Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Downpayment or Investment
Old 01-21-2005, 08:48 PM   #1
Confused about dryer sheets
 
Join Date: Jan 2005
Posts: 3
Downpayment or Investment

a friend of mine is looking to buy a house in the $200000 range. he currently has $10k saved for a down payment. last year he made $96k & hopes to do better this year, so lets call it $100k. also, no debt.
because of his work situation, he ends up paying only 7% tax & gets a hefty cheque every year at tax time. last year it was $13.5k
assuming the same amount this year, would it be better to add $10k to the down payment, or should he use that money to invest in an index fund, a drip, or some other kind of investment.
__________________

__________________
Sharp21 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Downpayment or Investment
Old 01-22-2005, 06:44 AM   #2
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
Re: Downpayment or Investment

I general, you should put down 20% to avoid paying mortgage insurance.

As far as investing $10k or putting more down payment, this is up to you to decide. The down payment is a gurantee return of 6% (or whatever the mortgage rate might be) while investing in an S&P500 index may provide you with a return of 10.63% over the long term.

P.S. I would like to pay only 7% tax also.

Spanky
__________________

__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Re: Downpayment or Investment
Old 01-22-2005, 08:07 AM   #3
Recycles dryer sheets
 
Join Date: Oct 2003
Posts: 452
Re: Downpayment or Investment

Seems like your friend is giving the Feds an interest free loan every year (13.5k), that is paid back after he files his taxes.
That's a mistake. That's over 1000 / month that he could be investing/saving.
__________________
renferme is offline   Reply With Quote
Re: Downpayment or Investment
Old 01-22-2005, 08:23 AM   #4
Recycles dryer sheets
 
Join Date: Sep 2004
Posts: 174
Re: Downpayment or Investment

Why not just put the money away for now since you know what you want for a home. If your dream house falls into your lap, it would be a good idea to have the money! My tax this year will be around $2,000 on $30,000 of income, however, $12,000 of that was capital gains/ dividends. So I'm about 7% myself this year.
__________________
Berkshire_Bull is offline   Reply With Quote
Re: Downpayment or Investment
Old 01-23-2005, 06:16 PM   #5
Confused about dryer sheets
 
Join Date: Jan 2005
Posts: 3
Re: Downpayment or Investment

the money is not an interest free loan to the govt. it is due to an offshore tax credit, which applies only to those people working for a canadian company, but out of the country for more than 6 months of the year.
tax is deducted every check at the regular rate (38%) & then the credit is applied at tax time, hence the big return.
__________________
Sharp21 is offline   Reply With Quote
Re: Downpayment or Investment
Old 01-29-2005, 07:04 PM   #6
Full time employment: Posting here.
 
Join Date: Dec 2004
Posts: 714
Re: Downpayment or Investment

I believe bennevis was referring to the amount withheld, and can't your friend reduce that (via W-4 change) in anticipation of the credit? *I'm not an international tax expert ... has your friend determined lower withholding is definitely not an option?
__________________

__________________
Craig is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Tropical Tree farms as an investment dougdo FIRE and Money 53 05-17-2008 06:31 PM
Investment cost basis justification for taxes Delawaredave FIRE and Money 8 01-07-2007 09:21 PM
What is this investment ? Delawaredave FIRE and Money 9 12-27-2006 01:42 PM
Looking for opinions on this Unit Investment Trust Dude FIRE and Money 15 03-07-2006 11:37 AM
Does this investment exist? ordway FIRE and Money 4 09-16-2004 06:52 AM

 

 
All times are GMT -6. The time now is 04:56 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.