Moderate chance I'll need to dip into roth principal when I buy a home. With that in mind, should I be investing in bonds, or should I still playing the long term game with stocks?
My empoyer allows the mega backdoor roth strategy, where after tax 401k contributions are converted to roth contributions, and then rolled over to a Roth IRA. I can do about $40k worth of this a year. I have not been taking advantage of this because I have been saving for a home down payment.
I'm at point now where I have enough to make a 15-20% downpayment on a home, which is great. But, depending on the home I buy, I may need more cash lying around to fund projects & renovations (which is not something I can easily finance into the loan, home renovation loans have a lot of strings, and can make my offer uncompetitive).
But, because there's a chance I might not need to touch this money - and because you always withdraw roth principal (your contributions) penalty-free, I figure now is a good time to start prioriting roth contributions over after-tax savings. My questions for you is, should I be investing my roth funds into the stock market (i.e. VTI/VXUS), bonds, or short-term cash equivalents (1-3 month T-Bills, SGOV, MMFs, etc)?
Details:
* Income: $275k - a significant portion of this is commission and company stock, however. I might break $300k this year, but if the market performs poorly I might fall back to $260k.
* Liquid Net worth: ~$375k
* $161k in retirement, all in on VTI/VXUS.
* $20k in immediate cash (Treasury MMF)
* $132k in cash-equivalent bonds (1-3 month T-Bills, SGOV)
* $55k in after-tax investments (almost entirely VTI)
* Home Purchase: I'll probably buy something in the $600-850k range, putting $120-135k down, with potentially $15k in closing costs (depending on whether or not the seller will cover it). I may wish to put more down than this, but that would involve selling my stocks. All in all, I could end up paying as little as $120k, or as much as $180k (depending on the cost of the house, and how much mortgage debt I want to take on).
What do you guys think? **I'm not concerned about withdrawing roth contributions because I wouldn't be making them otherwise (*a temporary roth contribution seems better than no roth at all*)**, and I would have the freedom to add back when I withdrew in the future (given the high limit).