u/gmannetje

Hi Bogleheads! I'm looking at a time horizon of ~6 years for a house down payment, and I wanted to get the community's critiques on my plan.

I know that for ~3-5 year time horizon the general recommendation is to stick to short term treasuries/HYSA/CD's, but since my time horizon is towards the end of that range, and ultimately is quite flexible in case of a downturn, I was thinking of starting with a 50/50 blend.

This would be 50% equities (VT), and 50% treasury bills/bonds. For the treasury bills/bonds I was thinking of using the new iShares term treasury ETF's, here it would be the iShares® iBonds® Dec 2032 Term Treasury ETF | IBTM. These look good to me due to the low ER (0.07%), and set maturity date that corresponds approximately to when I would want to use these funds.

The 50/50 approach would be for year 1 funds, and then each subsequent year I would allocate less into equities and more into Tbills/bonds, say 30/70 year 2, and 10/90 year 3, then 100% treasuries from that point onwards.

Each year, after hitting the long-term capital gains, I would convert the VT share lots into fixed income until I hit my desired allocation for that year. This would be either additional IBTM shares, or something more liquid (like SGOV), aiming for 100% fixed income (treasuries) 2-3 years out. I would then wait until IBTM matures, and have the funds available for a down payment.

If there is a large market downturn in this time frame, I would be willing to hold on to the equities I had bought for an additional 3-4 years, potentially shifting the house purchase timeline, however ideally I never have so much in VT such that this is a dealbreaker.

My questions are:

Is 6 years still too short of a time frame for any equities, or is the approach I've come up with above safe enough for what I want to accomplish?
What does this community think of the term treasury ETF's, can I use them like this?
What have other Bogleheads done to manage their savings for a large purchase like this, in a similar time frame?
Anything else I'm missing?

Thank you!!

For some background, I (23M) have been working out of university for a couple years, and due to a very generous living situation have been able to save the majority of my income. I've spent the last few months reading about Bogleheads, on the forum and here on Reddit, and built a portfolio that mostly follows those principles, but I'm unsure if I'm thinking about things correctly, and wanted feedback.

Since I've fortunately been able to start so early, should I still focus on maxing my 401k contributions (currently 15%, could be much more), when I'm also able to max out my RothIRA at the start of every year? The alternative, what I've been doing, is being more generous with contributing to my taxable, in hopes of saving enough for a down payment 5-10 years down the line.
With limited options in the 401k, and approximately equal 401k / RothIRA account values, how should I manage the US - ExUS split?

Across my investment accounts, I'm currently shooting for a 40/40/10/10 Total US, Total International, US SCV, and International SCV. I realize that this is not explicitly Bogleheads as it deviates slightly from market weights (50-50 instead of 60-40), and there's a small cap value tilt, but having spent a few months going through literature, Ben Felix, OptimizedPortfolio, and the like, I've decided that this will be my target split over the next few decades.

While I am young and have only experienced a decade long bull market, I am extremely averse to selling and have been convinced by the & Chill part of VT&Chill, so I am comfortable with 100% equities at my age.

Portfolio:

Taxable:

~$60k, 30% VTI, 30% VXUS, 20% AVUV, 20% AVDV

RothIRA:

~14.5k, 100% FZILX

Trad 401k:

~14k, 100% FXAIX

Emergency:

6-12 months funded, ~10k

Unfortunately, besides FXAIX I do not have access to any reasonable international funds or TDF's, they are all American Funds with high ER's. My thought process was that since they are about equal at the moment, I can approximate my desired US/ExUS split using the Fidelity S&P500 I have access to, and the Fidelity international 0% ER fund in my Roth.

What are the r/Bogleheads thoughts on this? Should I hit the max 401k contribution as early as possible, even though I will only be able to contribute to the S&P500 fund, and I am starting retirement savings quite young? Or would it be better to contribute less (maybe 10-15k a year instead of the $24.5k max), and save more for a house fund?

I appreciate any insights into my thought processes. Thank you!

How to organize House fund, ~6 year time horizon

Portfolio Review: Advice Wanted