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What to do with money
Old 10-20-2009, 07:52 AM   #1
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What to do with money

I am retiring in 2 weeks. We have a contract on our house. We are moving. We will be going to Charlottesville, Virginia. We both always wanted to retire to a college town. However, we plan on renting for a year, or so, to make sure C-ville is the right town for us and to decide where in town or around there, we want to settle. We will have $300,000 that we will net from the sale of our house. Does anyone have any suggestions about what to do with this money, in the meantime? It would make the matress too lumpy if we put it under there, but we can't afford to lose this money by doing anything too risky.

No, I don't want any sales pitches, or invest in your personal, can't miss, business venture!
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Old 10-20-2009, 08:01 AM   #2
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We had the same problem when we sold our house in New Jersey and rented in Florida . We did not want the money tied up for too long so we put it in CD's . Of course then CD's were paying something . It worked out fine since we found the perfect house six months after we moved and it was ready to close at the twelve month time frame . Renting for a year was the best thing we did . You can visit places but until you actually reside there you can not know the best neighborhoods . Where we would have bought before we rented would have been a mistake . Good Luck with your house hunting !
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Old 10-20-2009, 08:01 AM   #3
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I assume you know about cd's for a safe option. If you think/have confidence the market will improve you might contemplate a total index fund and plop it in. Were it mine that is what I might contemplate provided that I had other assets to live off of. For me it would likely be a world wide index fund from say Vanguard.
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Old 10-20-2009, 08:05 AM   #4
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CDs are probably your best option.

Short term rates are awful, but you could put it in a long term running around 4 pct, keep it there 12-18 months, pull it out, and still net more than a short term CD even with the penalty (often 6 months worth of interest).

Alternatively to avoid the hassle just toss it in a couple of one year CDs and suffer the 1-2 pct returns.
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Old 10-20-2009, 08:11 AM   #5
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Are you eligible for a Roth IRA for 2009? If you are and you're under CSRS (you've posted under the Federal Soup board your pending retirement), and don't need the $300K sale proceeds for a while, then take the sale proceeds before you retire from the Feds and roll/dump the proceeds in the Voluntary Contribution program. And before you officially retire, ask for a refund and invest the after-tax part of the VC investment in a Roth IRA, where you can purchase CDs or any other low-risk instrument. (Take the interest earned on the VC and roll/invest that into a tax deferred account like TSP.) You will essentially transform $300K of taxable money into a nontaxable account.

I think, however, your timing might be a little off for these logistics, if you're planning on retiring in two weeks.
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Old 10-20-2009, 08:51 AM   #6
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We are in the same predicament, although after selling my home here in New Orleans I expect to net between 1/2 and 2/3rds of your anticipated $300,000. After I sell and move north, I want to keep that money available to use in buying the new house.

I am (reluctantly) going to put it in a bank or money market account making almost no interest, or else in 1-week CD's. I thought of longer term CD's, but want it available to dangle in front of the seller if the perfect house should happen to show up earlier than I expect. This could possibly drive the sales price down, or at least give me some room in the negotiations. Losing the interest is going to be part of the cost of moving, for me.

We do not expect to rent for a full year, though, and I doubt we will even rent for a full six months. We are already fairly familiar with our planned ER location.
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Old 10-20-2009, 11:20 AM   #7
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Most folks think of banks accounts, money market accounts, and CD's as a solution for short-term money. I would suggest you look at high yield savings accounts. Often these pay more than a CD and are FDIC insured. Best bets for these are at an internet bank.

See Moneyaisle.com or Bauer Financial for best rates and safety of institutions.

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Old 10-20-2009, 10:08 PM   #8
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Quote:
Originally Posted by deepc View Post
CDs are probably your best option.

Short term rates are awful, but you could put it in a long term running around 4 pct, keep it there 12-18 months, pull it out, and still net more than a short term CD even with the penalty (often 6 months worth of interest).

Alternatively to avoid the hassle just toss it in a couple of one year CDs and suffer the 1-2 pct returns.
Just be sure to watch the FDIC limits.
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Old 10-21-2009, 07:19 AM   #9
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my best cd rate link Bank Deals - Best Rates and Deals good luck Just looked at Pentagon Federal Credit Union and found this
MONEY MARKET CERTIFICATE RATES

Term APY6-Month 1.00%**1-Year 1.25%2-Year 1.75%3-Year 3.50%4-Year 3.75%5-Year 5.04%
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Old 10-21-2009, 10:37 AM   #10
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Quote:
Originally Posted by kowski View Post
my best cd rate link Bank Deals - Best Rates and Deals good luck Just looked at Pentagon Federal Credit Union and found this
MONEY MARKET CERTIFICATE RATES

Term APY6-Month 1.00%**1-Year 1.25%2-Year 1.75%3-Year 3.50%4-Year 3.75%5-Year 5.04%
An earlier poster spoke about depositing in a higher yield longer term CD, then paying the penalty for early withdrawal and still coming out ahead. This may be the kind of thing the poster was referencing. Would need to check penalty.

Also, back a couple years when I was chasing interest I ran into a gotcha - a limit on how much could be withdrawn in a certain time - worth checking if you have a need for all your bux at once.
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Old 10-21-2009, 05:24 PM   #11
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I will just repeat what I apparently have tattooed on the inside of my eyelids these days: "safety and soundness."

By your own admission, you cannot afford any losses on the money. So play it safe and put it in CDs, a savings account, T bills, etc.
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Old 10-21-2009, 08:37 PM   #12
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Check some local credit unions money market rates. You might find some around 2-3% for 50k +
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Old 10-22-2009, 11:02 PM   #13
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Do you plan to put all $300k back into another house? It might be
a good time to consider downsizing and invest the difference in a
short term bond index fund like Vanguard's until you decide on a
longer term asset allocation.

Cheers,

charlie
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