Mid-Term Goals

Saving for something 2 to 9 years away.

Mid-term goals have a timeframe of less than ten years but more than one. This could include saving for a big vacation to Argentina, saving for a house or saving for a wedding. (Granted, a wedding could slip under our arbitrary cut off of one year, but we’re going to assume you’re setting aside money in the hopes there will be a wedding a few years from now. If you’re getting married in six months, you need a short-term investment.)

Where to invest for the mid-term.

When you’re setting aside money for something you’ll be buying in a few years, you need to find a place to put that money that’s still relatively safe, but you can afford to tie it up for longer in exchange for a higher interest rate. Your primary choices are going to be CDs and stocks, but municipal bonds could also be a possibility if you’re on the longer end of two to nine years.

• CDs are very safe because they offer a guaranteed interest rate after a specific length of time. But you aren’t allowed to touch the money until that length of time has passed.
• Stocks and stock mutual funds are riskier, but since you have a longer time period to recover from ups and downs, the higher interest rate may be worth the risk.
• Municipal bonds are tax-friendly but the interest rate is comparatively low.

Strategies for saving in the mid-term.

If you’re looking to save money to set aside in one of these mid-term investments, start by paying down your debt. If you’ve amassed credit card debt, start by paying more than your minimum payment every month. This means you’ll need to cut back on spending elsewhere to apply it to your debt, but consider this: once you get used to spending less and that debt is gone, it’s all the more to set aside for your mid-term spending goal.

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Want to learn more? See our pages on Short-Term, Mid-Term and Long-Term plans for saving.