A Fool reader asked, "If I'm saving money to buy my first home within three years, how should I invest my money so that I get decent returns on my investments?" Here's the answer:
To ensure that you can afford more than a corrugated aluminum shack when the time comes to buy a home, any money that you expect to need within five years or so should not be invested in the stock market. You should take great comfort and encouragement from the fact that the stock market has averaged an annual 10% return for most of this century. But that rate of return is an average over the long haul. From year to year, anything can happen. In one 10- or 20-year stretch, the market can behave very differently from another 10- or 20-year stretch. You can't necessarily count on achieving average results -- you'll likely do better or worse than average.
Short-term scratch should be kept in a safe place, such as certificates of deposit or money market funds, to protect your principal.
Learn much more about home-buying in our Home Center, which also offers some special mortgage interest rates.
If you've got short-term money to invest, learn how to make the most of it in our Savings Center (which offers Fools some special deals on interest rates). For long-term investments, you'll likely want a brokerage. To learn to more about brokerages and possibly find a better brokerage for yourself, check out our Broker Center.
