Tax Efficent Cash Investments
I am closing on a property in the next 60 days that will provide cash equal to 33% of my current portfolio (thus 25% of my total assets). I have considered this property to be the cash portion of my portfolio and therefore have been about 90-95% in equities in my other investments. Therefore, I want to move the proceeds into cash (Bonds, etc). My goal is 35% cash, 65% equities in my portfolio.
I plan to convert all of my 401(k) that is not already bonds or REITs to more bonds to cover as much as possible. Unfortunately, this will only put me at about 15-20% cash. Thus, I will have to purchase a significant amount of cash assets in my non-tax sheltered accounts.
What should I consider when investing this cash? My plan is to just just suck up the taxes and invest in a Vanguard Short- or Intermediate-Term bond fund. Should I consider Municipal bonds? Other options? Please give me some ideas to investigate.
I don't mind paying taxes if the after tax returns beat the alternatives.
Marginal tax rate is 33%.
I do not need any dividends or interest for the next five years.