I need to investment money I want to use in hopefully 5 years or so for a down payment on a house. Because of that, I don't want to chase the lure of high stock market returns and get burned by a seriously down market. So how should I invest this money? Bonds, CDs, or something else? Should I put a sliver into stocks? And if so what bonds? Should I buy municipal bonds in my non-tax advantaged accounts?
As a note, my retirement investments are all in great shape thanks to this forum, so I won't mention them.
The kind of money I need to invest is:
$50,000 cash (non-tax advantaged)
$2,000/mo into Roth IRA through post-tax 401(k) backdoor
$50k to $75k in stock vesting later this year (god willing it holds its value, and yes I'll be selling it immediately)
Thanks!
How to invest down payment fund?
Re: How to invest down payment fund?
Common BH wisdom is that you do not risk money that is needed within 5 years, so FDIC insured products are best.
If you simply cannot abide the low return environment of the safe products, then maybe consider a low risk bond fund, probably a tax-exempt bond fund since this is non-retirement money. Stocks are really out of the question here.
If you simply cannot abide the low return environment of the safe products, then maybe consider a low risk bond fund, probably a tax-exempt bond fund since this is non-retirement money. Stocks are really out of the question here.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
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Re: How to invest down payment fund?
Thanks, that's what I suspected. Is my best bet to find the best CD rate possible in my timeline and go put the money into it? The other, unanswerable question, is if I am saving too much for a down payment, but that depends on where I buy a house, and mortgage rates, so I imagine it's best to play it safe now and then invest any unneeded money once the house is bought.BolderBoy wrote:Common BH wisdom is that you do not risk money that is needed within 5 years, so FDIC insured products are best.
If you simply cannot abide the low return environment of the safe products, then maybe consider a low risk bond fund, probably a tax-exempt bond fund since this is non-retirement money. Stocks are really out of the question here.