Saving for a First Home! How to make the most of my principal
Would appreciate any advice or personal experiences from anyone on this topic!
With housing prices ridiculously high and rising interest rates, I have decided to live at home with my mom to save up money for a down payment on my first home. Any advice on high-yield ways of earning interest while still protecting my principal? Thank you in advance for any responses to this post.
You could simply put the funds into a high-yield savings account and/or purchase US treasuries. Your bank might also offer competitively priced CDs.
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Real Estate Agent Florida (#SL3473500)
- Global Investors Podcast
- https://harborsidepartners.com/commercial-real-estate-podcast/
What is your timeline? If you are thinking within the next 5 years, @Charles Carillo hit all of the main points. Like most posters here, I only offer opinion, not investing 'advice' - but I wouldn't invest in the stock market as you said you want to protect your principle. Unfortunately, there are few other tools out there that exceed inflationary erosion. E.g., Ally.com is a popular online bank with a nice HYSA rate that is in near-lockstep with the Fed rates (3.85% as of this writing, while the CPI is published at ~4.9%). CDs are nice tools as they don't float, but lock in predictable returns (a 60mo yields 4.1% presently). Normal CDs can also be redeemed early for a minor penalty (brokered CDs through decent outfits like Vanguard or Fidelity are different animals). i-bonds (a savings bond) get a lot of press when inflation is flying and are about the only tool that will approximate inflation (https://www.treasurydirect.gov...), but that's not guaranteed. I-bonds do have some tax-advantages these other tools do not. And finally you can look at the trifecta of T-bills, T-bonds, and T-notes with their own holding periods and interest rate scales.
High yield savings account is probably the easiest place to keep it if you are wanting to use it within the next few years. The good side of the interest rate hikes is that these accounts are paying more as well.
@Charles Carillo @Ash Hegde Thank you guys. Need to look into a HYSA that will give me the best interest on my money.
@Paul Vail Thanks for breaking this down for me. I’ll look more into the information you provided!
Depends on how long you'll be saving. Charles Schwab offers a 5.3% APY on a CD. Discover has a regular savings account at 3.9%. You could put your money in an Index fund etc... Multiple ways to go about it
Quote from @Eric Castaneda:
@Charles Carillo @Ash Hegde Thank you guys. Need to look into a HYSA that will give me the best interest on my money.
@Paul Vail Thanks for breaking this down for me. I’ll look more into the information you provided!
You're very welcome. And please don't read too much into my post. I am NOT suggesting investing in the market is a bad idea. Only if you need to have a 'reliable' chunk of principle at the ready in your timeline. I'm a huge fan of investing in the stock market, particularly with tax-advantaged accounts and using ETFs such as VTI+VXUS as an example. But I'm also a huge fan of having 'safe' cash available and for your stated needs, I'll stand by my earlier post :)