It's mailbag time! In this segment from the MarketFoolery podcast, Chris Hill, Taylor Muckerman, and Jason Moser answer a listener question about how to invest for a goal you have three years in the future, get better returns than a traditional savings account, and not take on a huge amount of risk. Listen in to find out why time frames shorter than five years are so hard to invest for, especially in today's financial climate; what strategies to definitely avoid; and what you might want to pursue if you're looking at a three-year horizon.

A transcript follows the video.

This podcast was recorded on April 4, 2016.

Chris Hill: MarketFoolery@Fool.com is our email address. From Drew, who writes: "I'm a Fool at heart, and I've embraced the buy-and-hold concept. My better half and I are planning a year of travel around the world to take place in 2019. I've been saving, and I'm putting money away each month toward this sabbatical that I feel will be life-changing. I have my long-term stock investments, but would like to know if you have any recommendations on where I may put this monthly travel money for the short-term of three years that is not too risky, and may provide more return than I would receive from a plain old savings account? I know you can't provide specifics, but any suggestions would be greatly appreciated. Keep up the great work and Fool on!" Just send it to us, 2000 Duke St.

Taylor Muckerman: We'll give it back in 2019.

Hill: Yeah, we promise it'll be more. No, great question, and that's fantastic, that he and his better half are planning that kind of trip. When I first read his question, I thought to myself, "I don't know." If the question was, "We're planning this trip in 10 years," then I would feel a little bit more confident about saying, "Well, take at least some of that money and look to just dollar-cost average into a SPDR ETF, that sort of thing. Three years, not a lot of time. Jason?

Jason Moser:
That's right on that line. That was the same thing I thought. It's right on that line where you... we always say five years. We say, if you have money that you can part with for the next five years, then it's OK to invest that money in the stock market. Unfortunately, we're also in the face of this fixed-income environment where there is just no other return. There's no return on CDs, no returns on savings accounts, you have money market savings that may as well be regular savings. There's just nothing there. So, I certainly applaud what you're doing here, the saving, the goal, it all sounds so fun. And it sounds like he's pretty excited, too, and I would be. The market is doing very well right now. I mean, I could see a scenario where you would take this money and invest it in an S&P index fund. And, over the course of three years, anything can happen. I feel like we've probably learned a decent lesson to where we're not going to see a Great Recession-like market drop, but anything is possible. 

And I think the key here, no matter what, you have to put yourself in a position where you're not going to be a desperate seller. I mean, if you look at the charts of the S&P over time, it actually doesn't look all that bad. If you look at the two-year chart, you can certainly see some great opportunities in there, along the months. And you could dollar-cost average like you mentioned. Over three years, it looks even more attractive. Over five years, it looks even more attractive. But past performance is no guarantee that the future will be the same. The bottom line is, you can't put yourself in a situation where you're going to be a desperate seller, because then you're going to be really kicking yourself. Perhaps the solution is you don't invest all of it. Maybe, if you want to try to maximize the return on some of it, maybe you take a certain percentage of it -- 25%, 50% -- and then you dollar-cost average in something like the S&P index fund. I would not put it in individual stocks. I would certainly depend on having the broad diversity of the S&P index fund there as opposed to just individual stocks.

Muckerman: I was just going to suggest a dividend fund but not all the money, especially if your idea comes to fruition with increased dividends rather than increased buybacks.

Moser: Sure, dividends are cash in the pocket. That's the really nice thing about those.

Muckerman: So, that would be my idea. But, yeah, definitely not all of it. Keep the plane ticket money in cash, at least.

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