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What to do with $140K
Old 10-16-2017, 07:50 PM   #1
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What to do with $140K

We just sold some property and a home due to a relocation for work. We ended up closing on our new home before selling our previous home, so we didn't have the $ to put as a down payment. With that, I now have $140K sitting in a saving account and I'm not sure what I should do next.

I am 47 and my wife is 45. Our plan is to retire in 10 years. Right now, we're maxing out our TSP (I'm a fed employee and she is in the military). I'm relatively conservative with my money, so I don't want to get too risky with any investments with the money. One thought is to put it back into our new home to build equity by refinancing our current mortgage. But, I'd know that will mean I'd have to pay additional lender fees to do that. We are comfortable with our current mortgage rate and monthly payment, so we don't need to do that. I also thought about rolling it over into our existing TSP, or separate mutual fund.

I know that I'm not providing a lot of detail, but just curious what some conservative options would be to invest that money. Are there ways to invest it where it remains relatively liquid and accessible if we need to access it?

Any info would be appreciated.

Thanks.
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Old 10-16-2017, 07:59 PM   #2
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Originally Posted by HomesteadDreamer View Post
I now have $140K sitting in a saving account and I'm not sure what I should do next.

One thought is to put it back into our new home to build equity by refinancing our current mortgage.

I also thought about rolling it over into our existing TSP, or separate mutual fund.

I know that I'm not providing a lot of detail, but just curious what some conservative options would be to invest that money. Are there ways to invest it where it remains relatively liquid and accessible if we need to access it?
If you want it to remain relatively liquid, don't put it back into your home.

Consider investing it in line with your current investment plans. Your existing TSP probably would achieve that.

A CD ladder is relatively liquid too, but is likely even more conservative than your TSP.
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Old 10-16-2017, 09:01 PM   #3
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Why would you put it into the TSP? Wouldn't that mean taxes when you withdraw it? You could possibly put it into the Roth TSP but that would take several years unless you are rolling it over from an outside IRA. Go with a separate mutual fund.
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Old 10-16-2017, 09:43 PM   #4
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Understand your current asset allocation - everything - TSA, savings, IRAs, etc.

Go with what you're comfortable with. At your age I was 85%-ish stock, and keep it in the 65-70% today at 57.

For these specific funds, you don't appear to have any near term need for them, so I would invest them in line with you overall asset allocation. Don't know how you could put them in your TSA, but there are multiple options including Schwab and Vanguard
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Old 10-17-2017, 02:21 AM   #5
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I would put it in a taxable account and invest in the asset allocation you're comfortable with. This provides maximum flexibility and liquidity.
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Old 10-17-2017, 08:08 AM   #6
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Agree with FlaGator.

What you want to avoid IMO is making emotionally driven financial decisions based on lumpy changes in NW (up or down ). The best way I can think of is to first figure out what the asset allocation is (for me 65% equities, 28% bonds, 5% alternatives and 2% cash) and then whenever money comes in or goes out in a way that upsets the balance too much I rebalance. 100k, 500k, 1m... it doesn't really matter.

That asset allocation is primarily based on your age and retirement plans along with you anticipated lifestyle, current NW and so on.

Separate from that is stuff like "should I pay off my house" which I think has a lot to do with interest rates, taxes, psychological disposition and so on. I carry a mortgage on our retirement home because I have high income in a high tax state (CA) and a low interest rate 30 year loan. I paid off my "main home" because I get huge psychological satisfaction from having a the house I live in "paid for" even though it doesn't make the most economic sense. If I quit tomorrow and had my income drop to where I didn't get much of a deduction, I'd probably pay off the retirement house, sell the main house and move. IMO real estate appreciation is not a very good long term investment (unless you're doing it as a rental cash flow business which many people on this forum are really successful at); but that is an opinion that is up for debate.

No matter what you decide to do I suggest you separate "how you allocate money" generally from any particular one time event. My own approach is to try to not treat the source of money or the amount as a major factor in how it is allocated or what my priorities and goals are. So I think my answer is "invest the money in accordance with your existing retirement plan and life goals which includes asset allocation and goals/priorities." If you don't have that plan, make it first :P
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Old 10-17-2017, 08:13 AM   #7
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put it in usspx and forget about it.
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Old 10-17-2017, 12:20 PM   #8
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Are you paying PMI on your new home? We added $$
40k to our equity in our home by requesting to have it recast. This way our payment, rate and schedule stayed the same. We have a 10 year note at 2.75 and wanted to keep making substantial progress on the balance. The recast procedure cost $250 which I believe is standard in the industry.
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Old 10-17-2017, 12:48 PM   #9
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I would put it in a taxable account and invest in the asset allocation you're comfortable with. This provides maximum flexibility and liquidity.
+1

Open a Vanguard or Fidelity brokerage account and use the money to buy a broad market, low cost index fund (like VFINX or VTSMX).
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Old 10-17-2017, 02:06 PM   #10
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If you really want to put it into your home, just make a payment (or payments) to be applied on the PRINCIPAL ONLY of your mortgage. That will shorten the length of time you must pay, before the mortgage is paid off.

I did this, and wrote in big bold letters both on the check and on the payment form, that this was to be applied to principal only. Got my mortgage paid off in four years, and I will never make another mortgage payment.

Whether or not this is a good idea clearly depends on your own individual situation. In my case it was by far the best option according to my spreadsheet computations and projections. But you can do these calculations for yourself and figure out what is best for you.
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Old 10-17-2017, 10:28 PM   #11
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What do you plan to live on when you retire?
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Old 10-18-2017, 12:03 PM   #12
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Pay down to get rid of PMI and invest the rest in a taxable account for a little diversification.
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Old 10-18-2017, 07:58 PM   #13
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Pay down to get rid of PMI and invest the rest in a taxable account for a little diversification.
I have a VA loan, so no PMI.
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Old 10-18-2017, 07:59 PM   #14
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What do you plan to live on when you retire?
I have a military pension right now and will have another, small federal pension at the age of 57. Wife has a small monthly VA disability pension as well. She will get her military pension at age 60 and then we both plan on taking social security shortly after.
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Old 10-18-2017, 08:18 PM   #15
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I would pay your loan to no pmi start a Roth IRA for each of you and fund those with the etf QQQ and put anything else in a post tax stock account probably in the etf VTI. With that retirement profile you don't need to limit risk but you need to take some risk. QQQ and VTI will go up and down but your bet is on the USA doing well in the long term and that's a good bet. Go look at long term charts of these two. They point up

Best
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Old 10-18-2017, 09:11 PM   #16
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A medium-low risk investment would be a ladder of medium term investment grade bonds.
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Old 10-19-2017, 11:08 AM   #17
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A medium-low risk investment would be a ladder of medium term investment grade bonds.

How does one create such a ladder? I have never dealt with individual bonds -- just bond funds.


I too am looking for what to do with cash from sold real estate which I think I will need in 2020 when I next buy a home.
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Old 10-19-2017, 12:08 PM   #18
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For intermediate term you would look for bonds maturing in perhaps 4 to 12 years and scatter the purchases over the range. 2020 would be short term so the returns would be less. Have the bonds mature before you need the $. I usually choose ratings A to BBB and mix the business types as well. I use Fidelity. They have a very helpful bond trading desk.
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