I live in San Diego,CA and as most people know, housing prices are no t very cheap in here. Now, I hold some thoughts when it comes to money:
- You should always invest in 401k
- If you have leftover money, it should always be invested too.
Following this rule, I have been investing all 18k between my self and my wife for last two years + I have been having my long term stock investments for last 3 years. I initially thought that I can always get my money from investments If/when i decide to buy a house. However, I just realized that it would not be the best of ideas because
- From 401k, I can only borrow up to 50k
- with regular investments, I have already paid some taxes(as in income taxes) and when I sell it prematurely then I will end up paying long term investment taxes on top of it. That to me is a bad idea.
Say we talk numbers. I need 140k minimum for my house down payment an I think it may take me 3 years to save it if I need to.
- Which means if I do not invest during these three years then I lose all the potential investment returns on un-invested money
- If I do invest then I pay taxes twice (Income tax when I go tmy pay check + long term investment gains)
I am really confused on should I invest or not invest when I am saving for my house downpayment. Any ideas?