3

I have about $18k in mutual fund assets that I am planning to use for a down payment on a home within the next 1-2 years. Combined cost basis for the assets in question is +$2,800. Right now the asset allocation is aggressive, with a heavy slant towards stocks.

I'm not going to be contributing to these funds within the above timeframe. I just want to make sure they hold their value.

The way I see it, I can either liquidate the funds now and put them in a savings account, or I can rebalance to a safer investment within the funds, then liquidate closer to the actual closing date.

Are there any advantages or disadvantages to doing one or the other, or does it really not matter?

|improve this question
  • 4
    any time you want to make sure your account holds value, you put it into safer options, such as cash/CDs/MMAs – im so confused Oct 19 '13 at 18:46
  • @imsoconfused why not put it as an answer? – littleadv Oct 20 '13 at 1:47
  • 1
    @littleadv meh, i'm lazy and it's not an interesting answer. I'd much rather it be marked as a duplicate of this: money.stackexchange.com/questions/7632/… – im so confused Oct 20 '13 at 7:37
  • @imsoconfused that is good advice but it doesn't answer the question - I'm going to go to safer investments either way. The question is whether to liquidate now or closer to the closing date. The question is also not a duplicate, it specifically asks when as opposed to what. – Jeremy Oct 22 '13 at 16:40
  • When is easy - WHEN do you want a safer investment? THEN you liquidate and move to safer investments. – im so confused Oct 22 '13 at 18:28
1

This question is calling for a somewhat subjective answer. What I would recommend is liquidate now, since it is a stock fund and stocks have performed very well this year, no need to be greedy and hope that they do as well in 2014. Since it is not an enormous amount of money, put it in an interest yielding savings account which unfortunately are all sub 1%. But the key here is since we cannot predict the markets, no investment is going to be "safer". You want the 18k to be there when you need it for the down payment. If you invest it in a fund now, you may not be able to get at least 18k at the time you are forcing yourself to liquidate. A good rule for investing is never to have to sell to make a purchase because there is a high probability that you will be selling at a sub-optimal price.

Some savings accounts that have slightly higher yields. http://money.cnn.com/2013/10/01/pf/savings-account-yields/

|improve this answer

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.