You have 100k saved, you have enough for a down payment on your house. Go buy it, unless you are trying to purchase a McMansion (>400k), then don't!
I live in NYC and the houses are over $700,000.
If you plan on retiring early, then don't plan on the city pension.
Most people on here will tell you to get out of Wealthfront and Robinhood and only invest in vanguard low cost index funds.
Is it because of the fees attached to it? I just opened a Vanguard IRA and will be putting my money in index funds
You do NOT invest your home down payment in the stock market as the stock market WILL eventually go down. You don't want that to happen to funds you need in the next year.
Yes you're right. I will just put it in a high yield savings or CD for now.
Google Millionaire Educator, he has a ton of advice for teachers like you (and your wife?) for how to save money in an effective tax avoidance strategy. (e.g. Max out your 403b and 401k yearly, wife does the same and you just put away something like 70k yearly tax free - assuming your wife is also a teacher).
As for the funds, everyone will tell you to look for low cost index funds your plan offers. Never heard of a 7% fixed fund, and I wonder if you're paying into an annuity which I would be wary about.
The 7% fund is more like a savings account with interest.
As for the Roth, I wouldn't put any money in a Roth if you can qualify for a traditional tax deterred account. I don't know anything about 457 accounts.
The 457 is similar to a 401K but for government or state/city workers. Why traditional and not roth?
What is your wife investing in? If nothing, you are saving 21/140 a year of your income, which is something like 14% (mental math, I think that's correct?) Savings rate.
My wife isn't investing but I think I've convinced her to contribute more to her 401K and IRA.
You make good money, you should be saving at least 3x that if not 4-5x that in tax deterred accounts. As teacher(s) you have really great access to tax deterred options.
I don't know where in the country you are, but your 100k should easily get you a 20% down payment on a home. What are you waiting for? Don't invest that money if you are dumping it all into a home, that's too risky.
It's difficult since I live in NYC
Don't invest any more into taxable accounts until you've gotten your pre tax to at least 50% of income. Once you are there, then we can talk.
Is it because of the huge risk involved in taxable accounts? I thought it was an extra way to increase my income.
Yeesh, I knew NY was expensive, but MAN, 700k for a home? Are you sure that's your only option? If I were you, I might just have to be content with renting. 700k is an ENORMOUS amount of money...
The reason I (and everyone else) will tell you to always max tax-deferred before taxable is because USA has income tax based on brackets. So, if you can reduce your taxable liability, you will gain instant money.
For example:
Rate Married Filing Jointly
10% Up to $19,050
12% $19,051 to $77,400
22% $77,401 to $165,000
Every dollar you and your wife make beyond $77,400 that isn't sheltered from taxes will be taxed at a rate that is 10% higher the previous dollar (I'm aware of deductions, but i'm keeping this simple as OP makes 140k a year, and I doubt that he has 70k of deductions). So, if you CAN shelter that money, you would instantly have 10% more (than the previous tax bracket, 22% more than you would AFTER taxes) to invest. If you invest that money AFTER tax you would be taxed at 22%. You want to keep as much of your money in as low of brackets as possible. In this case, if you invest all that money before taxes, it's like getting a 10% match or bonus on the money.
Let's say you want to invest $10,000
If you take that off the top of your income after tax that $10,000 turns into $7,800. Now let's say that it grows at 6% every year for 10 years (compounded monthly), you are left at $14,191.29 plus long term capital gains, which i won't account for here, because you'll see in a moment that just makes it worse.
If you invest it pre-tax ($10k over same 10 year period at 6%) you end up with $18,193.97. Now, let's take out the 12% income tax (because we want everything in the lower bracket), you are left with $16,010.69.
So, you magically ended up with $1,800 extra in 10 years just by avoiding the 22% tax bracket. THAT is why you want to invest as much pre-tax as possible.
(Now, you COULD argue that when you pay income tax on that $10k in 10 years instead of now, that you will be in the 22% tax bracket anyways. That means you need to be SPENDING $77,400 plus deductibles, meaning you are living a very luxurious lifestyle and not being frugal at all (80k a year translates to $6,700 a month - that's crazy)).
