I'd Like to put this 40K for a down payment on a home, however the maket in Orange County CA. is not doing so well. The cost of housing was realy high until recently they started to go down. I'd like to wait for 1-2 years before doing this but where would be the best place to keep my money and maybe make it grow a little.
2007-03-07 10:05:00 · 9 answers · asked by Miguel H 1 in Business & Finance ➔ Renting & Real Estate
CD or savings account are risk-free and pay between 5-6% right now. (The highest savings account interest rates I've seen recently are for online accounts.)
You might consider putting some in an index fund as well, which has the potential to grow more. Avoid mutual funds; investors in the know recommend against them because of the fees. And because you want your money pretty soon, I'd put very little if any into the index funds. It's just worth your consideration and assessment of risk.
It's definitely good thinking on your part not to buy real estate in OC right now. I came to the same conclusion recently and will probably wait a few years and save the extra $3K/month for a down payment on an even nicer house once prices come down some more.
Good luck!
2007-03-07 21:20:37 · answer #1 · answered by Pookie 4 · 0⤊ 0⤋
1-2 years is a short time for an investment so your options are limited. A money market account or savings account is about as good as it gets for most people.
Even though rates vary between accounts the true difference measured over 1-2 years is not that much after tax. Stay away from any account that has fees attached.
On buying a home. If the local market is not doing well then this is the best time to buy. Sellers will be willing to deal. You just need to wait until you find one but that means active looking. If you can find a seller that will discount 5% to 10% then you will save money money than you are likely to earn from 1-2 years of interest. If you get a deal that is closer to 20% below true market value then jump on it rather than wait.
Lets put it this way... What are you waiting for? Do you want to see prices start to rise to confirm the market is healthy? If so then you are thinking it is better to pay more later than to buy now when there is a 'sale' on houses. In a buyer's market you can get the seller to make concessions in terms of closing costs, closing date and other things. You will not be competing with people who will pay more than the list price just to get a home.
If you fear that prices could go down more then consider what you will be doing with the savings and the rent in the mean time. If you are going to stay for 10 years then does it matter that much if prices do not pick up for a while? In the mean time you control your home and build equity through paying down the debt. If you buy at a discount from the present true market value then you are a bit covered if prices fall a bit more.
Only buy a house you really want and will truly expect to live in for a long time. The costs of buying are pretty high. If you really think that you might need to move in less than 5 years consider the fact that it could be best to rent the place after you move vs. selling it to move. Or just stay a renter for the 5 years.
If you make good money you also could be looking at paying less in taxes if you buy a place that costs about the same as renting. Hence that is another benefit to offset any potential future fall in value.
Do not wait for the market to be heading strongly up as that just means you missed out on a buyer's market.
2007-03-07 10:22:58 · answer #2 · answered by Anonymous · 0⤊ 0⤋
call up a company like wachovia or similar. They can put you an investment portfolio together. They can tailor something up for you. Itll be way higher gains than a CD.
and 40k wont get you far in OC. housing costs there are outrageous. In texas that would be 1/4 or 1/5 of a damned nice house here.
2007-03-07 10:14:07 · answer #3 · answered by Kyle M 6 · 0⤊ 1⤋
Go online and attempt to find a "tax sale property" in your region.
a tax sale property is basically a property that is owned by the government, that must be sold for its tax amount.
this is because the government can't own and sell property like a normal person, they must sell it for its tax, so a 100,000 dollar house will become 7,000 on a 7% region.
this means that you can BUY AND OWN the house, with NO mortgate. the house may have been used in a movie, or a T.V show, or repossessed, etc.
you can buy houses EXTREMELY cheap like that, but I will warn you, the process isn't the easiest on Earth.
you could by a very good house for a 40k investment, or buy several smaller ones. then sell them for normal price.
2007-03-07 10:16:05 · answer #4 · answered by CarlosTheRed 3 · 0⤊ 2⤋
Consider the Vanguard Prime Money Market Fund with a current yield of 5.10%:
https://flagship.vanguard.com/VGApp/hnw/FundsSnapshot?FundId=0030&FundIntExt=INT
If you are in a high tax bracket you may prefer their tax exempt money market funds:
https://flagship.vanguard.com/VGApp/hnw/FundsByType
Sometimes other institutions will have a higher teaser rate, but Vanguard tends to have the highest yields I've found over the long run. (Vanguard money markets are not FDIC insured, however.)
Article on teaser rates:
http://www.marketwatch.com/news/story/banks-advertised-rates-dont-always/story.aspx?guid=%7B0A13B6E2-FFB2-4E2B-BD42-E2D1E01C52E5%7D
2007-03-07 10:18:38 · answer #5 · answered by Anonymous · 0⤊ 0⤋
Short term parking... https://www.emigrantdirect.com
5.20% 6 month or more CD. You choose the term.
5.05% Regular savings.
FDIC insured
2007-03-07 10:13:35 · answer #6 · answered by chimneygod 3 · 0⤊ 0⤋
CDs. Find the highest paying rates in your area.
2007-03-07 10:09:46 · answer #7 · answered by pepper 7 · 0⤊ 0⤋
use that 40k to buy an investment property, preferably a foreclosure that you can rehab and then do a cash out refinance and rent it out.
2007-03-07 10:08:48 · answer #8 · answered by Anonymous · 0⤊ 1⤋
day trade limited brand stock (LTD)
2007-03-08 01:58:31 · answer #9 · answered by CALIFORNIA GOLD 3 · 0⤊ 0⤋