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If you would keep cash for expenses 3-5 years out, it seems logical to sell investments and hold in cash 3-5 years before the cash is needed
Sounds like you answered your own question
Pro
You should go in a money market fund
I’d start thinking about it 3 years out. If market is way down for some odd reason (like Covid) then I’d wait and monitor and pull out at the first bounce back.
Rising Star
Usually 12 to 24 months, leave in liquid or near liquid investments (HYSA, Bonds, etc). If you need in 2 to 5 years, equities tend to perform better (especially if it’s not a strict timeline and you can extend by a year or two if necessary).
Rising Star
Thanks for all the responses! I’m realizing there is an opportunity to clarify my question further but just to validate what I’m seeing - let’s say I need a large down payment in 7 years. I would start saving via securities for the first 5 years, then ~2 years out evaluate market to pull into cash, or if down, leave and wait for a rally.
Rising Star
You can leave the money in the market for years 6 and 7, just start pushing your short term cash towards HYSA or bonds at that point. If you want to start harvesting gains / losses in years 6 and 7 both to lock in your gains but also for tax purposes, that might be smart too.
Pro
I'd say at least 2 years, depending on the amount maybe 3.