Where to put profits from my home sale?

[Ben M.]

We will have a few hundred thousand dollars to invest after our home sale. Not only do I want to avoid paying taxes on that money, but we want to invest it as well. Initially, we would need access to approximately $50K within 18 months of investing. The remaining balance is more long-term.

Any suggestions or advice would be appreciated.

Thank you. 

[Chris Seveney]

Quote from @Ben M.:

We will have a few hundred thousand dollars to invest after our home sale. Not only do I want to avoid paying taxes on that money, but we want to invest it as well. Initially, we would need access to approximately $50K within 18 months of investing. The remaining balance is more long-term.

Any suggestions or advice would be appreciated.

Thank you. 

 What are your goals? If you want cash flow, I would say go towards a debt fund in todays environment. If you want growth, then I would invest it in the energy sector over next few years. Notice I did not say real estate, as I think the growth in real estate will be outperformed by many of sectors in the next few years - and this is coming from someone whose full time job for 25+ years has been in real estate. 

[Ben M.]

The $50K I mentioned will be used to buy a new home. We will be renting for 12-18 months in order to get acclimated to an area, test the waters, and see if we want to lay roots there. 

The balance will be used as income after we retire (in about 10-12 years). 

Note: I am not a big fan of the stock market. I am looking for more traditional, conservative investments. 

[Tyler Davis]

Quote from @Ben M.:

We will have a few hundred thousand dollars to invest after our home sale. Not only do I want to avoid paying taxes on that money, but we want to invest it as well. Initially, we would need access to approximately $50K within 18 months of investing. The remaining balance is more long-term.

Any suggestions or advice would be appreciated.

Thank you. 

How long have you lived in the home prior to selling? If its over two years then Capital Gains taxes are excluded up to $250,000 for single folks and $500,000 for married folks. 

As for where to invest it, I would consider a High Yield Savings Account, right now you can earn up to 5% on your money and its accessible whenever you need it. (Note you will have to pay taxes on the interest earned).

Also, you could invest in the S&P 500 which on average has a 10% return each year. 

Hope this helps!

[Ben M.]

Quote from @Tyler Davis:

Quote from @Ben M.:

We will have a few hundred thousand dollars to invest after our home sale. Not only do I want to avoid paying taxes on that money, but we want to invest it as well. Initially, we would need access to approximately $50K within 18 months of investing. The remaining balance is more long-term.

Any suggestions or advice would be appreciated.

Thank you. 

How long have you lived in the home prior to selling? If its over two years then Capital Gains taxes are excluded up to $250,000 for single folks and $500,000 for married folks. 

As for where to invest it, I would consider a High Yield Savings Account, right now you can earn up to 5% on your money and its accessible whenever you need it. (Note you will have to pay taxes on the interest earned).

Also, you could invest in the S&P 500 which on average has a 10% return each year. 

Hope this helps!

We've been in our home 22 years coming July

[Dillon Kenniston]

Hey @Ben M., congratulations on selling your home and the influx of cash! A few thoughts:

1. Given this was your home (ie, principal residence), and as long as you've lived in your home for 2 of the last 5 years, your sale is likely eligible for the Section 121 exclusion, meaning $250k in gain excluded from taxable income (or up to $500k in gain if married and filing jointly). I'm not sure what your specific numbers look like, but if your gain is within those bounds, taxes should be minimal.

2. I see the $50k you're setting aside within 18 months is for a new home purchase. While no one has a crystal ball, consider whether that amount is right for a downpayment for your family given the new area, home price ranges (which may continue to appreciate, especially if rates come down in 2024), and the resulting expected monthly payments on a new mortgage. $50k might be the right amount, but if you haven't already projected monthly P&I on the new home at $50k down, I'd recommend doing so before committing remainder to investments.

3. For reinvesting, given you're not a fan of the stock market and are looking for more conservative options with $50k liquidity available within 18 months, you might consider CDs or high-yield savings accounts for the downpayment (which I wouldn't have suggested a few years back, but now, some 1-year CD payouts are commensurate with iBonds [5.27% through April 2024] and with fewer restrictions). High-yield savings accounts are always good for near-term planned expenses, and some of those offer rates in the low-to-mid 4%'s. You could also explore fixed income mutual funds or ETFs, but these may lose principal.

For the balance, consider that 10-12 years is a long enough time horizon that fixed income instruments - bonds, CDs, or debt funds - are subject to inflation risk. Even if principal is safe with certain instruments, purchasing power may not be. (Or if purchasing power is preserved, your real, inflation-adjusted return will be lower than what might be advertised.) Some investors like bond ladders. Or, real estate is a fine asset class and historically has been a solid hedge against inflation. Or, you might take a more "active" investing strategy by looking at sectors, which can be good, especially if you've got a finger on the pulse for market trends. (I share Chris's view that the energy sector looks good and may outperform RE.)

I'd advise caution when someone suggests you use the balance to buy cash-value life insurance or an annuity. These are fine products in certain circumstances, possibly including yours; I don't know enough about your situation to say either way. But be aware that not all financial advisors are fiduciaries and whoever commends these products may be trying to sell you something. Which, again, isn't necessarily bad; just something to be aware of.

Truth is, we don't know what tomorrow will bring, but many of the above are fine options. My only word of encouragement would be to embrace some volatility over the coming decade for the longer-term opportunities it can afford. If I can be of service, please don't hesitate to reach out directly!

[Ben M.]

Wow! Thank you so much. There are lots to consider here 

[Spencer Cuello]

@Ben M.Congratulations on the sale!

- For the funds to be invested in your next home, a high yield savings account or CD with liquidity and low risk makes sense

- For the balance, if you are looking for steady cash flow you could consider a multi-family, syndicate if you're an accredited investor, or a bond ladder. If the time horizon is longer than 10 years, I'd consider a diversified portfolio

Good luck! 

[Theresa Harris]

I can't speak to taxes, but others can.  If you want something safe, talk to a few banks about GICs.  You can easily get one that is short term and others that are longer term-get the ones with the best rates that fit your needs.  My mom just sold her house and that's what we did.  With the current interest rates, she's getting more money than if she were to buy a rental.

[Laura Contee]

I would strongly suggest buying stock in the AI company Nvidia..do some research..

[Ben M.]

Laura,

What is your connection to this company? You cannot simply make such a statement without any reasons, facts, stats, etc. Your profile is blank. Sorry, but it sounds like you are simply a shill for the company.

[Jonathan Bock]

@Ben M.

Some good and some bad advice because none of it is for you personally and a little bit of information overload that will lead to inaction or making mistakes.

I'd recommend you see a real financial professional to help you and your family with your values and goals before determining your tactical strategies for capital deployment. 

Jonathan Bock, CPA 

[Ben M.]

I agree with you 100%. It is blatantly obvious that "Laura" is full of shite

Enjoy the day

[Carlos Ptriawan]

Quote from @Ben M.:

We will have a few hundred thousand dollars to invest after our home sale. Not only do I want to avoid paying taxes on that money, but we want to invest it as well. Initially, we would need access to approximately $50K within 18 months of investing. The remaining balance is more long-term.

Any suggestions or advice would be appreciated.

Thank you. 

 buy TSLY LOL

[Greg Hall]

Quote from @Chris Seveney:

Quote from @Ben M.:

We will have a few hundred thousand dollars to invest after our home sale. Not only do I want to avoid paying taxes on that money, but we want to invest it as well. Initially, we would need access to approximately $50K within 18 months of investing. The remaining balance is more long-term.

Any suggestions or advice would be appreciated.

Thank you. 

 What are your goals? If you want cash flow, I would say go towards a debt fund in todays environment. If you want growth, then I would invest it in the energy sector over next few years. Notice I did not say real estate, as I think the growth in real estate will be outperformed by many of sectors in the next few years - and this is coming from someone whose full time job for 25+ years has been in real estate. 

 @Chris Seveney - any particular debt funds you like? just curious and not considering this financial advice as I would do my own due diligence.  Just wanted narrow some down to evaluate.

[Ben M.]

We are nowhere near the investment stage yet. We didn't even sell our house

[John Mocker]

Ben,

There are a lot of options as you saw.  Things like, availability of the $50k as well as the remaining money from the sale, long term needs (retirement, college, business, etc.).  Its not likely that any one investment is correct, rather a mix of investments based on your long term goals.  This is definitely the time to speak to a financial advisor.  I can recommend a good one in NY if you are interested.   PM me and I will send you his contact info.

[Darryl S.]

Quote from @Laura Contee:

I would strongly suggest buying stock in the AI company Nvidia..do some research..

 Laura is a little bit late to the party on Nvidia. i bought Nvidia when it was under 200 a year or so ago and last time I looked it is over 600 so the upward curve may be about over or slowing. That is my best performer for 2023 LOL. 

[Carlos Ptriawan]

Quote from @Ben M.:

We will have a few hundred thousand dollars to invest after our home sale. Not only do I want to avoid paying taxes on that money, but we want to invest it as well. Initially, we would need access to approximately $50K within 18 months of investing. The remaining balance is more long-term.

Any suggestions or advice would be appreciated.

Thank you. 

 Yieldmax ETF for me LOL

[Darryl S.]

Quote from @Carlos Ptriawan:

Quote from @Ben M.:

We will have a few hundred thousand dollars to invest after our home sale. Not only do I want to avoid paying taxes on that money, but we want to invest it as well. Initially, we would need access to approximately $50K within 18 months of investing. The remaining balance is more long-term.

Any suggestions or advice would be appreciated.

Thank you. 

 Yieldmax ETF for me LOL

Pulling up the Etrade site now LOL. Is that YieldMax ETF a Qualified Opportunity Zone Fund per chance? 

[Carlos Ptriawan]

Quote from @Darryl S.:

Quote from @Carlos Ptriawan:

Quote from @Ben M.:

We will have a few hundred thousand dollars to invest after our home sale. Not only do I want to avoid paying taxes on that money, but we want to invest it as well. Initially, we would need access to approximately $50K within 18 months of investing. The remaining balance is more long-term.

Any suggestions or advice would be appreciated.

Thank you. 

 Yieldmax ETF for me LOL

Pulling up the Etrade site now LOL. Is that YieldMax ETF a Qualified Opportunity Zone Fund per chance? 

 Very farrr away from that

this is safe dividend 20 to 40 percent annualized

[Jeff Nash]

If you are looking for more safety and preservation of principal, we recommend a cash platform called Flourish (owned by Mass Mutual) to our clients.  The current yield is 5% which is variable.  It’s been 5% for the better part of the last year.  It’s flexible with no restrictions to move money between your other bank and investment accounts.  

As far as other options that might have higher yield and returns, structured notes and trust deed notes might be worth a look.  I have not quantified your risk tolerance, but from what you stated it looks like you are not particularly aggressive and might be moderate or slightly below.  Notes cover the entire risk spectrum and can be appropriate depending on the amount allocated and terms. There are greater risks relative to an option like Flourish which is strictly capital preservation, and temporary illiquidity is one of the drawbacks, but if you are selective and do your due diligence I think you can achieve the desired result.