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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: poorboyrichman on January 01, 2015, 03:21:06 PM

Title: Can investing short term be sensible for a house deposit
Post by: poorboyrichman on January 01, 2015, 03:21:06 PM
Quick question, looking to purchase my first home with my partner and I have 1000 in cash and will be saving another 600 per month towards our house deposit. Would it make sense to invest over a short period (1 to 2 years max) in a Vanguard LifeStratergy fund to maximise returns? I was thinking of investing in one of the less risky funds with a max of 20-40% in equities as I couldn't tolerate any major losses at this stage given the short term nature of the investment. I already have plans to invest 500 a month towards retirement with the 80% fund so this would be a seperate investment, purely for the home purchase.

Any thoughts?
Title: Re: Can investing short term be sensible for a house deposit
Post by: MDM on January 01, 2015, 03:29:52 PM
Quick question, looking to purchase my first home with my partner and I have 1000 in cash and will be saving another 600 per month towards our house deposit. Would it make sense to invest over a short period (1 to 2 years max) in a Vanguard LifeStratergy fund to maximise returns? I was thinking of investing in one of the less risky funds with a max of 20-40% in equities as I couldn't tolerate any major losses at this stage given the short term nature of the investment. I already have plans to invest 500 a month towards retirement with the 80% fund so this would be a seperate investment, purely for the home purchase.

Any thoughts?

Depends on how you look at the two bolded terms.  Unfortunately one cannot have one's cake and eat it also, so you'll have to make a choice.

If you have your heart set on a certain purchase, chasing short term returns seems unwise in view of the risk incurred.
If the purchase is truly optional, then go for the long term returns and if the purchase is doable, that's a bonus.
Title: Re: Can investing short term be sensible for a house deposit
Post by: poorboyrichman on January 01, 2015, 03:43:16 PM
Just ran the numbers and with returns averaged at 7% and I would only stand to gain a few hundred, yes definitely not worth the risk in the short term!