Personal Finance

3 Steps to Save for Shorter-Term Goals

July 8, 2019
Taking these actions can help you achieve your near-term financial objectives.

Key Points

  • Set a financial goal, and decide when you’ll need the money to fund it.
  • Use investments that are likely to hold their value.
  • Invest money regularly to help keep your savings on track.

Examples are for illustrative purposes only and do not represent any specific investment. The model allocations are based on the needs of hypothetical investors only. These allocations do not take risk tolerance, individual circumstances or preferences into account and may not align with your view of the appropriate levels of tradeoff between potential return and volatility.

All investments involve risk, including possible loss of principal. Investing consistent with a model allocation does not protect against losses or guarantee future results. Short-term bond funds have a different risk profile than an investment in money market securities. Fixed-income securities are subject to credit risk, liquidity risk, call risk, and interest-rate risk. As interest rates rise, bond prices generally fall.

1Assumes a 0.5% average annual rate of return.
2T. Rowe Price recommends saving 3 to 6 months’ worth of expenses in an emergency fund; example uses 4 months of expenses for an individual earning $75,000 per year and monthly expenditures of 80% of income. Assumes a 0.5% average annual rate of return.
3The figure reflects a 20% down payment for a median-priced home in January 2018 based on U.S. Census data. Assumes a 2.5% average annual rate of return and that all assets are moved to 100% short-term investments at the beginning of year 4.


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