The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: kavsquires on August 21, 2014, 12:04:49 PM
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I am a single mom finally making a decent living. (Went from $35k to $55k in a rural area this year) I have managed to save $11k over the past year with the goal of purchasing my first home. I have paid all debts with the exception of $8k remaining in student loans. I would R E A L L Y like to make that money do a bit of work for me in the short term - after all - the bigger the downpayment, the more negotiating power I will have on my interest rate. I'm flummoxed. Any suggestions?
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In general, you don't want to invest any money that you absolutely need short-term into stocks. You should keep that money in a safe accessible place (savings account, money market, maybe short-term CD's). While it is enticing to get gains from the stock market, you have to ask yourself "If I want to buy a house in 1 year, and I put $11k into the market, but when I want to buy the market has dropped... do I still want to take out that money?"
What's the time frame on your house purchase, and how much do you think you'll need?
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Yes, I assumed the stock market was a wash for short term - it's just difficult to see it sitting there, doing nothing! The cost of living is very cheap where I am. I can purchase a nice home with a yard in a good neighborhood for $100k-$125K. I'd really like to have $20k to put down so that I can do a 15 to 20 year loan with a lower interest rate.
I'm looking to make a purchase spring of '15.
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It would be best to hang on to that cash until next spring if you plan to buy a house with it then.
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Yes - I suppose if anyone had a magic formula for turning $11k into $22k in a few months wouldn't be posting here for free, LOL! Slow and steady wins the race. Thanks!
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Yes - I suppose if anyone had a magic formula for turning $11k into $22k in a few months wouldn't be posting here for free, LOL! Slow and steady wins the race. Thanks!
Well, according to your post, you already have a magic formula for making $0 into $11k in 12 months :)
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Lenders like to see money in the bank account. If you are buying a house in the spring, then you'll need the money in your bank account in the winter. 3 months worth of any kind of investment will be almost nothing (without taking significant risk).
I'd just go with a high interest (1%) savings account and call it a day.
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I use www.smartypig.com for my short-term cash. 1.0% APY
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Well, according to your post, you already have a magic formula for making $0 into $11k in 12 months :)
I did that the old-fashioned way... by moving every spare dime into the savings account! I'll count my blessings. : )
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SmartyPig is a pretty cool gig. Thanks!