Author Topic: Buying house soon - keep money as cash or in mutual fund?  (Read 2000 times)

chrispitzer

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Buying house soon - keep money as cash or in mutual fund?
« on: July 10, 2015, 03:16:07 PM »
My partner and I are buying a house soon. It's it bit of a bear to buy a house in Portland right now, and we've been looking for the killer deal for about four months now.

We've got the cash saved for a down payment. No credit card debt. Small amount of low interest student loans. And some assorted 401k business.

Advice time: should I keep my down payment money as cash or put it into a mutual fund as well? Given I may be using it to buy a house tomorrow, or may be using it to buy a house 3 or 6 or 9 months from now?

slugline

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Re: Buying house soon - keep money as cash or in mutual fund?
« Reply #1 on: July 10, 2015, 03:30:40 PM »
With that short of a time horizon, there's not all that much to be gained by having it invested in something with a lot of volatility. I think you'd be justified with having it in something as boring as a savings account.

I accumulated my own house down payment over the course of about three years, and  had it stashed in the Vanguard Short Term Investment Grade bond fund (VFSTX). So it earned more than if it was in a bank account, but nothing exciting.

Dicey

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Re: Buying house soon - keep money as cash or in mutual fund?
« Reply #2 on: July 10, 2015, 04:03:27 PM »
Safety is worth a mint when it comes to hard-earned DP money. Do nothing to jeapordize it. If you're going to use it within a year or two or even three, keep it safely stashed and don't chase returns. Just don't keep it under the mattress literally.

zoltani

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Re: Buying house soon - keep money as cash or in mutual fund?
« Reply #3 on: July 10, 2015, 05:36:26 PM »
I think you are better off asking your mortgage lender in this case as there are pretty strict protocols regarding move money around when you get your loan.

aschmidt2930

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Re: Buying house soon - keep money as cash or in mutual fund?
« Reply #4 on: July 10, 2015, 06:49:21 PM »
I wouldn't invest it if you're set on buying a house in the near future.  It would be a shame if the market dips 30%, and takes years to recover.

Bearded Man

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Re: Buying house soon - keep money as cash or in mutual fund?
« Reply #5 on: July 11, 2015, 12:15:35 AM »
I wouldn't invest it if you're set on buying a house in the near future.  It would be a shame if the market dips 30%, and takes years to recover.

I'm buying a fourth house and have always kept my money in the bank for this reason. That and I never felt safe in the stock market. I gambled a lot away, but now I've discovered VTSMX I feel a bit better but still not ready to jump in again.

In fact, personally I would not invest money in the stock market unless I owned my primary residence. If people do nothing else but this, they will still build wealth for themselves in the long run. Diversify, but get your foundation first, and that is a primary residence that you own.

Ricky

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Re: Buying house soon - keep money as cash or in mutual fund?
« Reply #6 on: July 11, 2015, 12:53:57 AM »
I wouldn't invest it if you're set on buying a house in the near future.  It would be a shame if the market dips 30%, and takes years to recover.
In fact, personally I would not invest money in the stock market unless I owned my primary residence. If people do nothing else but this, they will still build wealth for themselves in the long run. Diversify, but get your foundation first, and that is a primary residence that you own.

In general, I agree, for someone who doesn't have any other investments or very little. A house is a forced savings account.