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Hi Taylor
- I'm looking to buy a house within the next two years and want
to make sure I'm growing my money as fast as I can. I've currently
got my funds in a savings account with a 1.4% APY, but is there
another type of account that will get me better returns? I'm putting
around $1,000 a month into the account. - Bradley
Hi Bradley - Glad you're building up your cash reserve instead
of taking on a big mortgage. Unfortunately, the only way to speed
up your yield is by taking on more risk. 1.4% is probably as good
as you'll find, and any other investments will subject you to too
much volatility.
The problem with money markets is they have us believing there might
be a magical way to turn a huge profit in a short amount of time.
While that's possible, it's never probable, and it's far more common
to lose money in a year than make a bunch in the same amount of
time.
With a truncated timeframe like the one you're working on, there's
not much to do beyond what you're already doing. Keep putting money
in savings, make sure it's liquid and ready to move, and then find
ways to increase the amount you put away each month. If there are
corners you can cut or ways to earn a little extra, that's the best
way to reach your goal more quickly.
Until you have a significant amount in your savings account, you
shouldn't even be thinking about the yield. Yes, you want an account
that provides a good return, but you should be focusing your efforts
on the actual earning and saving. The harder you work to put money
into your account, the more the amount will grow and the more your
yield will come into play. Ideally, you'll start putting in $1,500
and then $2,000 each month. Then, before you know it, that 1.4%
will start looking a lot better.
Remember that the best returns come from somewhat risky investments,
and those investments often hurt your bottom line before they help.
This makes long-term stock investing work well, but short-term saving
doesn't fit the same mold. It's important to adopt this mindset
as you continue earning, saving and investing.
I wish I had
a more exciting answer, but it seems like you're aiming for a practical
approach and I'd hate to mislead you. Stay the course, look for
ways to spend less and save more, and you'll have the money you
need sooner than later. Good luck, Bradley!
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