Author Topic: 29, lucky, well-off: how to invest? Buy place? And thoughts on a good life?  (Read 3749 times)

jocular

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Hi gang!

For starters, I am very grateful to be in my situation.  Much of the good fortune is due to others.  I'm just making a major life transition and trying to think about the broader future, and have found this community great at larger life issues in addition to tactical investing choices.  (I'm a long-time lurker... I've read every post.)  Many here will have far larger assets, and in any case I hope to learn from anyone's expertise/thoughts regarding where I am in life.

So I'm 29, no debt, single, 'stache of $120k, recently finished terminal degree.  Invested heavily in equities, have maxed Roth to the extent I earned since 18 ($40k).  Other retirement acct of $40k.  The rest is in Lending Club ($6k) and an embarrassing amount in low-yield savings ($30k) in preparation for move.
*Another ~$400k will be added to my assets in the next few years (family).

I'm starting a new job shortly.  $132k/yr gross.  I also consult and work with startups, $10k/yr min with potential much larger upsides.

I am moving to a med-low COL area (think ~90% of Longmont, CO) for work.  I'd like to buy a very nice 2BR loft/condo (~$280k).  I could buy a good 2BR house for much less (~180k), but travel frequently and like the idea of a managed, low-upkeep place in a very central location (would be ~$300/month in fees).  I'd bike to work from either choice.   This is a case where I'm willing to be way sub-optimal, economically—I'm taking a significant lifestyle+dating hit to move for this new job, and a happy-hosting home is important to me.  My credit score is ~775, so mortgage rates are low, seemingly <4%.  I could also pay in cash, in full (using some of the family $400k mentioned earlier).  Alternately, rents are around $2000 for very high-end places.

1: Should I buy or rent?  (Assume at least 2.5 years in this location.  Strong rental market, in any case, though I'd be unlikely to be around to manage it myself.)
2: What sort of accounts should I use for my income-based savings?  I can invest in a 403b (up to 17.5k/yr, no match).  I will certainly max this.  I am also planning to max the Roth (it's unlikely my earnings will go down).  But I think that I'd like to save an additional $3k or so per month... any thoughts on vehicles for this?  I'm hoping to live on around $45k/yr (much of this travel to visit loved ones), leaving around $45k total to invest.  Not that Mustachian, but a start.
3: Any broader thoughts on how to live life well, given this situation/foundation?  Again, I feel super-lucky.  I've worked very hard, but most of my good fortune is down to others and their support.  All in my family (we're close) are in very good financial situations, and I don't anticipate needing to support them financially.  I do give to charities (time as well as about $1k per year, and will double at least when starting new job), though it makes more sense for my family to give via other family members with higher marginal tax rates.  My work is very fulfilling and, I think, useful to the world.  I'd do 60% of what I do at work for free (and I make significantly less than I would in other options -- not to say that I feel like I'm making a big sacrifice, just to acknowledge).

Again: This isn't meant to be humblebrag bullshit.  I'm just making a major life transition and trying to think about the broader future, and have found this community great at that (as a long-time lurker... I've read every post.)  Many here will have far larger assets, and I hope to learn from anyone's expertise/thoughts regarding where I am in life.

Please share your thoughts—and especially your questions.  Thanks, guys.

« Last Edit: September 21, 2013, 12:37:18 PM by jocular »

Dee18

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Re: 29, lucky, well-off: how to invest? Buy place? And thoughts on a good life?
« Reply #1 on: September 21, 2013, 12:19:16 PM »
Congratulations on getting where you are!  I recommend renting for a few reasons.  (1) You say you may stay as little as 2.5 years in that location, probably not long enough to cover transaction costs.  (2) If you rent, you can just go for the space you need now--perhaps 1 bedroom?--whereas with buying one understandably tends to think toward the future a bit more.  (3) At age 29 and single, you may well meet your mate in the next couple of years and then want to choose together where to live.  Of course, there may be other factors as well.  Have you lived in this town before?  Do you know exactly what part of town you would like to live in long term?  I think renting the first year in a new town is often a good idea...and my own experience was that once I got to know people, I heard about really good deals--both on rentals and homes for sale. 

jocular

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Re: 29, lucky, well-off: how to invest? Buy place? And thoughts on a good life?
« Reply #2 on: September 21, 2013, 12:28:54 PM »
Thanks, Dee!  This is really helpful.
 (1) You say you may stay as little as 2.5 years in that location, probably not long enough to cover transaction costs.
-- If I buy straight from a developer/builder, are transaction fees still high?  I have no idea on this one...

 (2) If you rent, you can just go for the space you need now--perhaps 1 bedroom?--whereas with buying one understandably tends to think toward the future a bit more. 
-- I think the 2BR is helpful now.  Not absolutely req'd, but helpful. I'd use the second as an office when working from home, and I definitely need a viable second bedroom for frequent hosting.


(3) At age 29 and single, you may well meet your mate in the next couple of years and then want to choose together where to live.  Of course, there may be other factors as well.  Have you lived in this town before?  Do you know exactly what part of town you would like to live in long term?  I think renting the first year in a new town is often a good idea...and my own experience was that once I got to know people, I heard about really good deals--both on rentals and homes for sale.

--I do know the area well, and am confident about the area I'd like to live in.  I think it's largely a financial call -- I don't really care about the "intangibles" of ownership right now.  The only other issue is that my ideal building doesn't rent/lease, though there are desirable units to purchase.

Any thoughts on this?  Thanks again.

Spudd

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Re: 29, lucky, well-off: how to invest? Buy place? And thoughts on a good life?
« Reply #3 on: September 21, 2013, 01:30:22 PM »
-- If I buy straight from a developer/builder, are transaction fees still high?  I have no idea on this one...

It's not the buying that costs money (well, it costs a bit in lawyer fees and so on), but the selling. When you sell a place, the realtor charges a percentage of the sale cost, which is entirely paid by the seller. Where I live, the standard fee is 5%, but it varies by location. This is the main cost involved in buying/selling.

matchewed

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Re: 29, lucky, well-off: how to invest? Buy place? And thoughts on a good life?
« Reply #4 on: September 21, 2013, 04:01:51 PM »
2.5 year time frame? Probably rent, but run the calculator http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0. 5 and 7 year ARMs were built for those types of short term purchases.

If you have the availability to use an HSA you can squirrel away a bit more than 3k pre-tax.

Broader thoughts on living well. Live to your values, you seem to be doing that so I'm unsure as to what you're asking.