Recently, my husband told me about an article in a popular investments magazine.

The article featured a couple of investment advisors advising people about how to save a down payment for a house.

Frankly, I was shocked when my husband told me what these advisors suggested.

Now, you'd be forgiven for thinking that what they advised was to save a certain amount of money each week in a relatively safe investment - like a high interest bank account - so that by the time it came to buy that house, there would be enough money for the down payment.

But that wasn't what they advised at all!

In fact, the first investment advisor suggested investing the money in a mutual fund. He said that, over time, the return would be greater than say, putting the money in the bank... which meant there would more money for the down payment.

I understand that but...

The second investment advisor suggested not only investing the money in a mutual fund, but also BORROWING against the shares in the fund, and reinvesting the borrowings back into the fund. This would generate an even greater return as the investor would take advantage of the wonders of leverage.

Now I'm really mad!

Is it just me, or is there something rather important that these guys are NOT saying?

Like the fact that some mutual funds are riskier than others... and that, by investing in a "risky" mutual fund you're putting your hard earned down payment at risk? Let alone taking on more risk - not to mention interest repayments - by BORROWING against the fund!

Now, there's no question that mutual funds which invest most of their assets in common stocks - and certainly index funds which are linked to stock indices - have historically performed better in terms of returns than the average bank account.

But they're also riskier - you have a greater chance of losing the value of your money with a mutual fund than with a bank account.

And when I say "long-term", I mean 10, 20, 30, 40 plus years depending on which historical period we're talking about.

Within a shorter period of time the performance of any given mutual fund can vary incredibly. Sure it can sky-rocket. But it can also PLUMMET.

So when it comes to saving a certain amount of money for a home down payment... do you really want to put that money at risk?

Sure, if your plan is to buy a home in 10 or more years time, maybe a mutual fund is the way to go. But if you intend to buy in just a few years time... don't you want that down payment to be there when you need it?

The truth is, when it comes to saving for a particular goal - like buying a home - I wouldn't even look at it as an investment. I'd treat it as a specific purchase that you need a specific amount of money for, and SAVE that amount of money accordingly.

I know, I know. House prices could go up. Interest rates could go down. There are still variables that will affect the value (or buying power) of the money you save... but, when it comes to your down payment, do you really want to add even MORE variables like the ups and downs of a given fund manager or the stock market to the mix?

I just don't think that's sensible... and I don't think the advice of those investment advisors was complete.

Which is just more proof that the financial media is far too busy dishing out quick investment "sound bites" and touting the latest "hot investments"... rather than giving people a logical, practical and effective framework for making sound investment decisions!