What should I do?

Question

I have 1000 dollars left bi-weekly after expenses. Should I invest it in mutual funds? I am planning to buy a house by the end of the year, so I'll need it for down payment?

I already save up about 15% of the down payment in a savings account with 5% interest. I don't have any debts, perhaps talking to a financial adviser is a good idea

Answer 1

since you need the cash in such a short time frame, you might consider a money market account or something that will simply add interest to your principal with no risk of loss & something that can be easily liquidated so when you have to pony up the downpayment there won't be any hassles.

A mutual fund puts you at risk of a market downturn & potential loss of your principal thus leaving you short with the downpayment.

Answer 2

You don't need a financial advisor for this, trust me, I am one.

Are you already saving for retirement via 401k or an IRA? If so, you should just add that extra $1000 to your savings account for your house. You do not want to invest money for your house in mutual funds, it's way too risky.

If you are NOT saving for retirement yet, you should use at least part of that money to fund your retirement accounts. If your company does not have a matching 401k, you should first fund a Roth IRA. You can put in up to $4000/year and you have up until April 15 of 2007 to put in money for 2006. This should be VERY high on your list of things to do if you haven't already. Then I would set up a direct deposit into a Roth of $333/month so you fully fund for 2007. This money you should invest in mutual funds that are appropriate for your age and risk tolerance.

If, after funding your retirement you still have money, I'd continue adding to your house savings account. You can never have too much money for a house since there are always expenses you didn't think would be there.

Congrats on being in such a good place financially. Good luck and if you have more specific questions feel free to e-mail me.

http://www.personalfinance101.org/?utm_source=YH&utm_medium=link

Answer 3

That's great! Congratulations.
First I would come up with a budget.
I would list all my debt.
Pay off your debt smallest to largest.
Do not go back into debt.
Since you make extra money and after paying off all your debt, make a list of what you want to do or buy (ex: a new car, TV, party, vacation and of course your house).
For a house, save till you have 20% (you will not have to pay PMI which is a heavy fee and makes you buy a lesser house).
Invest in mutual funds.

Answer 4

I would save some of it , especially if you plan on buying a house. Most lenders want to see 2 to 6 months in mortgage payments in a savings account.

Answer 5

If you invest it in a mutual fund and withdraw it by the end of the year you will pay more in fees than you gain in interest.

Try a liquid CD or a savings account.

Answer 6

You should but it in a saving account and you need a little bit more then $1,000 for a down payment it is about $ 5,000. That is a good idea because that is also what I am doing to for my family. Good luck

Answer 7

Go to your local bank and talk to a financial adviser and tell them what your goals are and they will give you many options on what to do with the money so that you will have a good down payment for your new home.

Answer 8

Do not buy mutual funds if you are going to use any of this money to buy a house within the next 1 year. Put the money in a money market mutual fund (MMMF)

Answer 9

short term CD? if you want it by the end of the year, perhaps put it in a money market account so it will earn some interest. No a lot of time for a interest bearing CD to do you any good.

Answer 10

Invest your money in CDs of 6 months or a year maturity, you'll get 4 to 4.5 percent interest.