Author Topic: Proceeds from house: where to store until I buy again in 12 months?  (Read 1105 times)

swt3000

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Hi, I will be making 160,000 on the sale of my house.  I will then be moving and getting to know a new area and then buying a house in about a year.  I hope to purchase a house for under 250,000 and pay off a small mortgage in 5 years.  I hate the thought of that cash from the sale of my current home just sitting there, but know that there is a risk in investing it if it was significantly down when I find the house of my dreams.  Any thoughts?

NoraLenderbee

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Re: Proceeds from house: where to store until I buy again in 12 months?
« Reply #1 on: December 02, 2014, 12:45:06 PM »
Savings account, CD, or Treasury bills/short-term bonds. If you know you need the money in a year, you need to invest in something where the principal is not at risk and that isn't volatile.

nereo

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Re: Proceeds from house: where to store until I buy again in 12 months?
« Reply #2 on: December 02, 2014, 06:13:48 PM »
I agree with the very core of what NoraLenderbee said; "if you need the money in a year, you need to invest it in something where the principle is not at risk"

However, I'll make an alternative suggestion.  Given that mortgage rates are "stupid low" right now, I'd recommend putting 20% of your expected purchase (~$50k) price into a safe savings account, and put the other ~$110k into an index fund.  Then take out a $200k mortgage at 3.x%  You can still make accelerated payments and odds are once the mortgage is paid off you will have a LOT more in your 'stach.

I would do this if your income allows you to easily make the monthly payments and you have no other financial skeletons hiding in the closet.

swt3000

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Re: Proceeds from house: where to store until I buy again in 12 months?
« Reply #3 on: December 02, 2014, 06:56:30 PM »
That's what I'm talking about! Thanks for the idea Nereo.