What to Do with Down Payment Money

[David Whartnaby]

Hi all, properties can be expensive and saving substantial amounts of money takes time. I would like to buy a multi family property but am realistically a year or so away from saving enough money. I will not be house hacking as this is not an option at this point. What are some options to help grow my down payment money faster than having it just simply sit in a bank making virtually no interest? How liquid should I be vs. investing in stocks among other things which pose inherent risk as well? Thoughts?

[Chris Mason]

If you're at least a year out, I'd suggest looking into 5 or 7 year CDs. 

When doing 12 month v 7 year CD analysis, you have to compare the higher rate on the long term CD to the early withdrawal penalty if you take it out in less than 7 years. 

It's often the case that the higher return more than makes up for the early withdrawal penalty after X months, with 12 often being X.

A certificate of deposit is super low risk, and not sexy at all, but it's secure, you control it, and it's not subject to the whims of wall street.