Investing 102

[CRCRFT78]

I've been thinking about cashing out my IRA and buying a house. Of course I woud incur the tax hit and te early withdrawal penalty but I think getting back into a house as opposed to renting could be a good idea. My rent payment can become a mortgage payment and be cut in half. The half I would save I can then contirbute back into a retirement account. Any opinions on this?

[Bucketlist2012]

Originally Posted by CRCRFT78

I've been thinking about cashing out my IRA and buying a house. Of course I woud incur the tax hit and te early withdrawal penalty but I think getting back into a house as opposed to renting could be a good idea. My rent payment can become a mortgage payment and be cut in half. The half I would save I can then contirbute back into a retirement account. Any opinions on this?

It depends on how old you are...If you are low 30's then maybe it is a good idea..You have plenty of time to regain Investments..

I just don't see rates being lower ever again...At 3.75% with deductions and Inflation, you are borrowing for almost free...

Renting ? You never gain anything...

[CRCRFT78]

I'm 35 so I feel like I have some time. Also the fact that I could possibly cut my payment by almost 50% and own instead of renting is a big factor. That 50% can be divided towards other things including more than what goes into my investment accounts already. I'm aware that starting over will hurt my total balance in the long-run but the thought of renting long-term just doesn't sit well with me.

[Bucketlist2012]

Originally Posted by CRCRFT78

I'm 35 so I feel like I have some time. Also the fact that I could possibly cut my payment by almost 50% and own instead of renting is a big factor. That 50% can be divided towards other things including more than what goes into my investment accounts already. I'm aware that starting over will hurt my total balance in the long-run but the thought of renting long-term just doesn't sit well with me.

35...Then IMO, I would do it..

Rates will never be lower and renting will give you nothing in return..

Sure being in California we get punished for being Home Owners, but in the long run, for me, it is one leg of my table of Financial Security..

Also you are selling at a High because I think we may get a correction in 2013..Nothing drastic, but we could lose 10% in a correction in the Stock Market..Temporarily..

NOT being an advisor, this is strictly opinion..

Also prices are on the rise with Homes , so better now than later.

[96z28ss]

really good article I just read, and that is what investing 102 has been all about.

http://beta.fool.com/thebargainbin/2...gyholnk0000001

[WSSix]

Jose, maybe only cash out enough to cover 20% of the home costs? That way you can avoid PMI and not take out too much from the 401k hopefully. I'd consult a financial adviser with that idea unless they can offer good reasons why not at all or why you should go more than the 20% down payment. Good luck. I hate renting and look forward to the day I can buy my own home, too.

[WSSix]

Originally Posted by 96z28ss

really good article I just read, and that is what investing 102 has been all about.

http://beta.fool.com/thebargainbin/2...gyholnk0000001

Excellent find! Very encouraging to me.

[glassman]

Originally Posted by Bucketlist2012

I know this is Investing 102 , so some of what I mention is actually Investing 101.

But everyone should be in their Companies Employer Matched funds if they are available..

When I worked , my company matched 10% and they also had a profit sharing program...

FREE Money. Plus I had them taking out 15%...Over a long period of time ??

Add to that having no consumer debt like Revolving Credit Card balances, or Car loans.

Then add to that a mid 3% Mortgage on a home you can afford ?

Then live within your means and have Investments on your own ?

Of course a high paying Job would be nice but not needed.

I may not be rich, but I am comfortable..

Ahhh but you are rich Michael ...we are in the top 10% in the world if all we have is one apartment/house, one car, and one computer.....not to mention our pot bellies lol...

Mike

[Bucketlist2012]

Originally Posted by glassman

Ahhh but you are rich Michael ...we are in the top 10% in the world if all we have is one apartment/house, one car, and one computer.....not to mention our pot bellies lol...

Mike

Ah Yes, when you put it that way....

I know I am blessed and Lucky to Live in America , even though I don't like the government that much...

[glassman]

Me neither!!! But we is still free (for the moment)....