Where to stash cash for short term?

54 Replies

Howdy. I'm looking for recommendations on which vehicle I should use to stash some funds to be used at a later time. Let's say it's more than 10k but less than 200k. A friend suggested municipal bonds but I'm not sure I'm interested in that. My CPA recommended treasury bills. My intention is to keep these funds somewhere liquid so I can pull in 1-3 years for real estate purchases. Liquid is key. I'm waiting for the eventual correction fire sales. 

Ally savings account is 1.85%

pretty hard to beat compared to Tbills and perfectly liquid

@Jesse M.

If any of your short-term investment is not going to provide any return better than your home mortgage, its better to pay off the Mortgage and apply for an equity line of credit.

You do not pay interest unless you use the money. 

This will have a snowball effect where you will be paying up your loan very quickly. 

If you do not have a mortgage, you have to pick an security that matches your risk and liquidity level. 

Stocks if you are willing to take a risk. It is pretty liquid. 

Money markets, T -Bills, CDs - It's better to pay off a mortgage than investing in these assuming you will apply for LOC for liquidity.

I also like the "pay your mortgage" philosphy while relying on a HELOC to make purchases. The only risk is if your home drops in value and you are not able to take as much out as you thought. But there is generally risk in any investment other than traditional checking / savings / CD accounts.

I'd say check out a credit union in your area.  My credit union gives me 3% on the first $15K, as long as i have a deposit to the account each month, and 15 transactions.  They also have savings accounts that pay 2.5% with no qualifications, but you can only front load $1000, and $500 a month after that.  I'm in your same boat, not saving for a correction, but saving for a new down payment on the next house.  Takes for fricken ever!

Nothing to do jumping jacks over, but NFCU offers a 3% 1yr CD on up to $3k.  Woohoo.

For s/t funds I like my mmkt acct at Vanguard.  It pays about 1.5% with no strings and I can trade/invest if I get a hankering.

Originally posted by @Alexander Felice :

Ally savings account is 1.85%

pretty hard to beat compared to Tbills and perfectly liquid

Thanks for the suggestions everyone. I think I may go the Ally route. My issue with paying down my mortgage and using HELOC or similar is, as suggested, depreciation of my primary during a downfall, which is exactly when I want to put this money to work.

Cheers. 

You didn't mention risk factor. After the cash/reserve accounts at my credit union, I keep most of my money in a Vanguard ETF Brokerage account. No, it is not risk free. Yes, it has been doing quite well. Vanguard has many funds depending on your risk level, and low fees. My particular fund is earning about 9% over the past 5 years, and is a "medium risk" fund. When I pulled money from it this year to buy a duplex, it took 48 hours for the money to be direct deposited into my bank account. You obviously pay taxes on the gains that you withdraw. 

@Jesse M. Short term hard money loans to other REI investors. If you have +100K. Easy 1% interest (1000$) per month in passive income.
Originally posted by @Anthony Wick :

You didn't mention risk factor. After the cash/reserve accounts at my credit union, I keep most of my money in a Vanguard ETF Brokerage account. No, it is not risk free. Yes, it has been doing quite well. Vanguard has many funds depending on your risk level, and low fees. My particular fund is earning about 9% over the past 5 years, and is a "medium risk" fund. When I pulled money from it this year to buy a duplex, it took 48 hours for the money to be direct deposited into my bank account. You obviously pay taxes on the gains that you withdraw. 

 Low risk preferred. I love Vanguard products but (1) I'm looking for relatively short term and (2) I'm wanting to use this cash in a downturn, which, if that happens, bye bye cash. 

Originally posted by @Daniel C. :
@Jesse M.

Short term hard money loans to other REI investors. If you have +100K. Easy 1% interest (1000$) per month in passive income.

 Interesting but seems like more work managing than I want. 

@Jesse M. Another vote for Ally. I keep a chunk of cash in there and they are always raising the interest rate on their savings account.

A friend of mine puts a chunk of his money in lendingclub. I really don't know too much about it, but a crowdfund type of investment might get you some good returns too. Just something else to consider. 

I use treasury direct, your cpa is correct in his rec. You can do 4 week, 13 week, etc. Automatically reinvest or just disburse back to your savings. You can also have sub accounts, for your rental deposits, without commingling.


Originally posted by @Jesse M. :

Howdy. I'm looking for recommendations on which vehicle I should use to stash some funds to be used at a later time. Let's say it's more than 10k but less than 200k. A friend suggested municipal bonds but I'm not sure I'm interested in that. My CPA recommended treasury bills. My intention is to keep these funds somewhere liquid so I can pull in 1-3 years for real estate purchases. Liquid is key. I'm waiting for the eventual correction fire sales. 

@Jesse M. Ok everyone's thought it but I'm gonna say, just to add a bit of humor.  Just withdraw the cash and stick in under your mattress.  But spread it around so it doesn't give you back problems :)

Seriously, though, it sounds like you're looking for maximum value preservation and liquidity with minimum effort. I'll add my vote for a "high" interest savings account with an institution you're confident will be around if things really get hairy like 10 years ago.

Good luck!

Originally posted by @John Woodington :

I'd say check out a credit union in your area.  My credit union gives me 3% on the first $15K, as long as i have a deposit to the account each month, and 15 transactions.  They also have savings accounts that pay 2.5% with no qualifications, but you can only front load $1000, and $500 a month after that.  I'm in your same boat, not saving for a correction, but saving for a new down payment on the next house.  Takes for fricken ever!

I agree with @JohnWoodington but take it up  a notch to others paying upto 5% in a checking account.  Automate the spending requirement by making smaller payments to your bills and you got a guaranteed 5% interest rate.  May have to open multiple s they have $10K max limits..

Also check out the CD rates at 3.25 for NASAFCU.  Doctor of Credit gives you lots of info on where to put liquid money.. 

https://www.doctorofcredit.com/high-interest-savings-to-get/

Ally bank savings
@Dennis M. Are there any restrictions to Ally savings bank at 1.85%? Is it a place I can stash cash between purchases and deposit and withdraw without restriction while earning 1.85% apr?
@Jesse M. I like storing cash in whole life cash value insurance. Good rates, safe, and liquid. Better than a bank and a lot less risky than than the stock market.

There's a few banks that are over 2% for a savings account, check bankrate.com  

I'll echo what some others have said and mention T-Bills.  4Week bills are close to 2% and are literally the most liquid of any investment vehicle.  If you want to juice your yield a bit you can buy floating treasuries and eliminate any duration risk of rising rates. 

Last thing to keep in mind is that the Fed is going to raise rates next week, so likely all of the savings/CD products will readjust.  As will T-Bills and any floating product.  

@Jesse M. Utah First Credit Union pays 2.25% on a savings if you have an automatic $25/month deposit setup. I can get you 2.59% on a Certificate for 21 months. I like UFCU’s liquid rate.
Originally posted by @Kon Zel :

There's a few banks that are over 2% for a savings account, check bankrate.com  

I'll echo what some others have said and mention T-Bills.  4Week bills are close to 2% and are literally the most liquid of any investment vehicle.  If you want to juice your yield a bit you can buy floating treasuries and eliminate any duration risk of rising rates. 

Last thing to keep in mind is that the Fed is going to raise rates next week, so likely all of the savings/CD products will readjust.  As will T-Bills and any floating product.  

I am a bit concerned with T-bills. wouldn't you have several uninvested days after the end of the T-bill?

@Kate J. Treasurydirect gives you options. You can have the money deposited into your savings account or rolled into the next auction of t-bills.

@Mark Welp I agree, i use the life insurance as well- but it is not a liquid as savings accounts. Once it is funded and there is cash in the policy, it is as liquid as anything. For liquid cash out of the gate, I’d use a mutual fund portfolio similar to someone’s vanguard recommendation. I’d have a majority of it in bond funds and high yield bond funds. Always keep a little in an index fund and then i ‘play around’ with the rest, but don’t trade funds more than once every few months. Usually this small portion of the portfolio will comprise of a combination of an international fund (sometimes a specific region or country), commodities fund, real estate fund, and/or small/mid cap funds. I’ll usually have an American fund fund in there too. Fairly low risk and usually steady returns; a little better if you can guess right on the ‘play around funds’. Don’t chase the returns of what has done well, think about what is ready to do well.

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