Sometimes in life, we need to make a big purchase.

The $50,000 wedding you only budgeted $25,000 for (oops). A house with a backyard so it’ll distract your kid while you Zoom and Slack within an inch of your life. Oh, and four words: SoulCycle at Home Bike (oops again).

What considerations should we think about when planning for big purchases?

Today, we’ll look at this from two angles:

• Saving up for big purchases, and the optimal way to do so (read: Should you be saving in a savings account or investing the money?)
• Using the money you’ve saved or invested for a purchase

First, I hear people ask fairly frequently: “I want to buy a house in X years. Should I invest that money?”

Then I ask: “Well, is your timeline flexible?”

If you’re signing a blood oath with your lender in seven months and you need that down payment ready to rock—or else—it’s probably not wise to put it in the stock market and risk losing some of it, like many of us are experiencing in this bear market.

But if you’re like, “Meh, I wanna buy a house…eventually…probably in like, three to five years. But who’s counting? I don’t know,” then I wouldn’t let that down payment wither away in a savings account (even a “high-yield” one, if you consider 1.5% a high yield).

Keep reading to see what I recommend instead.

Something I had never even heard of a year ago has been front and center in the financial news for the last few months. But I suppose it makes sense: Nothing tempts both those seeking performance and those seeking safety like a guaranteed nominal 9.62% rate of return, right?

Yet I fear they’re a distraction for young investors (and don’t worry, we address who they might make sense for in the episode). I invited Alan Ebright of Hodges Private Client, a wealth management firm in Dallas with $1B+ assets under management, on the show this week to talk about investor psychology and the self-defeating flight to safety.

Listen now on your favorite podcast player or catch the episode on YouTube!

• Rich Girl Roundup on YouTube. Do you like Q&A? Then do I have the playlist for you! Our new segment, Rich Girl Roundup, is now available on YouTube for quick, bite-sized takes.
• This Maison Louis Marie No.04 candle. One of my favorite writers, Jia Tolentino, plugged this sandalwood candle in her interesting 2019 Outdoor Voices deep dive, which I was rereading this weekend, so (like a good millennial) I bought it. 11/10 recommend.

Explore your options: Having an emergency fund is the move, but could your cash work harder? Earn 1.10% APY* with a Betterment Cash Reserve account. Find out how.*

*Variable APY as of 06/22/2022. Only for Betterment LLC clients. Betterment is not a bank. Transfers to program banks through clients’ brokerage accounts at Betterment Securities.

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