I want to buy a house within 5 years. How should I invest the savings in the meantime?

James A: I want to buy a house within 5 years. How should I invest the savings in the meantime?
Analysts like to say that “any money you need in the next 5 years should be out of the stock market.” But analysts are often full of it.

I plan on buying a house in the next 5 years and I was wondering where the best place to save the money is. I figure I will save a couple hundred a month and put it in a high-quality bond fund yielding 5-6%.

Other options would be stocks, money markets, etc.

Any suggestions?

Answers and Views:

Answer by dragonbreathfromjuno
I think the high quality bond fund is a very good choice. Even high quality bonds can go down because the ratings agencies have been lousy at rating lately. 5-6% bonds imply some risk, too. The economy is going down the toilet and you should play it very carefully now. Go for a CD at 3.5% if you want to play it very safe.

Five years is a reasonable time frame for buying a house. I doubt the price of houses will go up much in current conditions. Don’t buy more house than you expect to need.

Answer by Smilin’Bob_ The Enzyte Guy
In this economy, keep the money safe in CD’s until ready to use…..