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
Bonds are really the only way to go if we are on a downward sloping trend. Data is mixed throughout the USA but Canada, Australia and some parts of developed Asia are already on the decline. Personally, I think we are past the top of RE values but would wait for interest rates to peak in the region where you want to invest, and then go strong into bonds that you have confidence in during a downturn. If you buy in at 6 or 8% and interest rates drop to 3 or 4%, can you double your money? On the other hand, if you want 100% risk free high returns on low balances, simply Google bank or credit card bonuses assuming you have good to excellent credit. There are dozens of financial institutions paying $150 to $500 cash bonuses for meager deposits that usually work out to well over 10% APR!
TD Ameritrade has a solid offer for new accounts that open with a minimum of 25K. They give you a $100 bonus, plus free trades for the first 60 days. You can park your $ there, get the free bonus, and either "turn on the drip" investing by leveraging one of their conservative, fee free funds that steadily accrue interest/dividends while protecting you from market down turn. Or, you can take some of that $ and actively invest it into equities. I'm actually doing this right now...
My opinion here. The stock market is set to have a MAJOR CORRECTION in the very near future. There are major bubbles happening right now where valuation is not backed up by the price of the stock i.e., new burgeoning marijuana market in Canada/U.S. is a prime example. We have had 10 years of solid stock market growth, leaning on the principle of the "natural ebb and flow of markets" it follows that a short term correction is eminent. A major correction in the stock market can have a domino effect on real estate. So...
I would say patience (which is REALLY HARD FOR ME TO DO!!) is key right now; park your cash into a stable investment (I prefer $ market funds) and don't over expose yourself to the stock market.
My 2 cents... hopefully this helps.
This is a good thread as I am in the same situation. I've looked into some of the high interest accounts and I ran into restrictions (velocity limits) on how you could get your money back out on one of them. It capped withdraws to like $2k/day which doesn't work at all for me. I'll look into Ally and some of the other recs here.
My 2 cents on mortgage paydown & HELOCs - I am a big advocate of using HELOCs, but I don't make extra payments on my mortgage. The 3.875% I pay on my house is super cheap money to me (I remember paying 10% back in the day) and you truly cannot get your extra principle payments back out until you refi or sell. The HELOC is not a guarantee that you can always get to your principle. And besides, I use a combo of resources to make all-cash offers on property. So this has required liquid cash+HELOC+401k loan. In most cases only HELOC+401K would not be enough.
Here's a follow-up for whatever it may be worth to anyone.
After spending a little more time looking at options, I am going to go with the Vanguard VMRXX money market. A key thing for me is to not have to open anymore accounts. I already have more accounts than I like that I have to pay attention to and manage. So while an Ally account or equivalent option looks good at ~1.85%, I am happy to take ~1.5% or so via Vanguard that I can purchase in my existing TD Ameritrade account.
Cheers,
Dave
Just an FYI, if you have a W2 income, you're not eligible for a solo 401K. They're reserved for self-employed income. So technically if you have a business entity set up for your real estate ventures, you can put some of the money generated from that into your solo 401K.
To say that REITs are liquid and price doesn't fluctuate is a joke. They trade based on their NAV which can move with real estate prices and/or rates. As an investment, they're a good arrow in your quiver but its an investment, not a cash holding. There is definitely risk associated with holding them.
Not to pick on you Matt, but this is one of my biggest pet peeves. People ask for short term holding (cash) recommendations and people chime in with syndicated loan funds, REITs, etc. Literally anything else but actual cash holdings. Yeah, we're in a benign credit environment and defaults are near historic lows. Doesn't mean its time to treat investments that may lose value as cash.
To say that REITs are liquid and price doesn't fluctuate is a joke. They trade based on their NAV which can move with real estate prices and/or rates. As an investment, they're a good arrow in your quiver but its an investment, not a cash holding. There is definitely risk associated with holding them.
Not to pick on you Matt, but this is one of my biggest pet peeves. People ask for short term holding (cash) recommendations and people chime in with syndicated loan funds, REITs, etc. Literally anything else but actual cash holdings. Yeah, we're in a benign credit environment and defaults are near historic lows. Doesn't mean its time to treat investments that may lose value as cash.
I didn’t say they don’t fluctuate - I said they don’t fluctuate much, which as a broad generalization is true compared to other securities. Obviously they are not as liquid as cash, but as I mentioned it is an option that has a better return than cash holdings, and you can dispose of your shares any time you want (vs a syndication - which you mentioned, not me). If you want to extrapolate something from peoples post here to fit your agenda or create a narrative to discuss your pet peeves, do it with someone else.
To say that REITs are liquid and price doesn't fluctuate is a joke. They trade based on their NAV which can move with real estate prices and/or rates. As an investment, they're a good arrow in your quiver but its an investment, not a cash holding. There is definitely risk associated with holding them.
Not to pick on you Matt, but this is one of my biggest pet peeves. People ask for short term holding (cash) recommendations and people chime in with syndicated loan funds, REITs, etc. Literally anything else but actual cash holdings. Yeah, we're in a benign credit environment and defaults are near historic lows. Doesn't mean its time to treat investments that may lose value as cash.
I didn’t say they don’t fluctuate - I said they don’t fluctuate much, which as a broad generalization is true compared to other securities. Obviously they are not as liquid as cash, but as I mentioned it is an option that has a better return than cash holdings, and you can dispose of your shares any time you want (vs a syndication - which you mentioned, not me). If you want to extrapolate something from peoples post here to fit your agenda or create a narrative to discuss your pet peeves, do it with someone else.
Syndicated bank loans != syndication. I do this for a living and am very versed in fixed income products. If people are looking for short term holdings, capital preservation is #1 priority. Meaning instruments that will not lose value. You literally can not get more risk-free than UST.
At work, we define short term as anything having a final maturity of less than 12 months from settlement. Meaning that CP, T-bills, repos, etc. Anything that doesn't fit in that bucket, is a long term holding.
Before getting defensive, learn the terminology and market.
To say that REITs are liquid and price doesn't fluctuate is a joke. They trade based on their NAV which can move with real estate prices and/or rates. As an investment, they're a good arrow in your quiver but its an investment, not a cash holding. There is definitely risk associated with holding them.
Not to pick on you Matt, but this is one of my biggest pet peeves. People ask for short term holding (cash) recommendations and people chime in with syndicated loan funds, REITs, etc. Literally anything else but actual cash holdings. Yeah, we're in a benign credit environment and defaults are near historic lows. Doesn't mean its time to treat investments that may lose value as cash.
I didn’t say they don’t fluctuate - I said they don’t fluctuate much, which as a broad generalization is true compared to other securities. Obviously they are not as liquid as cash, but as I mentioned it is an option that has a better return than cash holdings, and you can dispose of your shares any time you want (vs a syndication - which you mentioned, not me). If you want to extrapolate something from peoples post here to fit your agenda or create a narrative to discuss your pet peeves, do it with someone else.
Syndicated bank loans != syndication. I do this for a living and am very versed in fixed income products. If people are looking for short term holdings, capital preservation is #1 priority. Meaning instruments that will not lose value. You literally can not get more risk-free than UST.
At work, we define short term as anything having a final maturity of less than 12 months from settlement. Meaning that CP, T-bills, repos, etc. Anything that doesn't fit in that bucket, is a long term holding.
Before getting defensive, learn the terminology and market.
Again, you are supporting your agenda by miss-representing what I said. At no point did I say REITS were risk free nor did I say they don’t fluctuate in price. I simply presented another option for the OP that hadn’t been mentioned before. If you want to nit-pick comments here to look smart, so be it. I wasn’t selling REITS as the way to go, the way you are pushing your “expertise”.
To say that REITs are liquid and price doesn't fluctuate is a joke. They trade based on their NAV which can move with real estate prices and/or rates. As an investment, they're a good arrow in your quiver but its an investment, not a cash holding. There is definitely risk associated with holding them.
Not to pick on you Matt, but this is one of my biggest pet peeves. People ask for short term holding (cash) recommendations and people chime in with syndicated loan funds, REITs, etc. Literally anything else but actual cash holdings. Yeah, we're in a benign credit environment and defaults are near historic lows. Doesn't mean its time to treat investments that may lose value as cash.
I didn’t say they don’t fluctuate - I said they don’t fluctuate much, which as a broad generalization is true compared to other securities. Obviously they are not as liquid as cash, but as I mentioned it is an option that has a better return than cash holdings, and you can dispose of your shares any time you want (vs a syndication - which you mentioned, not me). If you want to extrapolate something from peoples post here to fit your agenda or create a narrative to discuss your pet peeves, do it with someone else.
Syndicated bank loans != syndication. I do this for a living and am very versed in fixed income products. If people are looking for short term holdings, capital preservation is #1 priority. Meaning instruments that will not lose value. You literally can not get more risk-free than UST.
At work, we define short term as anything having a final maturity of less than 12 months from settlement. Meaning that CP, T-bills, repos, etc. Anything that doesn't fit in that bucket, is a long term holding.
Before getting defensive, learn the terminology and market.
Again, you are supporting your agenda by miss-representing what I said. At no point did I say REITS were risk free nor did I say they don’t fluctuate in price. I simply presented another option for the OP that hadn’t been mentioned before. If you want to nit-pick comments here to look smart, so be it. I wasn’t selling REITS as the way to go, the way you are pushing your “expertise”.
Matt - what agenda am I pushing? You stated that REITs didn't fluctuate much, a very subjective measure. So yes you presented an option, even though the question asked was about something else.
If I ask for recommendation on fruits and someone chimes in that potatoes are great. Yes, they presented an option, but it doesn't answer the original question.
I'm not peddling my expertise just relying on it to answer the intended question.
Just an FYI, if you have a W2 income, you're not eligible for a solo 401K. They're reserved for self-employed income. So technically if you have a business entity set up for your real estate ventures, you can put some of the money generated from that into your solo 401K.
Just an FYI, if you have a W2 income, you're not eligible for a solo 401K. They're reserved for self-employed income. So technically if you have a business entity set up for your real estate ventures, you can put some of the money generated from that into your solo 401K.
Alina - That's exactly what I said in the bottom of that post. Only the income generated from the business is eligible to placed in the Solo 401K.
To say that REITs are liquid and price doesn't fluctuate is a joke. They trade based on their NAV which can move with real estate prices and/or rates. As an investment, they're a good arrow in your quiver but its an investment, not a cash holding. There is definitely risk associated with holding them.
Not to pick on you Matt, but this is one of my biggest pet peeves. People ask for short term holding (cash) recommendations and people chime in with syndicated loan funds, REITs, etc. Literally anything else but actual cash holdings. Yeah, we're in a benign credit environment and defaults are near historic lows. Doesn't mean its time to treat investments that may lose value as cash.
I didn’t say they don’t fluctuate - I said they don’t fluctuate much, which as a broad generalization is true compared to other securities. Obviously they are not as liquid as cash, but as I mentioned it is an option that has a better return than cash holdings, and you can dispose of your shares any time you want (vs a syndication - which you mentioned, not me). If you want to extrapolate something from peoples post here to fit your agenda or create a narrative to discuss your pet peeves, do it with someone else.
Syndicated bank loans != syndication. I do this for a living and am very versed in fixed income products. If people are looking for short term holdings, capital preservation is #1 priority. Meaning instruments that will not lose value. You literally can not get more risk-free than UST.
At work, we define short term as anything having a final maturity of less than 12 months from settlement. Meaning that CP, T-bills, repos, etc. Anything that doesn't fit in that bucket, is a long term holding.
Before getting defensive, learn the terminology and market.
Again, you are supporting your agenda by miss-representing what I said. At no point did I say REITS were risk free nor did I say they don’t fluctuate in price. I simply presented another option for the OP that hadn’t been mentioned before. If you want to nit-pick comments here to look smart, so be it. I wasn’t selling REITS as the way to go, the way you are pushing your “expertise”.
Matt - what agenda am I pushing? You stated that REITs didn't fluctuate much, a very subjective measure. So yes you presented an option, even though the question asked was about something else.
If I ask for recommendation on fruits and someone chimes in that potatoes are great. Yes, they presented an option, but it doesn't answer the original question.
I'm not peddling my expertise just relying on it to answer the intended question.
Other people suggested things like paying down a mortgage or solo 401ks but you didn't jump at them... then when I said REIT prices "don't fluctuate much" you chime in and reacted as if I said they don't fluctuate "AT ALL". You responded to words that I never said... the reason for I still can't understand.... other than to perhaps use it as a platform to (as you say) peddle your expertise based on a pet peeve for something that I did not say. I appreciate this conversation and hope you can see my point here. Respond to exactly what people say, not what you were hoping they said.
@Jesse M. If liquidity is key, just put it in a money-market fund because you not looking for high returns but convenience.
Honestly, what is an extra 1% going to get you over the whole year - $2K at most for $200K. That's a drop in the bucket. Don't over think, do what most portfolio managers do - money-market funds ideally at a brokerage where you don't get charged any trade fees.
@Jesse M. Look into notes as they offer fixed interest rates and relatively short terms.
I would say short CDs or T-bills, failing that, then yes maybe just a savings account that can give you a little something.
@Alina Trigub, @Kon Zel, @Missy Mercer, @Jesse M.
Yes, Solo 401k plan designed for those who are self-employed or own a small business without full time employees.
Contributions to the Solo 401k can only be made from earned self-employment income.
The fact that you have a job with W2 income has no effect on your ability to qualify for the Solo 401k, many of our clients have full time jobs and side business, which they use to qualify for Solo 401k.
Is the $10,000 that you mention earned income or did you inherit it? Or is it sitting in a retirement account?
I think someone else mentioned something similar above, but another option would be to take advantage of all the different promotions banks have for opening up accounts with them. $200 here, $150 there, $400 there. Of course, it may be a pain to keep track of, but might be the most bang for your buck. I'm opening up one with Citibank now, and there is a $400 bonus to keep a minimum of 15k in there for 90 days. That's like a 12% return on your money. There's a site where a guy lists diff deals if you just google it - bankdealguy.