[dpark]

I think the core problem causing disagreement here is that you are not consistent or clear with what your goal is. Do you want flexibility? Low risk? Then rent. Do you want to own a home? Then buy. But decide what you want and then figure out how best to get there. You're starting with the assertion that the goal should be 500k in the bank but then abandoning that goal at some arbitrary point in the future when you'll suddenly dump that into a house. What do you actually want? Half a million in the bank as a safety cushion? Then you should not put that into a house at any time. Do you want a house? Then you probably shouldn't wait until you've saved an arbitrary half million dollars.

I don't know where you're getting the 6% number for buying a car in cash. That's definitely not going to happen. You could get a car loan at a better rate than that from a bank and pay the dealer in cash. Bankrate.com is showing me a rate below 3% for financing a new car over 5 years.

Your belief that you can do better than 4% in the market is exactly why it does not make sense to save and buy a house in cash. If you have 500k in cash and have the option to dump it into a house or dump it into the stock market, and you believe the stock market will perform significantly better than real estate, then you are wasting money by dumping it into the house. If you believe you can get, say, 6% in the stock market, then taking out a mortgage at 4% lets you earn 2% extra each year.

[Retric]

Reading though this thread I have been justifying my statements and backing into an odd corner.

Buying a house was an example of a life changing thing you could do with 500k even with a six figure job. And no you can't buy a house at 100k with zero savings in the bay.

Sure, that's true long before you randomly hit ~500k, but that was chosen as a 'good' return from joining a startup that does not become Google as a non founder.

PS: As to returns, if you can't get 4+% retirement get's a lot harder. 1.04 ^ 40 = 4.8x So, 10% is not even close to cutting it. At 2% forget about it. Best of luck.

[dpark]

You're right that you cannot buy a house with $0 in the bank, pretty much regardless of what you make. No one is likely to give you a mortgage with $0 down, and if they do, it's going to be a bad deal for you.

Back on topic, we did go down an odd path specifically about the house. My initial point really boils down to what you want to do with the money. It could be very life-changing to save $500k in ten years and retire somewhere cheap. If you're just going to buy a house, it's really not that life-changing, both because you can do that without 500k in cash, and because owning a house is really not that different day-to-day from renting.

I'm not clear what you mean when you say "10% is not even close to cutting it". If your retirement goals depend on a >10% return, you're likely to be disappointed. The S&P 500 has only been ~5%/year for the past 10 years, and that's before accounting for inflation. It wasn't doing so hot before that, either, with ~4%/year over the last 20.