Where to Put Money for Future Home Purchase

[av8er]

One of my family's major financial goals is to save enough money in taxable accounts so that we can purchase a house with cash when I retire from the military (anywhere from 5-7 years depending on assignments). I currently have the majority of our "house fund" money in Vanguard's Wellesley Admiral Fund (VWIAX). I realize that many would likely advise against using this for a taxable account because it throws off a fair amount of taxes each year, but my goal is to strike a reasonable balance between growth and risk...I want to see the money grow, but I don't want to have huge swings with such a short time horizon before I expect to use the money. So, my questions is, if you were in my shoes where would you park the money given the information above?

[brewer12345]

CDs.

[Meadbh]

Quote:

Originally Posted by brewer12345 CDs.

+1
This is money you need to be SAFE.

[jimnjana]

pen fed three yr cd is 1.85 apr

[pb4uski]

I think it depends on how much risk you are willing to take. If you want to take no risk then FDIC insured CDs or online savings is a good way to go. While Wellesley is relatively low risk it does carry some equity risk and some interest rate risk. While i think it is a fine choice for 5-7 year money, I am a bit of a risk taker.

[Animorph]

If you are willing to be flexible in your timing, something like Wellesley should be fine. You just may have to wait a year or two for things to recover if it takes a dip just before you retire. I'd be wary of bonds in that time frame due to what seems like a certainty (one of these years) of rising rates. So I'll +1 the CD recommendation if Wellesley seems too risky.

[av8er]

I am flexible in my timeline so willing to take a little more risk. Appreciate all of the advice!