Saving for deposit.

I am 27 and was recently told that I have a trust fund I never knew about. I will receive two payments (one next year and one when I turn 30) to total about $80k. I would like to use this money to put a 20% deposit on a home in Seattle when I am 30, and would like to make the most the two years I have to invest the first disbursement. Right now I have about $6k saved in an online savings account earning about 3.25%. Should I continue to put the money there given the market, or should I do something else considering I will have a couple of years? Any other suggestions would be greatly appreciated. Thank you.

At your age the market will be going up up up from here over the next 30-40 years. In the long run 2008 will look like a spec on the long term chart.

I am 97% equity right now and am buying more and more every month. I would be buying if I were you as well.

I second jlm.. If I were you, I'd put 5% down on the house and start putting $1k per month into the market and try to continue that as long as you and the TF can sustain it. Dollar cost averaging in the down market will reap you big when the market comes back. At that point you can go with a less risky investment like equity. Besides, mortgage rates are way low now. No sense making 5% when you can make 10-15% in the market.

Remember that a home is a liability, and in the current market is not a good investment unless you have a long time frame for ownership. The cost of buying, moving out, moving in, is all very costly and can only pay off if you are going to hold for quite awhile. You could easily lose a lot of your savings if you are not in a position to hold for awhile. Ultimately you have to consider things such as how stable your employment situation is, and if you lose your job, how easy would it be for you to find a new one with similar pay which would permit you to pay your debt service. Basically, how much risk can you afford?

If you are married in a two-income household, for example, there is a greater resilience to shocks in employment status, since presumably it's less likely for both of you to be unemployed at the same time.

Obviously, the local real estate market in which you are planning to buy will also impact on the level of risk. If the area has a good economy that is not particularly jeopardized by the current changes in consumer habits or credit crisis, or has home prices that are not still in freefall due to a huge inventory surplus, then buying a home will be less risky. Just remember a home is a liability, and stocks will most likely lead coming out of a recession. Unless you are really planning to put down roots right now, it may not be the best place to put your money.