but it sounds like you don't NEED this money in 2-3 years, you might want this money in 2-3 years. Would I be correct in assuming that if you invest this money and the market tanks you would reconsider at that point whether you want to lock in the loss by selling to buy real estate unless the real estate deal makes that worthwhile? Or would you want to sell no matter what because you'll want to buy real estate even if it doesn't make financial sense? If the former, then go ahead and invest the money, it's the "right" decision. If the latter, you may want to put the money in something unlikely to lose value.
If you do want to invest, remember Dollar Cost Averaging is a good behavioral trick to get you to invest as fast as possible while acknowledging that investing makes some people nervous. Mathematically, investing as fast as possible (as close to lump some as possible) is the optimal strategy.
Yeah, you read this right ;) I might want the money, but I don't exactly know when or under what circumstances. Obviously if the market has tanked, I'm not going to pull it out... but that could hamstring my efforts to buy a house
if the housing market tanks at the same time ;) But then, if I see the market tanking, still have a decent job, and stop investing in my funds and throw my cash into savings, I could then still swoop in and buy a house. Or does that count as market timing?
This is the problem: there are tons of variables that are impossible to predict, so I'm just trying to make the decisions that make me as resilient (antifragile?) as possible, without putting my FIRE plans on hold.
Also, I do appreciate you summing up DCA that way!
Your situation is almost exactly the same as mine. I sold a house and got a check for $110k, but I'm not sure how long it will be before I want to buy another house. It could be as soon as next year, or it could be 2-3 years away. I basically went with option #2 on your list. I'm keeping enough for a 20% down payment in savings, and dollar cost averaging the rest. I've been investing $10k at a time. I also decided to increase the size of my emergency fund because I went through a period of unemployment recently (which was the reason I was selling my house to begin with) and it took me a while to land a new job. I don't want to have to worry too much about being unemployed again, and having the extra savings really helps.
Thanks for sharing, I appreciate the real-world experience! I also would like to have a sizeable emergency fund readily available. Up till now, I've just stuck the vast majority of my money into the markets. I know MMM talks about using a HELOC as an emergency fund, but obvi. that's not an option for me anymore.
My problem is that I live in a HCOL area, and a 20% down payment is realistically almost all of the money I'm walking away with :S Time to think about moving, I know... hence why I don't want to buy a house just yet.