House Fund vs Invest Calculator
Compare keeping your down-payment savings in cash versus investing them — see the projected difference and the risk trade-off.
How it works
FV = monthly × ((1 + r)^n − 1) ÷ r, computed once at the savings APY and once at the investment return, where r = rate ÷ 12 and n = months
Money you will need soon behaves differently from money you can leave alone. Investing a house fund can earn more, but stocks can drop 20–30% in a bad year — and if that year is the year you want to buy, you may be forced to sell low or delay. The shorter your timeline, the more the extra return has to be weighed against the chance of a shortfall exactly when you need the cash.
Worked example
Saving $1,000 a month for 5 years (60 deposits, $60,000 paid in): at a 4% savings APY it grows to about $66,300, while an 8% investment return projects about $73,500 — roughly $7,200 more, at the cost of market risk over those five years.
Frequently asked questions
Should a down payment ever be invested?
It depends on the timeline. Under about three years, most planners keep it in cash or a high-yield account because a market dip could shrink it right before closing. With a longer horizon, some investing may be reasonable.
Why does the difference look modest?
Over a short period, compounding has little time to widen the gap, and each dollar you add only earns the higher return for the months that remain. The advantage grows much larger over decade-plus horizons.
What return should I use?
Use a conservative figure for both. High-yield savings has recently paid around 4–5%, while a diversified stock portfolio has historically averaged roughly 7–10% before inflation — never guaranteed.
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Educational estimate, not financial advice. Returns are assumed constant and are not guaranteed.