Where is best place to put money while you are saving for deals?

Question

Where do you prefer to have your $ while saving for the next deal? Roth IRA? Savings account? Anything different? I'd like to hear where other investors prefer to save for deals?

Mike Dymski · Answer

Online savings account...Marcus, Amex, Ally, CIT, and Discover are the common ones discussed on BP. Google online savings accounts.

Not the stock market...that's using short term funds for a long term investment.

Jay Hinrichs · Answer

If your accredited Iron Bridge in Portland has a nice fund with a 30 day call.. and I think it pays 6%.

Joe Splitrock · Answer

@Deadrick Colbert putting money in a Roth IRA is a long term retirement strategy, not something you want to do if you need the cash in the next 20 years. You could do a stock market index fund, but there is a lot of volatility from month to month, so there is risk your investment could be down when you go to get the cash. That is really a longer term play too. Really the only safe short term investment is a high yield money market savings account. As @Mike Dymski mentioned there are several online banks that are popular due to higher yields. My Discover Bank account pays almost 2% which isn't life changing, but there is no minimum balance and it is FDIC insured. I can get the cash at any time with no risk of losing it.

Ryan P. Kotschedoff · Answer

I recommend diversifying the cash a little bit. You could place some money in some index funds (especially right now). Also as you mentioned putting some money in a savings account works just find for building up that cash in a safe and guaranteed manner.

Raja Panyala · Answer

@Mike Dymski - Service has not opened up yet - I'm on the waiting list. They have to work out the FDIC/SIPC part and then I think they will open up - heard they are rebranding...

Mike Dymski · Answer

Raja, are you currently using this account? It's my understanding that it is not available yet. It's also my understanding that it's not a savings account (i.e. no FDIC insurance) and the SIPC has yet to approve it for coverage.

Shiloh Lundahl · Answer

@Deadrick Colbert for me it depends. How long are you looking to save up for? And how much are you looking to save?

In my opinion, putting your money into an account that earns you 2-3% or even 6% could be more harmful than helpful. Have you ever heard of the saying “good enough is the enemy of great”? Psychologically, if you are earning a decent return in a savings account, you can slip into complacency. Rather than feeling like, “I have to do something with this money rather than just have it sit there,” your brain may likely think “I’m earning a decent amount in my savings account, so I’ll let it sit there until a really good deal comes up.” It may take away the urgency or drive to get things moving.

If you want to put a fire under your seat, and if you are looking to invest within a year’s time, put the money into an account earning 0% and tell yourself I can’t take it out until I find a deal and that my money is going to get depreciated everyday by inflation until I put it to work. (Important note: don’t use this motivational thinking as an excuse to buy a bad deal and then blame someone else for it).

We are in the building phase of our real estate companies right now. So we keep our money in our business checking accounts until it gets deployed. We value liquidity and quick access to our capital over the interest that we could make in tieing our money up in accounts that may take us days to access.

Bryan Blankenship · Answer

Consider a self-directed IRA. more flexibility...

Where is best place to put money while you are saving for deals?

Where is best place to put money while you are saving for deals?

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