The costly mistake most people make
When a big expense comes up - wedding, home down payment, tuition - most people sell investments to cover the cost. This creates unnecessary capital gains taxes, disrupts long-term compounding, and forces you to sell at potentially bad times.
The smarter approach is isolation: set money aside in advance so you're prepared without touching your investment portfolio.
The three-step framework
Step 1: Define it precisely What exactly do you need? When? How much total cost including buffers?
Step 2: Isolate the capital Create a dedicated account separate from investments and emergency funds.
Step 3: Fund with new earnings Use future income rather than selling existing assets.
Where to keep the money
For expenses within 2 years: High-yield savings (currently 4-5% annually) For 2-3 years out: Money Market Funds, Smart Treasury or CDs for slightly higher yields For 3+ years: Conservative investment mix that can grow with minimal risk
Avoid keeping it in checking accounts earning nothing or volatile investments that might lose value when needed.
Timing your contributions
- $50,000 needed in 30 months = $1,667/month
- $50,000 needed in 18 months = $2,778/month
The earlier you start, the smaller the monthly commitment and the less financial stress.
Common mistakes to avoid
Starting too late: Creates cash flow pressure and forces suboptimal decisions Underestimating costs: Most major expenses run 20-30% over initial estimates
Stopping all investing: Continue wealth building while separately funding the expense Using emergency funds: Keep goal-specific savings separate from true emergency reserves
Quick Answers: Large expense planning
"Should I pause investing to save for this?" Generally no. Reduce discretionary spending first, then temporarily reduce (don't eliminate) investments if needed.
"What if I need the money sooner than expected?" The isolation strategy keeps funds liquid and accessible while protecting your investment portfolio.
"Can I invest money I need in 2-3 years?" Conservatively, yes—but only in stable investments that won't lose significant value when you need to withdraw.
Can Titan help with expense planning?
Yes. If you're a Titan client, we can:
- Help you determine optimal monthly contributions based on your timeline and total expense amount
- Recommend appropriate account types for different expense timelines and risk levels
- Coordinate large expense planning with your overall investment strategy
- Adjust your savings plan as timelines or expense amounts change
The goal is funding life's important moments without derailing your long-term wealth building.
Ready to fund your next big expense strategically?
Talk to a Titan advisor to create a savings plan that protects your investments while funding life's important moments.
About Titan
Titan is a modern Registered Investment Advisor (RIA) helping high-earning professionals navigate complex money decisions. With a dedicated advisor and access to proprietary strategies and alternative investment options, we're your go-to wealth team for everything from RSUs to retirement. Learn more at www.titan.com.
