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Assume that you would like to purchase a home in the next 15 years. Also assume that you have already saved $50,000 so far and the approximate cost of the house is 250,000. Calculate how much you need to save for the next five years to purchase this home and put 20% as a down payment.
Based on the interest rate on a five year interest rate from the Treasury department: http://www.treasury.gov/resource center/data chart center/interest rates/Pages/TextView.aspx?data=yield.
Calculate the required yearly savings on $50,000.
How much money could be made using the same interest rate with the amount of yearly cash flows which would have been saved for the investment if these amounts had been invested instead?
Which is the best option? Why?