Over the years, many people have inquired whether they should invest in a 401k or save for a downpayment. A home, after all, is usually the most expensive asset someone will buy in their lifetimes.
Coming up with the downpayment is one of the biggest financial hurdles anybody can overcome. Furthermore, nobody wants to remain in a rental if they know they plan to live in an area for an extended period of time e.g. five years or more.
I’ll share with you my framework on how to figure out whether to invest or save for a downpayment. We’ll also talk through the decision process of deciding how much to invest in a pre-tax investment account like a 401k.
The 401k has early withdrawal penalties before age 59.5 to be aware of. We’ll also talk about whether t invest in an after-tax digital wealth advisor like Betterment where you can easily get liquid without any penalties to buy your home.