Saving Over 40?

Question

Hello

I am 40 years old and I can't decide how I should save my money to go towards my first Long Term Rental.  I can't decide if I should stick to a Savings Bank Account, Roth IRA or an Acorns investment account.  So at my age of 40, which investment plan would make the most sense to put away money and collect interest, with the goal of putting it towards a down payment for a Long Term Rental?

Kate Sanchez · Answer

@Arthur Luay For a near-term rental down payment, I’d skip Roth or Acorns and focus on a high-yield savings or money market account to keep funds liquid and avoid market risk.

Ashish Acharya · Answer

@Arthur Luay At age 40, if your goal is to save for a down payment on your first long-term rental, the best option depends on your timeline and risk tolerance—but here's how each choice stacks up:

A savings account offers safety and liquidity but earns minimal interest. It's a solid short-term place to hold funds if you plan to buy within 12 to 18 months.

A Roth IRA is excellent for long-term tax-free growth, but contributions are limited ($7,000/year at your age) and early withdrawals are restricted. You can withdraw your contributions (not earnings) at any time tax- and penalty-free, so it's a decent secondary option if you're also saving for retirement.

An Acorns investment account offers automated investing, but funds are exposed to market volatility. It's best if your purchase timeline is 3+ years out and you're comfortable with risk.

If you're planning to buy within the next one to two years, prioritize a high-yield savings account or money market fund to preserve your capital. If your timeline is longer, you might blend strategies by using a Roth IRA for part of your savings and a conservative brokerage account for the rest.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Caleb Brown · Answer

Can you get your income up? 35K is super tough to save and invest. I would focus on increasing that and getting rid of consumer debt before looking or thinking of real estate. You need the right foundation to set yourself up. If you can get your income up and get rid of debt I would look into house hacking a 2-4 unit place but that'll be down the road. At 40 your money won't compound as much as a 20 year old so having higher income to throw at stocks, real estate will accelerate things.

Paul Novak · Answer

Arthur, I am going to assume that you already have paid off high interest debt and are maximizing your savings rate.  The question wasn’t how to save more money but what to do with the money you are saving.  In my mind it comes to how long you are going to have to save.  If you are going to be saving for 6 months or less I would keep the money in a high yield savings account.  If you are going to be saving for a year plus I would put the money in a low cost index fund like VOO.  I know the market is showing a lot of volatility right now but I made a savings calculator to analyze this very scenario.  What I have found over the last 45 years is that there is a 64% chance your money will grow beyond 4%, there is a 75% chance you won’t lose money.  But the potential upside out ways the risk in my opinion.  The long the money can compound in the account the greater your chances of success are.

I personally would stay away from things like crypto or highly volatile investments.  You are looking to save up for your first rental.  Doing things that put that at risk to me just isn’t worth it.  As you get more capital putting a little more risk on the table I think is okay because you have more cashflow backing you.  You don’t want to invest in a manner that could wipe out your ability to invest for tomorrow.  If you have more questions or want to talk further let me know.  Good luck!

Khalid Bryan · Answer

I hear great things about the opportunities in Bitcoin long term. I hear you can lend from your portfolio tax free and invest the proceeds into real estate. You can purchase real estate with crypto now and I hear coinbase can be used for escrow in some transactions. Do some research on the topic.

Fulton Abraham Sanchez · Answer

Hi @Arthur Luay, I understand your situation as you search for the best way to save for your first long-term rental property. Given your goal of building significant equity for a down payment, especially considering housing prices in your area, it's crucial to carefully evaluate the tax implications of each savings option, but you've come to the right place, as here at BiggerPockets, there are more than 20 CPAs who can help you.

As with loan consolidation, REP status, and potential cost segregation in existing properties, the way you save for your initial investment can also have significant tax consequences. I highly recommend speaking with a CPA with real estate experience. Even a brief consultation could clarify the most tax efficient savings strategy to achieve your rental property goal.

Bill Hampton · Answer

@Arthur Luay

We need more information. How much do you earn a year? How much do you already have saved? How much more do you need to save? How much does the house cost? When do plan on buying the property? What's your risk tolerance?

I recommend a paid consultation with your tax accountant or financial advisor. If you don't have one, get one before you do anything.

Bigger Pockets is a great place to find a tax accountant or financial advisor that specializes in working with real estate investors.

Good luck.

Arthur Luay · Answer

Thank you guys!

Jason Malabute · Answer

If your goal is to save up for your first property or long-term rental, the best approach really depends on two things — your time horizon and your comfort with risk.

Here’s how a few options compare:

• High-Yield Savings Account:Great for liquidity and short-term goals (within 12–18 months). Your money stays safe, but you won’t earn much in interest.
• Roth IRA:Excellent for long-term, tax-free growth — but contributions are capped each year, and pulling funds early can come with penalties (except for your original contributions). It’s more of a retirement tool but can serve as a secondary bucket if you’re thinking long-term.
• Investment Apps or Brokerage Accounts (like Acorns):These automate investing and can provide higher returns, but you’ll be exposed to market swings. If your purchase goal is 3+ years away, this might make sense.

Great for liquidity and short-term goals (within 12–18 months). Your money stays safe, but you won’t earn much in interest.

Excellent for long-term, tax-free growth — but contributions are capped each year, and pulling funds early can come with penalties (except for your original contributions). It’s more of a retirement tool but can serve as a secondary bucket if you’re thinking long-term.

These automate investing and can provide higher returns, but you’ll be exposed to market swings. If your purchase goal is 3+ years away, this might make sense.

If you’re aiming to buy within the next year or two, prioritize stability — a high-yield savings or money market account helps protect your capital. If you’re planning further out, you can start mixing in investments for potentially better growth.

Arthur Luay · Answer

Thank you guys!

Saving Over 40?

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