Author Topic: Saving for a real estate down payment: keep in Savings or put in Vanguard?  (Read 1356 times)


  • 5 O'Clock Shadow
  • *
  • Posts: 59
Hi folks,
Here's the sitch:
DW and I have $250k across our retirement/investment accounts, and I think it's time to diversify into a real estate purchase.  We live in NYC, so we could easily put our life savings into a down payment for a one bedroom condo in Brooklyn, but we are thinking that we may not want to stay here (HCOL, high stress/long hour jobs) so I am thinking to divert the next $75k we can put away for a down payment.  Provided nothing changes w/our employment, this could be the next year of saving, and I'm hoping we've sorted out the "where" bit by then.

Do I keep putting everything into Vanguard (and the highly inflated market) for the next year, and then sell the fund shares when needed for the purchase?
Do I divert the biweekly autopayment into a separate savings account and keep it liquid and outside the market until it reaches $75k and/or is needed for the purchase?

My "financial advisor" (friend who is a real estate investor and financial planner for the ultra wealthy) says to do the second option.  She sounds worried about the market taking a nice big correction soon. That said, she also is in favor of us putting 200k+ into a down payment for a Brooklyn apartment.

What should I do?



  • Stubble
  • **
  • Posts: 133
Since 1927, for 12 month rolling periods SPX (S&P 500) index (may not take into account dividends).

34%        of periods have resulted in losses
18%        have resulted in losses greater than 10%
7.0%       have resulted in losses greater than 20%
3.5%       have resulted in losses greater than 30%

The lowest return over 12 months is -70%.

Statistically, 66% of the time you will make money owning stocks over a 12 month period with an overall median return of 8% and average return of 6%.

The question you are asking is "ceteris paribus, is the 2/3 chance of making money worth the 1/3 chance of losing money and small probability of losing substantial capital".

For most, I believe this answer is "no". Your time horizon is 1 year. Equities are not 1 year assets.

I have neither the time nor desire to assess the relative probability of a drawdown in the face of today's prevailing valuations; all I'll say is that most believe there is a higher probability of a drawdown 8 years into a bull market than in a given year. Whether that is true or not, is tough to answer. Valuation is correlated to long term returns, but less so short term. 1-2 years is short term.

For those tolerant of risk, the answer is "maybe". Your buddy who is a financial player for the ultra wealthy deals with people for whom the answer is generally "hell no, don't lose my money, I'm already rich".
« Last Edit: October 10, 2017, 10:18:58 AM by mrspendy »


  • Handlebar Stache
  • *****
  • Posts: 2180
  • Age: 26
I think it's time to diversify into a real estate purchase.

but we are thinking that we may not want to stay here (HCOL, high stress/long hour jobs)

IMO, these two statements are at odds with one another.  It sounds like you're (unintentionally) conflating purchasing real estate for a place to live with buying real estate as an investment.

If you are interested in real estate investing, that's one thing.  If you are interested in moving forward with purchasing real estate for a living situation, that's completely separate. Mixing the two can be done, but it's not easy.

What are your intentions?  If you're considering leaving NYC anytime soon, do NOT buy a place.