Probably not the right bowl. I have $240k in my savings account, recently became a father of 3 and my wife left her job so now one income. I make $215k base. Monthly expenses prob around $6.5k including my mortgage. Home equity somewhere around $200k. I've never been good at investing (always losing money in the market). Want to move to a bigger home but don't want to lose my cash cushion. How can I conservatively grow my net worth? Vague question but any help appreciated. BTW I'm 33.

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I know that these are probably simple answers to your question but take it from someone that has been in the market for a while, simple is best. Google 1 and PWC 1 are 100% correct. VOO/VUG/VTI are the best. I think if a lot of us knew this simple strategy from the beginning we could have had much higher returns. Stay the course and don’t deviate.

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US large cap indexes have done really well and are likely still a good strategy.

Nobody has a crystal ball, but indexes do a good job of rotating the “winners” in (which have been big tech in recent years) and the “losers” out.

The general recommendation is to invest in index funds such as VTI or VOO in Vanguard. You should also max out 401k and back door Roth IRA every year to take advantage of tax incentives. It’s honestly just those few small things and you put your investing on auto pilot.

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D1, I was in your exact situation 6 years ago.

I’d be cautious having so much $$ in cash in savings unless you have short term needs for it as inflation will keep taking bites out of real purchasing power.

You need to figure out how much cash you need for an emergency fund and any shorter term needs. Then consider investing the rest.

Do you really need a bigger home now? Will you be able to comfortably handle those expenses (not only mortgage and taxes, but also upkeep which can be surprisingly large for a single family house)

How much will you need for a down payment?

What do your retirement accounts look like? Are you maxing out your 401k?

Have you started 529s for the kids?

Agree with others that investing in US large cap indexes like VOO or SPY is a pretty safe bet with a 5-10+ year investing timeline

likesmart

I was an advisor for HNW clients prior. Best advice I think is to limit your expenses as much as you can. Would question if you really need to upgrade the house. The market is inflated now, rates are rising, demand is slowing, so wouldn’t be surprised if it looks better in next couple of years but who knows.

Investing wise, an easy allocation is
40% SPY - US large cap
25% QQQ - tech
15% SRLN - Senior loans (replacement for fixed income bc rates are so low). Pays around 4% a year vs treasuries around 2%.
20% BXMT - black stone real estate fund paying 8-9% a year. Also great bc these loans are to commercial properties and are floating rate, meaning as rates rise the firm makes more money off the loans. It’s a natural hedge for inflation that way.

Also would keep trying to max out 401k to reduce taxes, and you can always withdraw from the 401k anytime for a new home purchase if it’s been 5 years since your last home purchase. Hope this helps. DM if you have specific questions.

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You can’t afford a bigger home on that income and three kids, no magic bullet here…

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He can but at a lower school and neighborhood quality. I would rather setup bunkbeds for a few years until wife can start work again if was in that situation.

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Mutual funds and long term investing.

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I am not from US but the principal remains same.

You need to set aside big portion of your salary in Mutual Funds via monthly systematic investment. Someone else is taking investment decision on your behalf so risk of loosing money is small.

I am in 40s and at this stage the money I make from my investment is equal to post tax salary I receive from my software job. I am assuming a return rate of 12 percent. I am getting more than that but i want to be conservative here.

I started investing 12 years ago and my savings rate have been 50 percent. My wife also has to quit her job to take care of baby, so for me it was important to get that lost income back.

Check Dave Ramsey videos on YouTube, he has some good advice for US folks.

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To conservatively grow net worth you may look into investment properties. You are set up for that since you have liquid cash. If you don’t mind moving, then you may be able to get a multi family unit where you can move in and use your home equity, plus some of those savings for down payment and then rent out.

The math needs to work out and the location needs to be landlord friendly with positive cash flow.

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How is buying investment properties with 5x leverage safer than mutual funds with zero leverage?

You mention more effort. How much time does it take to buy and maintain a rental property vs buying a mutual fund?

What about liquidity and transaction costs?

I’m not saying there isn’t money to be made in Real Estate, but there are many pros and cons.

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Dip into that home equity to secure a second home. Rent out the first (lord of land) and you generate passive income. Ask your missus to help with the admin of collecting and tracking rent. Keep your $240K diversified

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Yep and when they did the no eviction because of Covid thing, there were a lot of landlords who got stiffed on rent.

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Here is what I would do if it helps (33 single male (I own two properties, but wearing your shoes):

If you have a single family home already in a major city and in a nice area I would just hold on to that and remodel if you really need more space. It will be worth it’s weight in gold by the time your kids are going to have their families. While renovations take time and effort, if it actually adds value to the home why not. The timing to sell and then to buy a new home right now if you can find one sucks.

Getting a new house would just mean a new 30 year commitment, which meh. You’re close enough to paying for the first one, why take on more debt if you really don’t have plans with your money/have not been planning and you have 3 kids to send to school potentially. Don’t take equity out for anything not medical. Secure your first home fully paid (but don’t pay early!)

Also, since you have a stack of cash already saved up, calculate your actual year emergency fund which is 6k expenses x 12 = 72k keep that as an emergency fund

Then (I know some people think this is too conservative or Dave Ramsey) but you could also have a rolling 6 month mortgage fund, where the mortgage auto drafts. So say you deposit a 7th payment month into this account. Instead, that dollar amount let’s say $2k can be auto rolled into Vanguard ETFs (look up lazy portfolio). If there is an emergency, you have a 6 month mortgage window and can stop the drafts to vanguard.

Sucks you didn’t buy any ETFs during the pandemic.

But yeah, you can’t time real estate or the market. You gotta just do research, get in the game, have a trusted team, and buy stuff without monitoring it daily.

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Probably need your spouse to go back to work for saving power to be higher.

If you’re risk adverse try I bonds for the next year…pegged to inflation so sitting at a safe 10%

Check out “I” bonds from Treasury. Currently pays 7%. most likely it won’t pay this much for long term, but you can cash in. So long inflation is high.

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