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Thoughts on what to do with $50k?
Old 01-20-2017, 09:55 AM   #1
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Thoughts on what to do with $50k?

My wife, my 2.5 son & I moved out of NYC to NJ and bought a house last summer. We had some cash left over after the purchase and have been able to sock away about $2k each month since we've gone from a nanny to daycare.

We're now sitting on a little over $50k in an Capital One checking account getting a whole 0.5% interest rate. Obviously we can do better.

That said, we're expecting a second child later this year and will need the money with my wife taking maternity leave and wanting to have a nanny for the first year or so. As such, I dont want to put this anywhere too risky and risk losing a chunk of this as I expect we will need a lot of it for the 2nd half of 2017 and all of 2018.

Thoughts on a good strategy? Short term bond funds? Half in the mutual fund world and half in cash? cds? Something else.

Thanks
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Old 01-20-2017, 10:05 AM   #2
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you can easily double that return by moving the cash to an online checking or savings account at Synchrony or Ally.
I don;t know what other cash reserves you have, of course, but it sounds like you may need the ability to access the money fairly quickly, so I would probably stick with cash-type investments.
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Old 01-20-2017, 10:41 AM   #3
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For a slight principal risk, you might want to consider VFSUX (Vanguard short term investment grade, admiral class): https://personal.vanguard.com/us/fun...tExt=INT#tab=0

yields 1.98% right now; 2016 price range was 10.58 to 10.80. Good return and not very likely to lose money considering the yield--but you could.

(This, along with checking account, constitutes our "cash.")
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Old 01-20-2017, 10:45 AM   #4
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You're probably talking about a difference of a couple of hundred dollars no matter what "cash-type" investment you choose. I would opt for absolute security since you know you need the money in the immediate future, and stick that in a savings account with a better yield than 0.5%. Maybe one of the banks already suggested. I don't think I'd worry about CDs which lock the money up or short term bonds. JMO.
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Old 01-20-2017, 02:47 PM   #5
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Quote:
you can easily double that return by moving the cash to an online checking or savings account at Synchrony or Ally.
+1
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Old 01-20-2017, 04:19 PM   #6
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+1
+2 I have both Ally and Synchrony with no complaints. Synchrony is currently paying slightly higher at 1.05%.
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Old 01-20-2017, 04:52 PM   #7
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You can even stay right at Capital One and get 1.00% from their 360 Money Market, minimum balance 10,000.
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Old 01-20-2017, 05:24 PM   #8
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Or you could buy a Harley.
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Old 01-20-2017, 05:37 PM   #9
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Or you could buy a Harley.
.. with a side car for the kidlet
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Old 01-20-2017, 05:45 PM   #10
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Most of our cash we plan to spend within a year is in high yield savings accounts yielding around 1%. For cash we don't expect to touch in a year - some of that is in 1year+ CDs paying higher rates, and some in short-term bond funds.
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