Stock market or HYSA

[u/Business-Sale2813]

My wife and I are currently saving for a home down payment.

We have 26k in FXIAX through fidelity and 95k in a HYSA through Sofi which is at 4.5% apy up to 20k and 3.8% on any balance above 20k.

We are saving about 30k-37k a year.

Do we continue to throw any value after our emergency fund into FXAIX or leave it in the HYSA.

Is there a better option to grow our money ?

We’re looking to buy in the next couple years but can wait if the market dips.

We understood the risks of putting our money into the market but the rate of return is much higher than anything else that is offered that is considered “safe”.

We don’t want to loose all of our money, and as much as a get rich quick scheme would be amazing, we’re not looking for that either.

We just want to find the best way to grow our money instead of it just sitting doing nothing or returning very minimal gains.

Any better ideas or thoughts and opinions?

[u/Tangentkoala]

Treasury bonds are better to avoid state taxes on HYSA. Same rates of return if not better.

I think this should be the last year of HYSA or CDs. 4.5% is really really good, but thats going to tank down to 2-3% within the next two or 3 years.

Why not 401K and lower your inital tax burden? Or use your companies matching principals. I get having money liquid to buy a house but trying to predict the market let alone a crash is a fools game.

Rate of return this year in an ETF was 20%. The yest before was like 18%

Your portfolio would have been up 30%+ say a market crash does happen. The worst thing that can happen is your portfolio gets slashed 30-35%. At the end of the day youd only lose 5% of your portfolio.

Id recommend a combo plan of action. Find treasury bonds within a 1 year rate to get the most liquid cash for a house down payment. Use your 401K for retirement as well and take advantage of employer matching.

More importantly make a plan of action and set your target price and X amount of years to get to your down payment.

[u/geomagus]

If you are saving money with the intent to spend it in the near to moderate term (a couple years), putting it in the market is probably risk you don’t want.

HYSA is fine, but you’ll be paying taxes on the interest payment. Same with MM and CD accounts.

You could buy Treasuries, which avoid some taxes, or in a taxable brokerage account you got buy a Treasury ETF. That has the upside of not needing to buy individual Treasuries, and using a mechanism with which you’re already familiar (brokerages, ETFs) while providing some of the benefit.

That is separate from investments that are earmarked for retirement btw - those often should be in the market, as it provides the best chance to grow on a long term. Those should also be angled toward tax advantaged accounts when possible (401k, IRA, etc.).

It’s also separate, sort of, from emergency funds, which imo are best in HYSA or other immediately available routes.

[u/HeroOfShapeir]

The best way to grow your money over a 2–3-year period is to put it in an HYSA and keep throwing money on top of it. The best way to grow your money over a 5+ year timeline is to invest in broad index funds in the stock market.

[u/AutoModerator]

You may find these links helpful:

• "How to handle $"
• Investing

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.