The most commonly asked question in the Animal Spirits inbox is, “I’m saving up for a house. Where do I invest this money in the meantime?”
There are three things at play here that are driving these questions:
Rates on cash are zero or close to it. With home prices increasing, people feel like their cash just isn’t cutting it. But the biggest driver behind this question is that stocks have done nothing but go up until very recently.
On this week’s Animal Spirits, someone asked if they should hold their down payment money in a residential REIT. The thinking behind this was if home prices keep rising, this is a good way to keep up.
I said to Ben that this is a question you’d only see in a bull market. It got me thinking about some of the questions we’ve gotten multiple times in the last year.
- Why shouldn’t I hold all my money in stocks?
- Do I really need 6 months in cash?
- Should I only invest in growth stocks?
- Why wouldn’t I DCA into a 3x long S&P 500 ETF if I’ve got a long enough time horizon?
- Should I trade options?
- Why should I hold bonds?
- How do I get a higher yield on my savings?
- What are the best stocks to buy right now?
- Is value investing dead?
- Should I use dividend-paying stocks as a bond substitute?
None of these questions are unreasonable. They’re just a product of the recent environment.
Check out the full video below.