My partner and I want to buy our first house.
We're thinking about the cash that we'll be required to have on-hand for the down payment and closing costs. We have no debt.
We have money saved in various accounts of ours: brokerage, traditional IRA, Roth IRA, 401k, etc.
Our brokerage account contains various index funds (stocks, nominal bonds, inflation-linked bonds, commodities, etc) whose total value exceeds what we'd need for a down payment for a house.
It feels like we have 2 options (or combo if the 2):
- Sell enough of those assets to have enough cash on hand for the down payment, closing costs, and for paying any necessary taxes on the sale of those assets, or...
- Leave the brokerage account untouched, and start saving new monthly income into a simple savings account, and just wait a longer time until that savings account has enough cash for the down payment and closing costs.
Option 2 came to mind since we've always wanted to avoid selling assets because of the tax consequences. But it would involve us accumulating ~$200k that is sitting uninvested (and therefore losing purchasing power in the meantime due to continued inflation), missing out on any upside in the markets over that time (and yes, we know markets go up and down, but we believe as a general rule that one can expect to receive positive compensation for having diversified passive exposure to the markets over time).
What are the factors that we should be considering?