Hello,
I have a question about what to do about my retirement savings. The question is a little multifaceted, and please keep in mind I am kind of clueless about this kind of thing (although trying to clue myself in).
My family has no debt and we rent a house. We have been relatively thrifty over the years. I got some money for college from a relative about 10 years ago, and I worked in college so I managed to have about $16,000 left over when I graduated. About six years ago I entered a brief period of investment excitement, and I invested it in Vanguard funds. Unfortunately, I didn't stick with the S&P 500 funds - I put about half in a total international stock fund (VGTSX) and half in an emerging market find (VEIEX) - why? Because I let my gambling get the best of me, I think. (Neither seem to be doing that well compared to S&P.) I have about $12K in Roth IRAs, and $4K in a regular Individual account.
Okay, sorry for all the background, on to my main questions: 1) Should I redistribute all of these funds in a better-allocated distribution? What are the costs of selling them all and rebuying? Still don't quite understand the IRA system enough to know if I'd lose out.
2) My wife and I want to buy a house. I won't go into whether or not this would be a good investment here, but let's assume it IS for the moment (and we're planning on paying it off quickly).
Now, I believe that I can use my Roth IRA funds for a down payment on a first home purchase without paying early withdrawal fees. a) Is this true? b) How do I determine whether this makes sense or not? Do I prioritize getting a 20% down payment together? The standard doctrine is to not touch my retirement at all. They way I see it though, is that 16K is not that much money and it's not making money either. My wife and I have good careers and the potential to save a lot more over the next 10 years, at least moving in the direction early retirement, if not fully retired. I like my job and it is very flexible, so I don't particularly want to retire from it anyway.
So: What should I do? Cash out my $16K in about a years time and count it towards my down payment? Or save less than 20% and keep my investments invested? And either way, should I just go ahead and redistribute all my investments into a more intelligent allocation?
I would appreciate any advice. I'm trying to educate myself on all this stuff by reading books, but it would be helpful for me to get input from folks who have the particular perspective promulgated on this great website.