Investing Money You Need Soon

The stock market's long-term average return is ~10% per year. In any given year, the range is -37% to +54%. If you invest your rent money, emergency fund, or next year's tuition, you might need to sell during a downturn and lock in losses. Rule of thumb: money you need within 1-2 years stays in a high-yield savings account (5%+ APY in 2026). Money for 3-5 years: bonds or CDs. Money for 5+ years: stocks. This isn't complicated, but the temptation to "put my savings to work" in the stock market leads beginners to sell at the worst possible time when they need the cash. Liquidity and returns are tradeoffs.