Where to House my Down Payment Funds?

3 Replies

Hey guys. I recently finished "Set for Life" and in it the author suggests keeping your investment savings (not your emergency savings) in the stock market so you can ride the general upward slope of the economy before you utilize it. This makes a kind of sense, but I have concerns.

And it's not as though I am terribly risk adverse, either. I have a separate portfolio of stocks which are all highly aggressive, but my timeline for those is decades in the future. 

Basically, because my estimated timeline before purchase is 12-36 months then that isn't very long term and thus I wouldn't be riding the "general upward slope of the economy" but would rather be subject to whatever short term market conditions come my way. 

What do you guys think? If you were going to be making a purchase in the next 3 years would you keep your money safely "under the mattress" in the bank, or would you place it in the market and accept the risk for the possibly great rewards?

I personally put my down payment money in an Ally Savings Account. I had toyed with purchasing CD's but found that the Ally Savings Account had a very decent interest rate where it wasn't worth doing a CD for less than 5 years. I believe I get something like 1.25% now.  I personally don't prescribe to stock market investing, especially for a downpayment.  The only way you may true money in the stock market is not put most of your eggs in one basket.  Doing that with my dp feels like Russian roulette. 

@Corina Eufinger

Ally savings, huh? Interesting. 

I wouldnt want to throw my funds into a single stock either. The only way I'd do it is with a broad Index Fund of either the S&P500 or the entire US market.

I know I don't make a ton on it in Ally but it keeps it liquid and my money doesn't fluctuate. So if I see a good property on Sunday I don't have to wonder what my stock will look like on Tuesday if I sell to gather a DP.   

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