Investing for Middle-Term Goals
Most people have a two-pronged approach to meeting their financial goals: save for the short-term, invest for the long-term.
Near-future goals like replenishing your emergency fund or taking a trip tend to be top of mind and funded easily enough through a traditional or high-yield savings account. Meanwhile, long-term goals, like retirement, are well-suited for investment accounts designed to grow over decades.
While both of these are smart financial strategies, what about goals that fall somewhere in between?
Why Focus on Middle-Term Investing?
Generally, middle-term goals are significant financial milestones expected within the next 5–20 years, such as:
- A down payment on a home
- Tuition for children
- Travel and vacations
- Purchasing a new car
- Buying a second home
Keeping these funds in a standard savings account means missing out on potential investment growth. By utilizing the right investment accounts instead, you can take advantage of market growth while maintaining access to your funds when needed.
What Type of Accounts Work Best for Middle-Term Goals?
The best choice is often a taxable investment account. Unlike tax-advantaged options like 401(k)s or IRAs, taxable accounts let you access your money anytime without restrictions. While you’ll need to pay taxes on earnings, these accounts offer greater flexibility, making them great for medium-term investing.
A popular option is a brokerage account, where you can deposit money with a licensed brokerage that handles trades and investing for you, but you still own your investments and will need to report any capital gains when filing your taxes.
Your financial advisor can help you navigate the nuances of taxable accounts, but in general, they offer a balance of investment growth and liquidity—making them a strong fit for funding middle-term goals.
How to Get Started
Starting a middle-term investment strategy is straightforward:
- Identify your middle-term goals. Determine what financial milestones you want to achieve in the next 5–20 years.
- Consult a financial advisor. A professional can help you select the right investment approach based on your goals and risk tolerance.
- Review your existing accounts. Assess your current financial situation and determine how much you can allocate toward middle-term investments.
- Set up automatic contributions. Consistently adding funds to your investment account can help build momentum and ensure progress toward your goals.
If you’re ready to explore investing options for your middle-term goals, our team at Commas can determine the right fit for your specific situation and help you get started.
Commas is a wholly-owned subsidiary of Truepoint Inc., a fee-only Registered Investment Adviser (RIA). Registration as an adviser does not connote a specific level of skill or training nor an endorsement by the SEC. More detail, including forms ADV Part 2A and Form CRS filed with the SEC, can be found at www.usecommas.com. Neither the information, nor any opinion expressed, is to be construed as personalized investment, tax or legal advice. The accuracy and completeness of information presented from third-party sources cannot be guaranteed.