When saving to buy a house there are many issues to consider. One is what you do with the money you are saving to buy a house?
The rule of thumb is to put this money into a safe investment vehivle like a money market account or savings account. The logic behind this is that you do not want to be in the stock market and have a correction when you need access to the money. Also, you do not want to invest in anything illiquid or volatile.
Now I have heard stories about those that were saving to buy house buy investing the money they saved. Yes, it turned out well for them and they grew their money that way. However, if you followed that path recently last week’s stock market drop and continued volatily could put your home purchase on hold because your $50,000 has become $45,000 all of the sudden.
It is silly to risk your savings to buy a house because currently there are many online saving account options that offer an APR over 5%. The safety, liquidity and growth really cannot be beat.
Remember that any money you will need to access within the next three years should be in a high yield savings account or money market. It was tough gfor my wife and I to avoid the stock market with this money, but we did it. And near the end each month we were seeing a big chunck of interest being deposited into our account.
I use HSBC for my online savings account and I get about 5% and love it. Right now they also have a 6% special going on for money transferred into the account until end of April. I agree with the post that its a smart way to keep your money liquid but still get a good amount interest added to your account