I'm 51, male, single, don't own a home anymore (live in a rental apt), have a stable job, salary around $255k, live in HCOL city. Approx. $1.5M in 401k (max out every year), $36k in Roth (started doing backdoors 3 years ago), $55k in Series I Bonds, $431k in taxable brokerage acct. Around $241k in the taxable account is sitting in Vanguard's Treasury Money Market Fund (VUSXX), and the remaining $190k is spread across VTI, VTEB, VEA and VXUS. Total portfolio just over $2M. My current asset allocation is 61% equities, 27% bonds, 12% short term reserves. My desired asset allocation is 67/28/5.
In 2020 and 2022 I sold some of my equity and bond ETFs in my taxable brokerage account to accumulate cash in anticipation of building a house. Last year I bought a piece of residential land in a different state, designed a house, hired an architect to draft it into plans, etc. I was hoping to build it sometime in the next 3-5 years. All last year I stashed cash in the money market fund with the goal of reaching $300k, which is half what I estimate it will cost to build the house.
Now my plan has changed. I no longer think I'll build the house in the next few years due to family having moved farther away from the place where I bought the land. I might build it there, or I might not, but it's no longer a certainty. Either way, I definitely won't build it within the next 2-3 years.
Here's my question: what should I do with the $241k sitting in the money market fund? It's earning around 5.28%, but I worry I'm missing out on having it invested. I want to put most of it into VTI in my taxable brokerage account, which would bring me to my desired 67/28/5 asset allocation, but I'm concerned that if I DO decide to build the house in, say, 3, 4 or 5 years, I'll run the risk of having to sell my taxable brokerage account investments at an inopportune time. The price/share of VTI is near its all-time high, for example. If I decide to take the plunge and reinvest the $241k now anyway, I'd be sure time any withdrawals to generate house-build cash so as to avoid the higher cap gains rate. If you think I should reinvest the cash, should I do it all at once in a lump sum, or do it in chunks over time?
Important consideration: I'm 51, have spine problems which will likely someday require major surgeries, and might not be able to continue working to age 65. I'm guessing I'll be lucky to work until age 62, so I probably only realistically have 11 more years in my taxable brokerage account investment time horizon. Oh, and I also luckily have a work pension which will pay me $3240/month when I turn 65 -- not bad.
Thanks for reading this and for any input you can provide!
In 2020 and 2022 I sold some of my equity and bond ETFs in my taxable brokerage account to accumulate cash in anticipation of building a house. Last year I bought a piece of residential land in a different state, designed a house, hired an architect to draft it into plans, etc. I was hoping to build it sometime in the next 3-5 years. All last year I stashed cash in the money market fund with the goal of reaching $300k, which is half what I estimate it will cost to build the house.
Now my plan has changed. I no longer think I'll build the house in the next few years due to family having moved farther away from the place where I bought the land. I might build it there, or I might not, but it's no longer a certainty. Either way, I definitely won't build it within the next 2-3 years.
Here's my question: what should I do with the $241k sitting in the money market fund? It's earning around 5.28%, but I worry I'm missing out on having it invested. I want to put most of it into VTI in my taxable brokerage account, which would bring me to my desired 67/28/5 asset allocation, but I'm concerned that if I DO decide to build the house in, say, 3, 4 or 5 years, I'll run the risk of having to sell my taxable brokerage account investments at an inopportune time. The price/share of VTI is near its all-time high, for example. If I decide to take the plunge and reinvest the $241k now anyway, I'd be sure time any withdrawals to generate house-build cash so as to avoid the higher cap gains rate. If you think I should reinvest the cash, should I do it all at once in a lump sum, or do it in chunks over time?
Important consideration: I'm 51, have spine problems which will likely someday require major surgeries, and might not be able to continue working to age 65. I'm guessing I'll be lucky to work until age 62, so I probably only realistically have 11 more years in my taxable brokerage account investment time horizon. Oh, and I also luckily have a work pension which will pay me $3240/month when I turn 65 -- not bad.
Thanks for reading this and for any input you can provide!
Statistics: Posted by scalawag73 — Fri Apr 26, 2024 3:00 pm — Replies 11 — Views 658