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your return on what may be a meager starting balance. Unless your target date for buying a home is
way down the road — say eight, ten years or more —
don’t do it. The stock market is too volatile for shortterm savings. One severe market downturn can set
you back significantly, not to mention discourage
your ongoing efforts. Instead, take a look at these
options: High yield savings accounts: These days,
“high yield savings account” is a bit of an oxymoron.
But with easy access, total liquidity, and FDIC insurance, it’s a common choice for short- to mid-term
savers. Banks, especially online versions, like Capital
One 360, Ally and Synchrony offer decent rates. Be
sure to check with your local credit unions, as well.
Money market accounts and funds: Money market
accounts and funds can also be useful options for
the short-term saver. Money market accounts are insured and offered by banks and credit unions while
money market mutual funds are not guaranteed and
available at investment brokerages. As with savings
accounts, it takes a bit of shopping to find decent returns. Perhaps the best option is buying certificates
of deposit (CDs) timed to mature around the time
you expect to have the bulk of your down payment
saved. CDs offer a slightly higher rate than savings
accounts or money markets, but that’s because
your money is locked up for the term of the CD: six
months, one year — even two, three years or more.
The fact that your money is inaccessible unless you
pay a penalty may help keep those of us easily tempted to tap savings on track. While all of these options
may currently have skinny returns as interest rates
rise, your profits will too. Besides, saving for a down
payment may be more about keeping the cash outof-sight and out-of-mind rather than scoring big returns. And each of these savings options can quickly
be set up for automated transfers from your checking
account.
BIG
BLOCK
REALTY
Alex LiMandri
CalBRE 01822666
[email protected]
www.laloftsrealty.com