Home buying fund vs opportunity cost
My spouse and I are in our early 30s, dual income, no debt, and currently renting in the HCOL area. We have been saving for a home for around 5 years (average home is 1M+ in our area). We have around $500k sitting in HYSA as a home fund.
We are not actively rushing to buy a home, but we want to remain opportunistic buyers over the next few years if the “right” house at the “right” price comes along. We could buy it next month or not but for the next 2-3 years. Think good neighborhood, decent schools, reasonable commute/lifestyle fit, etc.
The issue is that holding this much cash feels increasingly inefficient. HYSA/MMF yields are falling, interest gets taxed heavily at our marginal tax bracket, and inflation slowly eats away at purchasing power. At the same time, putting too much into equities feels risky if we end up wanting to buy a house in the next 0–3 years.
For people who were “opportunistic buyers” rather than immediately take keys:
\- Did anyone partially invest their future down payment fund into broad index funds?
\- How did you balance flexibility vs long-term compounding?