Saving for a down payment on a house.

[A10Chief]

Alright I put 10% into a pretax retirement account. I am about to bump that to 15%. I am also about to open a Roth IRA. I am an enlisted Air Force dude, but I am going to officer school in the fall and I will be flying planes, meaning I am going to be making a substantial amount more over the coming years. I will be moving a lot over the next 5-10 years though. I want to save money now so when I get somewhere I can stay for a good period of time I can afford to make a nice down payment on a house. What is the best account to put a little money each month into so that when I am ready to make said down payment it will be available, but will earn a decent return in the meantime. I have thought about CDs with the rollover option, as recommended by several people. However, I would like more opinions.

[prohornblower]

Not sure if your pre-tax account is a match account like a 401(k) or something, but if you are going to put 15% into that + fund a RothIRA, that is a lot to put away for retirement.

The first thing you should do is match the pre-taxed account (if employer provides match), then max out Roth, then if you feel like adding more to retirement, put more into your pre-taxed retirement account.

15% per year saving for retirement is a really good amount for a young guy. Anything beyond 15% you may want to keep for your downpayment. If you are buying within a couple years or so, you may want to choose a guaranteed e-savings account that gets 5.5-6.0%APY. If you are buying in 5 years or more, you may choose more aggressive/risky mutual funds.

Hope this helps.

[jesse8888]

Open the Roth IRA ASAP. The relevant rules for a roth go like this:

1. All your contributions can be with withdrawn at any time.
2. Up to 10,000 in gains can be withdrawn for the purchase of your first home once the account has been open in 5 calendar years.

For example, if you open in 2007 and put 4000 in the account every year, on Jan 1st 2011 you'll be able to withdraw up to 10K in gains. Before that, the gains get pummeled by tax/penalty/governmental bending over if you try to touch them.

In terms of what you should be investing in....I suggest opening an Etrade account (i do that like twice a week on this forum recently it seems) and going from there. Savings rate is 5.05% and you can buy a nice mix of index and bond funds.

[DrewDevil]

100% financing is readily available...