Key insights
- An individual is considering investing $25k of a $200k house fund into equities, using a lump sum and DCA strategy, despite a 2-3 year time horizon. The decision balances potential gains against the risk of market volatility impacting their home purchase timeline. Given the short time horizon and the primary goal of purchasing a house, the risk-adjusted return is likely unfavorable, suggesting a slightly negative influence on broader market sentiment as it reflects investor caution.
25K is part of a larger pool of 200K that is a house fund. 175k is currently sitting cash in HYSA savings account. It makes me nervous to tie up house money into equities, but greed takes over it. I want to optimize the gains. And with this current dip in the market, I’m leaning on the strategy of lump summing 10k and DCA the other 15k over 2 years. Thoughts?
Edit: apologies for not being more clear in my post, the money is mostly the equity from the sale of a house. In theory I’ve already made a solid ROI. Would it be nice to buy another house in 2-3 years? Absolutely. Will I need the entire 200k for a down payment on the house? Probably not. 25k is what I feel like I can stomach some volatility. I ran the NPV on the other 175k whilst still contributing 1,500 per month into the fund that 175k will be ~220k in 2 years. Throw in the 25k maybe making a conservative 5% in the market my total pool will be almost $250k. Trying to weigh the risk reward here.