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Short term investments
Old 05-18-2012, 06:41 PM   #1
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Short term investments

Hey all.

I'm curious if anyone has any creative ideas on safe places to put cash for ~3 years?

My wife and I just finished paying off our mortgage and now we're going to start slamming money aside for some freedom in a few years. No where near FIRE, but trying to get enough liquidity in place to have the option to leave megacorp and consult/start a company/join a smaller firm.

Expect I can put away about $400-500K if I put my mind to it.

Other than just spreading it around in some non-yielding CDs, any suggestions? This is definitely more about preservation than anything else.

Thanks for any suggestions.
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Old 05-18-2012, 07:32 PM   #2
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It is the old risk reward tradeoff but here are a couple of relatively safe suggestions that are in my portfolio.

1. Internet bank - I use discoverbank but there are others. A regular savings account currently earns 0.8% is FDIC insured (to $250k IIRC) and has no interest rate risk.

2. VFSUX Vanguard Short Term Investment Grade Fund Admiral Shares - current yield is 1.72% but duration is 2.4 years so there is a bit of interest rate risk associated with the fund.

Slim pickings in this space today.
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Old 05-18-2012, 09:57 PM   #3
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Boring, but keep an eye on possibilities with I-Bonds. Due to limits you could only deploy a small amount of your stash, and you might need to cash out with a penalty, but even with those downsides you can beat CD's and I- Bonds are free of risk and tax deferred.
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Old 05-19-2012, 06:51 AM   #4
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Good thoughts. Thanks!
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Old 05-19-2012, 07:40 AM   #5
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+1 VFSUX Short-term investment grade fund.
For me experiences are not good or bad, just different
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Old 05-19-2012, 07:44 AM   #6
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1) liquid accounts
TIAA Direct "teaser" ? rate 1.25%

2) CDs slightly higher for 2.5 yr term
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