i guess i can offer advice to a vikings fan since my preferred team is in the afc :p.
SkolVikes7 wrote:has a solid emergency fund (index funds).
absent context, index funds are not appropriate for an emergency fund.
He wants to use the $80k that he has invested with fidelity and transition it from these high risk assets to use for a downpayment for a house in 3-5 years.
this is a really bad idea, as it seems you are aware.
My first instinct is to tell him to sell these to purchase a short term bond index fund (such as Fidelity Spartan Short-Term Treasury Bond Index Fund Investor Class). Although I know it is not ideal to hold these types of funds in a taxable account.
Another note is he is currently in a tax free zone (and spend the past three months in a tax free zone), I don't know if that would change anything. In all reality, the decision to go with CD's, MM or Short term bond funds in this time frame will most likely not make much of a difference, I am just looking for any advice or oh bye the ways before I tell him my opinion. Thanks!
i don't know what you mean by "tax free zone". does this impact your concerns about potentially holding tax-inefficient assets in taxable space?
i think the options you're considering are all reasonable. you should also look at I Bonds. you could consider municipal bond funds, which bear more risk (weaker diversification) but have better tax efficiency.
if it were me, i wouldn't mess around with these nonzero-risk vehicles (bonds) when there are zero-risk vehicles (CDs, I Bonds) with similar yields right now. for the long run, i'm perfectly satisfied with bond funds. 3-5 years is not the long run.