Author Topic: Best place to save for the short-term?  (Read 2306 times)

somebody8198

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Best place to save for the short-term?
« on: October 06, 2015, 01:24:17 PM »
Let's say you want to save for a downpayment on a home sometime in the next ten years; or a some unexpected medical expenses. Where would you invest money so that the risk threshold is right?

Eric

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Re: Best place to save for the short-term?
« Reply #1 on: October 06, 2015, 01:42:05 PM »
Depends.  The standard answer is a savings account (or CD).  If you're flexible in your timeframe, you could get to your goal faster by investing it.  Of course, that could also get you there slower.  It's variable based on the goal and whether there's a flexible timeframe or not.

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Re: Best place to save for the short-term?
« Reply #2 on: October 07, 2015, 09:08:06 AM »
Let's say you want to save for a downpayment on a home sometime in the next ten years; or a some unexpected medical expenses. Where would you invest money so that the risk threshold is right?

In my view, ten years is not short term.  So it's not easy to give you a good answer... except that for "unexpected" medical expenses, I keep targeted money in a high-yield savings account because liquidity is key here (IMHO).

slugline

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Re: Best place to save for the short-term?
« Reply #3 on: October 07, 2015, 10:41:03 AM »
In this time frame I'm personally a bit risk averse, but these were my reactions to that question, depending on how this sum is viewed:

Scenario 1 -- "I want to invest this money and I think there's a high probability it will be used for a house purchase around year 10, and not much of a chance I'll need it before then."  <--- I'd put it in a 50/50 mix of  stock/bond funds.

Scenario 2 -- "I think of this as my emergency/contingency fund and there's a fairly equal probability I will tap it for some purpose between 1 and 10 years from now." <--- I'd just keep some in an FDIC-insured savings account and some in a bond fund.

For money I don't expect to tap until >10 years out, I'd go much heavier into stock funds.

zephyr911

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Re: Best place to save for the short-term?
« Reply #4 on: October 07, 2015, 02:14:18 PM »
I'll beat the money-market rate for as long as you wanna leave it with me... just in time for Stocktober too! Wooo