Where do you park your money?

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Where do you park your money?

Joe SplitrockPro Member
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Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes

I am wondering if you built up $10,000 or $25,000 or $100,000 in cash to invest, but were not ready to invest, where would you park your money? Would the "location" change based on the dollar amount?

- Money market (FDIC and available quickly)

- Stock market (good return but some risk)

- Bank CD (FDIC but locks term)

- Private money lending (higher risk)

- Other?

I am trying to see where I could get a good return but still keep my money relatively safe and available if I need it. I am interested in what others are doing. Please share as much detail as you can. (No this isn't an offer to give you money to invest so please don't ask.)

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Logan AllecBusiness Member
Accountant · Los Angeles, CA · Member since 2014 · 1k+ posts · 980 votes
8y

I just move around from bank to bank to collect sign-up bonuses.

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  • Ernesto Hernandez
    Realtor · San Francisco, CA · Member since 2017 · 408 posts · 361 votes
    8y

    S and P. Last year I think I got about 15-16% back. Good year. They average out at 7-8%.

    1Reply
  • Nathan Patterson
    New to Real Estate · Castle Rock, CO · Member since 2014 · 172 posts · 66 votes
    8y

    I have mine parked in Ally Bank with 1.25% interest, like many others in this thread.  Have had them for a few years with no complaints. 

    2Reply
  • Nathan Patterson
    New to Real Estate · Castle Rock, CO · Member since 2014 · 172 posts · 66 votes
    8y

    @Dave Van Horn Insurance Contracts?  This is something I have not heard of before.  Is this in a similar realm as Notes/Tax LIens or something different entirely.

    0Reply
  • Dave Van HornPro Member
    Fund Manager · Wayne, PA · Member since 2009 · 1k+ posts · 1k+ votes
    8y

    @Nathan Patterson

    Completely different. Usually offers less of a return than notes, but can offer more liquidity.

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  • Patricia GallagherPro Member
    Rental Property Investor · Salt Lake City, UT · Member since 2017 · 37 posts · 26 votes
    8y

    Savings! I've used Ally Financial (1.25%) & Discover Bank (1.30%) for years and have had no issues with them, transfers have been easy. Recently got an account at CIT Bank (1.55%).

    1Reply
  • Joe SplitrockPro Member
    Moderator
    OP
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    8y

    @Patricia Gallagher that CIT Bank at 1.55% is the best mentioned so far, thanks. I am leaning towards a good chunk just in savings to keep it safe and ready to use.

    0Reply
  • Patricia GallagherPro Member
    Rental Property Investor · Salt Lake City, UT · Member since 2017 · 37 posts · 26 votes
    8y

    @Joe Splitrock with CIT when I've needed to transfer some money out, it's usually in my other account the next day, so very accessible as well

    2Reply
  • Faysal Alam
    Real Estate Agent · New York City, NY · Member since 2017 · 150 posts · 26 votes
    8y
    Joe Splitrock try Goldman Sachs online savings , 1.4%
    1Reply
  • Kyle McCorkel
    Rental Property Investor · Hummelstown, PA · Member since 2015 · 638 posts · 653 votes
    8y
    Hey Michael H. Another options trader! I keep a reserve of $60k that I don’t touch but get a return on it from trading options. Then I have my operating account (checking) which contains a minimum of $10k but could contain much more depending on where I am in the buy-rehab-rent-refi cycle. My total operating capital is about $80k plus I use private money to pay for rehabs. So I might have $90k in my checking at one point but it doesn’t last long because I’m moving to the next deal.
    2Reply
  • Gautam Venkatesan
    Investor · Dallas, TX · Member since 2013 · 619 posts · 128 votes
    8y
    Originally posted by @Dave Van Horn:

    @Nathan Patterson

    Completely different. Usually offers less of a return than notes, but can offer more liquidity.

     Dave - where can we learn more about insurance contracts?

    1Reply
  • Dave Van HornPro Member
    Fund Manager · Wayne, PA · Member since 2009 · 1k+ posts · 1k+ votes
    8y

    @Gautam Venkatesan

    Every insurance company has different contracts. Most fall into a category of policy and everyone's situation is different (that depends on a variety of factors, like age, riders, etc). I learned about them as a licensed insurance salesman myself. I would ask your insurance agent or estate planning attorney. Some financial advisors are familiar with them as well.

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    4Reply
  • Ned J.Pro Member
    Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
    8y

    Love to hear more about how to get into holding notes etc

    0Reply
  • RJ Grimshaw
    Investor · Ann Arbor, MI · Member since 2014 · 3 posts · 1 vote
    8y

    Ally - great bank.

    1Reply
  • Jimmy Ou
    Real Estate Agent · Los Angeles, CA · Member since 2017 · 10 posts · 8 votes
    8y

    I second the CIT Bank 11 month no penalty CD at 1.55%. 

    1Reply
  • Clancy Catelli
    Real Estate Agent · Sequim, WA · Member since 2017 · 64 posts · 39 votes
    8y

    Just closed on a spec house i built and I will be using that money to build my personal home this year. I won't be starting until March so I put the money in a Diversified equities account.  $50k in tech stocks, $50k in energy stocks, $50k in consumer Staples,$50k in bio/health care, and $50i in basic materials. Well Diversified, kinda like my own personal mutual fund I've created. 

    1Reply
  • Jim Brandt
    Investor · Highland, CA · Member since 2016 · 19 posts · 8 votes
    8y
    After reading this post I became even more interested in parking some money and more than my Chase .01%. I started looking into this subject. Has anyone had an experience with CIT Bank, good or bad, or heard anything about them one way or the other? Thank You! Jim
    1Reply
  • Derek Hubbard
    Investor · Leesburg, VA · Member since 2017 · 4 posts · 2 votes
    8y

    Betterment.  I like to earn more than a ~1% return while I am waiting on my next purchase.  

    For those of you who aren't familiar, this is one of a few widely available robo-advisors; which is basically a brokerage account that is automatically managed for me based on criteria that I set.  I can select a % mix of stocks to bonds for the account and my expected time range for withdrawal.  The service takes it from there and selects appropriate bonds and ETFs (typically low expense ratio funds by Vanguard).  

    Sure there is always some risk of a market downturn but even bonds are earning a much higher return than 1% and Betterment allows you to control your exposure.  Plus it is very easy to transfer money in and out of the account or set up automatic deposits which will be vest for you.

    After such a glowing review I would like to say that I have no connection with Betterment beyond being a very happy customer.

    2Reply
  • Jeff V.
    Investor · Deridder, LA · Member since 2014 · 298 posts · 185 votes
    8y

    Capital waiting to be invested for me goes into a portfolio of low expense index funds and bond funds.  I follow bogle heads methods for investing in that respect. 

    However I have been trying to get enough information to pull the trigger on notes like Chris Seveney spoke of. I think they will be much safer investment than in the market. 

    I feel like even if I get in the note space the market will still be the initial parking space for the funds until I find the next note or RE investment. 

    Savings accounts and money market accounts are a waste in my opinion for anything other than an emergency fund.

    Jeff V

    1Reply
  • Chase Gochnauer
    Investor · Des Moines, IA · Member since 2015 · 380 posts · 201 votes
    8y
    Get a line of credit on an existing property. Example if you owe $100k on your personal residence and have $100k cash, pay off your house and get a $100k line of credit on the property. You're saving a guaranteed 3-5% interest and the funds are available when you need them.
    3Reply
  • Joe SplitrockPro Member
    Moderator
    OP
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    8y

    @Jim Brandt there are a couple people who commented positive things about CIT Bank. Pretty good rates for an FDIC insured product.

    @Chase Gochnauer you are the first person to mention mortgage pay down (surprisingly). I have considered this. I agree the big advantage is guaranteed returns. Avoiding interest is the same as getting interest. Where I struggle is sacrificing a locked in low rate for higher variable rate. Having cash and line of credit gives me a stronger position. Still I am not discounting this option. Thanks.

    0Reply
  • Chase Gochnauer
    Investor · Des Moines, IA · Member since 2015 · 380 posts · 201 votes
    8y

    @Joe Splitrock

    I do understand your point there on the low fixed rate. A lot of my properties are financed through a local bank that only give a 5 year fixed anyway. My line of credit rates are fixed for 12 months. So rates could skyrocket and cause an issue. Being able to pay down the lines when you're cash heavy and pull out when you need it is nice though. Then you only make interest only payments when you need it. 

    0Reply
  • Joe SplitrockPro Member
    Moderator
    OP
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    8y

    Interesting fact, I just checked where the whole market ETF, VTI was trading when I first posted this. Over the last 9 days it has gained 1.29% in value. Ironic that many of these FDIC savings accounts get only a little more interest in a year. Of course it is the stock market, so it could easily go the other way too. With great risk comes greater reward. Thanks everyone for the suggestions.

    0Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    8y

    Joe, what did you choose?  I'm online right now and going to pick Discover or CIT.

    0Reply
  • Charles Kennedy
    Rental Property Investor · Philadelphia, PA · Member since 2015 · 213 posts · 160 votes
    8y

    @Mike Dymski I also have CIT. No reason not too pick the extra % points. I've noticed it's a little slower in depositing money  in (usually 3 days), but have yet to remove money from the saving account so not sure on that timing.

    To answer OP's general question, I have roughly 35% in stocks, and the rest in a savings account (CIT). With having a plan to purchase soon, I have been leaning towards the small guaranteed return of a savings account, although if I'd put all that savings into my brokerage, I'd be crushing it, but hey, hind sight is 20-20.

    2Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    8y
    Originally posted by @Charles Kennedy:

    @Mike Dymski I also have CIT. No reason not too pick the extra % points. I've noticed it's a little slower in depositing money  in (usually 3 days), but have yet to remove money from the saving account so not sure on that timing.

    To answer OP's general question, I have roughly 35% in stocks, and the rest in a savings account (CIT). With having a plan to purchase soon, I have been leaning towards the small guaranteed return of a savings account, although if I'd put all that savings into my brokerage, I'd be crushing it, but hey, hind sight is 20-20.

    Looks like Discover has cash bonuses and I have a card with them already but I'm not going to split hairs and just want something easy.

    1Reply
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