Dave Ramsey says: Try piling up money instead of unnecessarily fixing things

Dear Dave,

I plan to buy another investment property with cash in the next year or two. Currently, I have $83,000 sitting in a high-yield savings account at 4% interest. My goal is to save another $50,000 to $70,000 in the upcoming months. Right now, 4% is good, but I want to make sure I’m maximizing my returns. Should I be doing something else with the money?

— Brett

Dear Brett,

I like the way you’re doing things. Right now, you’re simply parking the money short term for a purchase a few months down the road. If you invest it, you might make a little more, but you’re taking more risk, too. If I’m you, I’m parking the cash.

Here’s the deal: The money you’ll have to purchase another property won’t come from a return on the investment. It’ll come from you putting money in the account. The investment isn’t the secret sauce in this scenario—you are. If you invested the money and made 10% rather than 4% over two months, let’s say, that amounts to about a 3% difference. That’s nothing in your case. You’re not within a couple thousand dollars of doing a deal at the moment. Your deal is a $150,000 deal. Your return on investment isn’t going to make this happen, or keep it from happening. See what I’m saying?

Just keep doing what you’ve been doing and park the money. That’s what I’d do. People who are math nerds, like us, always look for things to fix an investment. But sometimes the thing that fixes the investment is you. You are the one doing the investing. You are the one putting money in the account. So, in this case, don’t try to fix it. Just pile up money and go do it.

Great question, Brett!

— Dave

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