Hello all,
I just paid off all my college loans (yay!), and have no car payments, credit card balance, or debt of any kind. I haven't started saving for retirement at all yet, and my job doesn't offer a 401k or other retirement option until I've been there a year (I started approx. 3 months ago). I do, however, have a healthy four months' expenses between checking and savings, which I am comfortable with as an emergency fund.
I'm taking home approximately $2,400/month and will have about $1,200 a month to invest. I will get a bonus at the end of the year ranging from $5,000 to $15,000, depending on how well I meet certain goals over the year.
I want to start saving for retirement, but honestly I am more excited about the prospect of owning a house. I am planning on relocating to a lower cost of living area, and I would estimate that my ideal house would cost about $90,000. 20% down payment would be $18,000, and I know closing costs can add extra thousands.
If I can save $1,200 a month with a $5,000 annual bonus, I should be able to cover a 20% down payment in about a year. The question is, how should I invest that money so that I can easily withdraw it within 5 years? From what I've gathered, investing all of it in the stock market is too risky since I will need the money relatively soon. Would it make sense to invest along the lines of a conservative 80/20 bond to stock ratio, invest in money markets, or some other strategy? What would YOU do?
Note: I'm sure some (if not all) of you will advise me to begin saving for retirement. Rest assured, I plan to open a Vanguard Target Retirement fund ASAP and save simultaneously for a mortgage down payment and begin funding my retirement.