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See, that's the thing, gg. When you need the money, it's different from money you don't necessarily need. You should keep the two separate when investing it. Don't gamble with the downpayment on your home, especially if you have a plan in two years' time.
This is why many retail investors have balanced portfolios geared towards their risk tolerance. The proportion of stocks to bonds, for example, is weighted in favour of that tolerance. If you don't mind the risk, you can have more stocks than bonds. You can even have growth stocks over value stocks if you have a particularly high risk tolerance.
The further you are away from retirement, usually the easier it is to have this kind of tolerance for stocks that may or may not perform for you. If things go wrong, at least you have the time to make corrections and learn from it. If you retire in less than five years (or if you need the money for a down payment in two), these aren't the kind of risks you should be taking.
On the other side of things, there is the risk of not having the portfolio performance you need to meet your goals. This is why having a bond- or fixed-income-heavy portfolio doesn't make a lot of sense when you're young and have a lot of time. Inflation will erode too much of your gains and you won't likely meet your goals.
The whole strategy is about balancing risk vs. reward. It depends on your time frame mostly. Stocks tend to give you the highest overall growth, but that's usually over the long term. Price volatility needs longer cycles to make it worthwhile.
Two years isn't a lot of time. Not with money that's already slotted for a specific use when the time is up.
---------- Post added at 09:50 AM ---------- Previous post was at 09:38 AM ----------
EDIT: I should also add that I wouldn't be comfortable with products tracking the S&P 500 at this time unless I was looking at the longer view. There is too much uncertainty and potential volatility currently, that I wouldn't be surprised to see most of the recent gains of the past year or two wiped out again.
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Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön
Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot
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