are linear, but this is far from the truth.  Ive seen multiple bear periods, and many on this site have never seen a real one, only a one year correction, unlike what we had in the 60s and 70s.  The 1990s Japan correction (i lived in Tokyo at its start) and  later bear market lasted something like 15 years, with almost 30 years needed to recover.  Friends had property and stocks drop 50% in 6 months and stay there a long time. im not predicting this will happen, but with China overtaking the US economically and trade war fears, a recession seems a slim, but possible outcome ahead.  The US is looking a bit like 1992 Tokyo to my eyes...hot property markets, full employment, losing manufacturing and tech to other asian 'tigers' like Korea, expensive labor, aging skilled workforce, etc.

That said, it depends on how certain the need for money is.  A vague idea that you might want a home is agreed, not a sufficient cause to reduce investments.  However, if you are actively looking and know you will need 50k within 6 months, I would have that in a money market, especially if it is a large portion of your investments, and if a large market correction would have you changing life decisions.

If the stash is over 1M and you need 50k within a few years, sure, let it ride.  If your stash is 100k and you definitely need 50k for a home or school within 1-2 years, I think a more conservative allocation to cash is a good idea.

Your investment time horizon doesn't really matter when we're talking about tiny fractional withdrawals (like downpayment for a house or purchase of a car).  I don't know when the next recession will come, so I remain invested all the time.  Doing otherwise is just a form of market timing.  How are you planning to FIRE if you're afraid to withdraw your money when you need it?

I have diversified my investments so that I'm not solely dependent upon US performance.  I have a mix of stocks/bonds to limit risk should I need to withdraw money at some point in the future.  You're right that extremely short term (probably under 3 months) it doesn't really matter if you're invested or have the money sitting in a bank account, but for much over that I'd just keep it invested.  If the Japan scenario happens, so be it.  I'll end up withdrawing more from my bonds in order to keep my asset allocation on target.  If the market explodes upwards, so be it.  I'll end up withdrawing more from my stocks in order to keep my asset allocation on target.  Either way, the money is always there for use.

PizzaSteve

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Re: Sell index funds now for down payment during recession?
« Reply #23 on: October 09, 2018, 10:55:14 AM »
...
Your investment time horizon doesn't really matter when we're talking about tiny fractional withdrawals (like downpayment for a house or purchase of a car).  I don't know when the next recession will come, so I remain invested all the time.  Doing otherwise is just a form of market timing.  How are you planning to FIRE if you're afraid to withdraw your money when you need it? I disagree.  Reducing money from the investment pool to spend it (e.g. on down payment) is spending, not market timing.  Presumably your asset allocation for invested cash remains unchanged, percentage wise.

I have diversified my investments so that I'm not solely dependent upon US performance.  I have a mix of stocks/bonds to limit risk should I need to withdraw money at some point in the future.  You're right that extremely short term (probably under 3 months) it doesn't really matter if you're invested or have the money sitting in a bank account, but for much over that I'd just keep it invested.  If the Japan scenario happens, so be it.  I'll end up withdrawing more from my bonds in order to keep my asset allocation on target.  If the market explodes upwards, so be it.  I'll end up withdrawing more from my stocks in order to keep my asset allocation on target.  Either way, the money is always there for use. agree.  this is solid advice.
I think we are on the same page.


GuitarStv

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Re: Sell index funds now for down payment during recession?
« Reply #24 on: October 09, 2018, 11:01:24 AM »
...
Your investment time horizon doesn't really matter when we're talking about tiny fractional withdrawals (like downpayment for a house or purchase of a car).  I don't know when the next recession will come, so I remain invested all the time.  Doing otherwise is just a form of market timing.  How are you planning to FIRE if you're afraid to withdraw your money when you need it? I disagree.  Reducing money from the investment pool to spend it (e.g. on down payment) is spending, not market timing.  Presumably your asset allocation for invested cash remains unchanged, percentage wise.

The reason that doing this is market timing is that you're not spending the money (at least not right away).  You're reducing investments over a period of time in order to fill a bank account.  Effectively you're timing the market by choosing the bank account investment (less volatility/less reward) over the market.

That's no different than pulling money out to sit in an account because you think a big dip in the market is coming around the corner.

Short term (a couple months) this doesn't really matter.  If you're saving up for something for years at a time by doing this, you're likely costing yourself money though.

J Boogie

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Re: Sell index funds now for down payment during recession?
« Reply #25 on: October 09, 2018, 03:40:04 PM »
Many of the first time homebuyer programs require a tiny down payment. I'd use one of those, that way you wouldn't have to sideline more than $15,000 or so.

partgypsy

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Re: Sell index funds now for down payment during recession?
« Reply #26 on: October 10, 2018, 09:10:48 AM »
Here is a related hypothetical question. You have money to invest in real estate. You want to wait until a downturn to buy in an area which you want to invest in. This downturn could be 3 months to 4 years from now. You don't want to put your money in the stock market. Would you continue to purchase property that is less expensive elsewhere (i.e. put the money in less expensive real estate even if that's not where you really want to buy) or keep the money in cash or cash equivalents? My feeling it is better to put in cash or cash equivalents, since real estate is not very liquid. The only cash equivalents I know of are things like money markets or CDs. I don't know if there is any non stock market ways of investing that is better than those options, because then sitting on the sidelines does appear to increase risk (inflation). 

JLee

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Re: Sell index funds now for down payment during recession?
« Reply #27 on: October 10, 2018, 09:21:02 AM »
$300k for a down payment means you're looking at what, a ~$1.5 mil house?    If the housing market stays completely flat for eight years you'll pay $90k in realtor commissions when you sell.

I would do a lot of math and see if this is worth it.  Unless buying was cheaper than renting, it's not something I would do myself.  Hell, the $300k down you're looking at is half of my LCOL barebones FIRE target, lol.

PizzaSteve

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Re: Sell index funds now for down payment during recession?
« Reply #28 on: October 10, 2018, 09:30:49 AM »
Agree it is fine to leave money in a liquid, volatile asset class (stocks) if you can still achieve your goals assuming a large market downside event occurs.  It is not market timing to pull money out as soon as you know this is not the case, rather it is foolish to wait to risk your life goals for a few fractions of a percent of possible upside over a very small time period.  Think about it this way. Assume 50k is needed.  The expected upside over a 3 month period is something like 7% (stock expected returns) -2% (savings returns) = (5%) x 3/12 (3 months) x 50k = $625.  A 50% market drop costs $25k of principal, which assuming our scenario, maybe costs you the chance to buy your dream home.

So it is market timing to say Gosh, I may lose  the chance to buy my dream home (or I will set my investments goals way back years, if I do buy after the drop) should the (rare) situation of a 50% market correction hits just before bid and close on my dream home.  I am certainly willing to give up $625 of expected returns right now to 'buy insurance' against that event by putting the needed deposit into a my Marcus Savings account now at 2%.

Anyway, one can argue whether that expected `cost' is a good bet or not, but I dont see that action as market timing.  You are not betting that the event will occur and trying to cash in, you are hedging your investments based on a known spending decision (just as you do when adding bonds to a portfolio at retirement).  By your definition one could argue anything not 100% equities with all assets all the time is market timing.
« Last Edit: October 10, 2018, 09:35:44 AM by PizzaSteve »

Telecaster

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Re: Sell index funds now for down payment during recession?
« Reply #29 on: October 10, 2018, 03:33:36 PM »
Agree it is fine to leave money in a liquid, volatile asset class (stocks) if you can still achieve your goals assuming a large market downside event occurs.  It is not market timing to pull money out as soon as you know this is not the case, rather it is foolish to wait to risk your life goals for a few fractions of a percent of possible upside over a very small time period.  Think about it this way. Assume 50k is needed.  The expected upside over a 3 month period is something like 7% (stock expected returns) -2% (savings returns) = (5%) x 3/12 (3 months) x 50k = $625.  A 50% market drop costs $25k of principal, which assuming our scenario, maybe costs you the chance to buy your dream home.

So it is market timing to say Gosh, I may lose  the chance to buy my dream home (or I will set my investments goals way back years, if I do buy after the drop) should the (rare) situation of a 50% market correction hits just before bid and close on my dream home.  I am certainly willing to give up $625 of expected returns right now to 'buy insurance' against that event by putting the needed deposit into a my Marcus Savings account now at 2%.

Anyway, one can argue whether that expected `cost' is a good bet or not, but I dont see that action as market timing.  You are not betting that the event will occur and trying to cash in, you are hedging your investments based on a known spending decision (just as you do when adding bonds to a portfolio at retirement).  By your definition one could argue anything not 100% equities with all assets all the time is market timing.

Thanks PizzaSteve, I was trying to formulate the same ideas and you said it better than I could.   I view it kind of like an emergency fund in that regard.  The more investments you have, the less you need an emergency fund.    But emergencies are unpredictable, buying a house is predictable, so it really starts to make sense to have at least some money for predictable expenses in cash.