31F, single, no kids, no debt. Numbers/finance are not my forte (I went to art school). My dear grandparents generously left me $250K and I am overwhelmed with where to start investing it. I would like to purchase a house in the next 3 years or so (likely won’t be sooner than that) but want to ensure the money is accessible in 3 years.
I am meeting with my financial advisor at the end of the week to discuss ideas on what to do with the money. When I briefly spoke with him earlier, he suggested a saving brokerage account at 3.73%, money market, or a 3-year CD.
I’d love to hear your thoughts. Thank you!
Inheriting $250K. Smartest way to invest for buying a house in 3 years?
byu/_fearlesschicken ininvesting
Posted by _fearlesschicken
17 Comments
If you are saving for a home, I think that a high yield savings account or CD are both good options. If you are looking into investing some cash, an ETF like VOO or SCHD might also be something to look into.
Your financial advisor is on the right track. If your horizon is 3 years, you don’t want to put it in something significantly risky, so your viable options range from cash equivalents to low-duration bonds.
Sorry for your loss, congratulations on your generous inheritance.
That money will hemorrhage purchasing power if it’s left in a money market or CD, due to current inflation unfortunately. It is the safest bet, but it is also barely surviving. A more aggressive financial advisor focused on growth may be more aligned with your near term goals. It’s true there is more risk the more aggressive the plan is, but that should all be explained and executed per *your* tolerance by a good advisor.
Open a Fidelity account. Put the money in SGOV. Then educate yourself on personal finance.
Start conservatively with SPAXX at Fidelity while you learn about investment options. The market could correct by 25% over the next three years so go slowly until you learn more.
Fidelity brokerage account in SPAXX or FZFXX pays the same 3.7 and you don’t have a FA taking 1 percent of it annually in fee. I’m highly against a CD as the money is locked up for the time duration. If it were me, I’d dump the cash into the broker account. Collect the interest on the money market. While that is happening, learn/read about investing. Maybe put some cash into the market. Your short and long term goals will define your strategy.
Voo
That’s an amazing opportunity, congrats on the inheritance. Since your time horizon is short, just three years, the priority should be capital preservation and accessibility rather than chasing high returns. Options like a high-yield savings account, money market, or a short-term CD make sense.
You could also use a wealth management tool to see different allocations, track risk, and compare yields while keeping your goal of buying a house in mind. The key is keeping it simple and ensuring the money is ready when you need it.
These comments are all pragmatic but you don’t need 250k for a house. The market could indeed crash by 25% for the next three years. You’ll get into the same house with $175k. Invest it in the stock market. Broad based ETFs. If the market drops, it drops. You don’t need $250k for a house.
Edit: I don’t mean a house costs less than $250k. I mean that $250k will have OP a house with a mortgage the same way that $175k would. Thats because houses today typically cost well above $250k. I suppose that’s not implied for some people.
It all depends on your tolerance for risk.
Your advisor’s recommendation is the cookie-cutter “safe” bet – there’s very little risk of losing your principal, and you should have ~$280K in 3 years. This also very much helps your advisor, as his company would gain $250k in investment capital.
However, I’d argue that 3.73%/year (or ~11.7% compounded total return) in the current market, for someone of your age and profile…is not in your fiduciary interest. 2022 was a rough year, but the S&P500 (or approximately VOO) has returned 80%+ since 1/1/2023. VTI, which includes international companies, has performed similarly. This has been a historic “bull market,” but your $250k could conceivably grow to $400k+ in an index fund like VOO/VTI if the market stays hot; even if we revert back to historic norms of 8%/year your $250k could grow to ~$315k.
Stepping back a bit to look at the larger picture, be wary of financial advisors. They will want to trap you as a long time client and may recommend investments that are difficult to change/liquidate.
No matter what, stay away from annuities and whole life insurance at your age.
Stepping back a bit to look at the larger picture, be wary of financial advisors. They will want to trap you as a long time client and may recommend investments that are difficult to change/liquidate.
No matter what, stay away from annuities and whole life insurance at your age.
That was sweet of your grandparents. Let it sit while you shop.
I hate to point out 250k is enough for the vultures to come at you but not enough to buy a home. Educate yourself on compound interest and go from there.
Don’t do 0 DTE options – i mean i personally would do that but you shouldnt if you need it
If you find the right house, at the right price sooner than later…
You may find that housing market appreciation, and inflation could negate any investing gain you may or may not have, not to mention what you will pay rent over the course of the next three years…
Food for thought…
I just buy HSBC shares with the money. Paying dividends and growing in price.
Risky but the return is more than 4%
1-year with 20% buyback premium. That’s where I’d put it.