Dec 11, 2025
Brett, 40, dreams of buying a home, but he’s starting to wonder if that goal is still achievable. He has been saving diligently for a down payment for eight years, and while his nest egg has grown, he’s questioning whether he made the right choices about what he’s saving for — and how.
It’s a familiar question for anyone pursuing homeownership in recent years. The housing market has been hot, and mortgage rates have climbed considerably.
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Brett worries that instead of saving, he should have been investing. Now, he feels like he will never catch up enough to afford a home.
Saving but falling behind
Brett isn’t a high earner, but he loves his job and the city he lives in. Home prices in the northeast, where he’s based, are high, so he’s been working hard to save for a down payment.
He earns $50,000 a year, and while the cost of living in his city is steep, he's been saving 15% of his income with the goal of putting 20% down on a home. A larger down payment reduces the amount borrowed and, in turn, the total interest paid over the life of the mortgage.
But in the years Brett has been saving, the housing market has skyrocketed. According to the Federal Reserve Bank of St. Louis, the median sales price for new single-family houses sold in the U.S. in the second quarter of 2025 was $410,800 (1).
Prices vary significantly by region: in the northeast, the Q2 median sales price for new homes was $796,700; in the midwest, it was $385,300; in the south, $372,100; and in the west it was $531,100 (2).
Brett has been saving $7,500 a year for the past eight years, reaching $60,000 in total. But since he was aiming for a 20% down payment — and the average price in his city for the type of home he wants is $600,000 — he’s only halfway to his goal.
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It’s easy to see why Brett is frustrated. After eight years of saving in cash, he looks at stock market performance over the same period and wonders if investing instead might have put him further ahead. Now, he’s questioning whether to keep saving for a home or shift his strategy and invest his nest egg.
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How much of my savings should I invest?
If you need your savings in the short or medium term — such as for a home down payment — it’s generally not advisable to invest all of it in riskier assets like stocks.
The reasoning is similar to that used for retirement planning: money invested in the stock market grows over time, and the longer it’s invested, the better the chance it has to recover from inevitable market ups and downs.
As people near retirement, their portfolios are typically rebalanced toward more stable assets like bonds or cash. The same logic applies to shorter-term goals like buying a home — there’s simply less time for investments to recover from market volatility.
That doesn’t mean you have to keep everything in cash. There are lower-risk options that can offer modest returns while keeping pace with or slightly beating inflation, such as certificates of deposit (CDs), money market accounts, U.S. Treasury securities, or high-yield savings accounts.
Holding all savings in cash, as Brett has done, risks losing purchasing power to inflation. A blended approach — keeping most funds in secure, short-term vehicles while investing a smaller portion for potential growth — can be more effective for goals within a few years.
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If Brett decides not to buy a home, his time horizon changes. At age 40, he can afford a longer-term investment strategy that includes higher-return assets like stocks or ETFs, which are better suited for retirement savings.
Finding the right balance between saving and investing is personal. As life circumstances and goals evolve, financial plans should adapt too.
Even though Brett isn’t ready to buy a home now, his disciplined saving has built a strong foundation. He can now allocate his $60,000 toward a mix of savings and investments that match his risk tolerance and timelines.
Working with a financial advisor could help him create a realistic roadmap for homeownership, retirement, and other future goals.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Federal Reserve Bank of St. Louis (1); Federal Reserve Bank of St. Louis (2).
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Rebecca Payne has more than a decade of experience editing and producing both local and national daily newspapers. She's worked on the Toronto Star, the Globe and Mail, Metro, Canada's National Observer, the Virginian-Pilot and Daily Press.
