Money market fund for future real estate purchase?

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Deep_Fried_Jazz
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Money market fund for future real estate purchase?

Post by Deep_Fried_Jazz »

Planning on making a land purchase within the next 5 to 10 years.

I am looking at parking a 5 figure sum of USD in a money market account through Vanguard. Would VMFXX be a decent fund for this?

Main goal is to keep pace with inflation. Currently my funds are in a general savings account.
Varsh
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Re: Money market fund for future real estate purchase?

Post by Varsh »

VMFXX is a money market account. It may be fine for now, for the short term, for short-term cash needs. However, the fund will offer less than today's roughly 5% when rates change or move down. I am not sure what inflation may be over the next several years, but I would bet that fund would not keep up. You may want to try a short-term tips fund, say VTIP or something comparable if keeping up with inflation is the goal.
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DaveTH
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Re: Money market fund for future real estate purchase?

Post by DaveTH »

Money Market funds are not indexed to inflation nor guaranteed to keep pace with inflation.
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Munir
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Re: Money market fund for future real estate purchase?

Post by Munir »

DaveTH wrote: Tue May 30, 2023 3:29 pm Money Market funds are not indexed to inflation nor guaranteed to keep pace with inflation.
You are correct. However, for short term purposes they are very stable and helpful- more than anything else at this time.
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welderwannabe
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Re: Money market fund for future real estate purchase?

Post by welderwannabe »

If your time period is 5 years plus (up to 10), a money market fund seems overly conservative. Looks good now with an inverted yield curve, but may not look so good in 2 years. If you can stomach it, i'd suggest goosing it with some stocks (maybe 50/50). Or at least some longer term bonds (5 year note). As you feel like you're getting closer to buying, you can make it ever more conservative.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.
bog007
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Re: Money market fund for future real estate purchase?

Post by bog007 »

Don’t let anyone else ruin your portfolio. It’s your portfolio. Ruin it yourself!!!
Marseille07
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Re: Money market fund for future real estate purchase?

Post by Marseille07 »

Deep_Fried_Jazz wrote: Tue May 30, 2023 12:20 pm Planning on making a land purchase within the next 5 to 10 years.

I am looking at parking a 5 figure sum of USD in a money market account through Vanguard. Would VMFXX be a decent fund for this?

Main goal is to keep pace with inflation. Currently my funds are in a general savings account.
Keep buying I-bonds? Nothing else is guaranteed to keep pace with inflation.
000
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Re: Money market fund for future real estate purchase?

Post by 000 »

Five to ten years is a long time. Real estate may experience significant appreciation or depreciation in price and it greatly depends on the local area.

There is no liquid investment available that closely tracks local real estate, but inflation-adjusted bonds may be worth considering, and possibly a small portion of REITs if losing out on appreciation is a major concern. There are REITs focused on residential, agricultural, and other kinds of land.
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