I expect to receive ~$170K in proceeds from selling my previous paid off house in the near-future.
The time-frame for a next home purchase is likely 2-6 years when/if my SO and I decide to have a family. We're currently loving the simplicity of our one-bedroom condo rental, a move that has enabled us to get down to one vehicle and get closer to work. We will also weigh out the cost of renting vs. owning, but generally our area supports home ownership. The issues, 1) we don't know when we might need a larger house and 2) we don't know the ideal location yet.
Without significant detail (we already max out our 401Ks, ROTH IRA, and invest the remaining balance in an after-tax brokerage account). We generally maintain a savings rate of 60%+ and we like the idea of maintaining little to no debt. We are currently debt free. Our current allocation is roughly 77% equity, 17% fixed income, 6% REITS. Additionally conservative, we maintain a large cash balance for unknown expenses, emergency fund, future cars, etc.
I'm curious on how you would approach the cash proceeds and if you can evaluate my initial thoughts:
$170,000 cash proceeds
$51,000 30% to online savings account for future down payment
$51,000 30% to PFF - preferred equity index fund (likely to sell and add to down payment)
$34,000 20% to REIT Index Fund (could either sell at next home purchase or maintain based on price)
$34,000 20% to brokerage for investments
The selection was based on my desire to earn some income before the next purchase, but maintain assets that would likely not have significant price fluctuation (as in the case of online savings and PFF). The issues: PFF has interest rate risk and exposure to financial institutions (think that is reasonable risk given the current environment), REITs have greater variability in return (but we could always wait it out with a lower down payment, maintaining that fund), and PFF and REITS are not great for taxable accounts (25% federal tax bracket, no state income tax).
Thoughts?
