New to Real Estate/ FIRE- General Savings Advice!

[Andy Grabis]

Hello BP Community! 

My question today is surrounding the accumulation phase of the FIRE journey. I am about ten months into my first job since graduating college in May of 2017. I live in Boston and have a pretty decent salary that allows me to save around 40% of my income while still allowing me to live comfortably and have some fun as well :). 

I would assume that most everyone here is at least familiar with Scott Trench's Set for Life, but if not, simply put it is broken into three different phases of achieving financial freedom. My goal is to buy a duplex (3.5% down FHA Loan) within the next two years. Right now, I would characterize myself in the accumulation phase, as I am essentially stock piling cash to be able to put down the down payment and have plenty left over to account for any unforeseen expenses (repairs, vacancy, etc.).

My question is, where should I be keeping this cash? I am torn between something safe (traditional/high interest savings acct.) vs. opening up a Vanguard Index and withdrawing the necessary amount when needed. Am I missing out on serious compound interest effects that will hurt me down the line, or is it smart to make sure I have the necessary cash if house hacking is the ultimate short term goal? Or some combination of both?

Thank you for taking a look at my questions and I look forward to the discussion!

[Steve Bracero]

@Andy Grabis

The way I look at it... what is your return by having liquid cash, vs an index fund where you can can receive a return  

The way I did it was keep very little "liquid money" or in a checking savings- then you can possibly pull your money from the index when you need to invest