Another what to do with this money question

[purplepenguin7]

I recently sold some stock that I was given from my old company that came out to about $10k.  I will likely end up using this as part of a down payment on a house in about 6-12 months (ideally we'd move asap but have some things to take care of before we can).  But where should I put it in the meantime?  I don't really want to hold it in cash but would if that makes the most sense.  Otherwise, I have Roth IRA, Rollover IRA and a regular brokerage account...could I deposit it into one of these accounts in a low risk mutual fund and be able to pull to our fairly short term?  Hopefully this isn't a really stupid question.  Thanks!

[ohgillian]

There really aren't stupid money questions.

You can put it in your regular brokerage account into some sort of super stable money market fund, but for using it in 6-12 months, I would just keep it in whatever savings account you have. Do you have just a standard savings of some kind?

[purplepenguin7]

ohgillian, thanks! I do have a standard savings I could stick it in, but I don't want it mixed if I can help it. Our moving timeline is also very fluid and could be longer based on a lot of different factors, and there is a chance I may not need this money for a down payment after all. Because of all that, I was hoping to re-invest it and then use it when and/or if I need it in the future. If it makes more sense to hold it cash I definitely can, there's just a lot of things we need to do sell our current house added in with being able to find a house we can buy due to crazy market right now that our new home purchase is timeline isn't very set in stone.

[goldengirlz]

I think the answer depends on how risk averse you are. Usually the advice for that kind of timeline would be to hold the funds in cash — the stock market can be volatile and if you’re relying on those funds, cash is your safest bet. (Generally speaking, the “safer” the investment, the more likely it is that you’re looking at slow and steady growth — not the kind that will yield significant returns in that short of a time horizon anyway.)

So I guess the question is: if, worst case scenario, the market had a sudden downturn because of some unforeseen event later this year, would you still be able to meet your financial needs? If so, then go ahead and invest — otherwise, play it safe and hold in cash.

[sadlebred]

If it's for a downpayment on a house, put it somewhere safe like a CD or checking account even with the terrible interest rates right now. It will be sitting there waiting for you safely. You don't want to risk losing any of it if the stock market goes down.

[purplepenguin7]

Thanks everyone! I didn’t even occur me to not put it back in the market and keep it as cash. I will have to think more on this but thank for you for the insight!

[magic]

If you're looking to buy in 6-12 months I'd keep it in cash. You won't gain much but you also won't lose anything. A low risk mutual fund still has risk and don't forget you have to pay taxes on your earnings. In my mind, the risk doesn't outweigh the potential profit given your timeframe.