How do I invest money that I planning to buy a home with in 3-6 yrs?

Question

Trying to match or beat national returns for real estate .I plan to use ETFs. This is not downpayment money (ie first 20%) but money above and beyond that. Just curious as to allocations, and I could always get a bigger mortgage and wait to withdraw if the market dropped significantly right before buying. Right now Im thinking

Domestic Dividend ETF 25%
International Dividend ETF 35%
REIT ETF 7%
Utilities ETF 6%
TIPS ETF 9%
Intermed Corp Bond ETF 18%

Any suggestions appreciated especially from those significantly experienced in financial planning.

Answer 1

Invest in the index funds with 2-3 years horizon. You should get reasonable tax free returns over 5-7% above inflation.

Answer 2

Your "asset allocation" is great except for one thing... You need the money soon. if you had a 7 - 10 year window I'd say that your allocation looks good.

What happens in 4 years when you want your money & the market drops by 25%? Money for a home downpayment belongs in Savings Accounts (earning above 5%),FDIC insured. You can also consider a small amount, laddered in CD's. What you're doing is gambling (because of the short time horizon). Don't hurt yourself!

Answer 3

I just opened an account at amtrustdirect.com I am earning 5.36% interest in my e-money market account there. Just like a savings account, you can take your money when you need it. Check it out.