Here’s a common question we get from clients - “I have a down payment saved for a house. I want to buy in the next two years. What should I invest this money in?”
The answer is simple - NOTHING!
Disappointed? Many folks often are at our response. However, the desire to grow your down payment through investing over a short time frame violates two of our key investing principals:
Is the down payment you currently have enough to secure the house you desire? Congratulations, goal achieved. We invest (and save) to achieve our goals and you have done that. Are you still looking for a few more dollars to grab the house of your dreams? Save, be patient, and follow your financial plan.
Let’s be honest here. No investment, investment strategy, or investment professional can promise that over a two-year period you’ll make you money. If they do, they are lying! Investing requires risk. That risk is a potential loss of your investment, especially in the short-term. Could you handle the possibility that your savings for your down payment might be worth less when the time comes to buy that house?
Bottom line – the markets are no place for short term savings! Keep your short-term savings in a liquid guaranteed bank account.