Where should I park $200,000 for 10 months?

[Camas Lilly]

I have $200,000 I am going to use about 2/3rds of it for construction in the next 10-12 months. The rest of it would make the 12 month mark.

Where should I park it in the mean time? What I would really like to do is throw it into my taxable account in a total market fund, but I understand any taxable gains will be taxed at our ordinary rate, at 22% in our case this year. I am a little short on what I want to do so I would like to earn a reasonable amount of return.

I also thought I could swap it out for some of the money that is currently in there, but there is only $30,000 and half of that right now would be short term gains as well, so that won't work.

I am not that concerned about risk on a total market fund, not that there isn't any, but if something did happen, I would just meld it into the retirement stash and draw from there instead.

Thoughts?

[pjigar]

Keep it in the bank. You should not invest in the market for such a short time period.


PS: I am in the similar boat and I have my money where my mouth is!

[njhowie]

Quote:

Originally Posted by Camas Lilly I am not that concerned about risk on a total market fund, not that there isn't any, but if something did happen, I would just meld it into the retirement stash and draw from there instead.

So why are you asking?

[street]

^ X2. Park it at a arm length away for your construction project. Anyway that is what I would do. Good luck in your new venture.

[Camas Lilly]

Probably I just wanted to know if anyone thought that made any sense. I don't always make the best decisions.

[Montecfo]

Money market or savings account.

T-Mobile Money 1.0%, FDIC insured.

[Camas Lilly]

Quote:

Originally Posted by Montecfo Money market or savings account. T-Mobile Money 1.0%, FDIC insured.

Thanks! I do have a Capital One Account at .40%, but I might check into that as well.

[Montecfo]

Quote:

Originally Posted by Camas Lilly Thanks! I do have a Capital One Account at .40%, but I might check into that as well.

I do also. But it's empty.

[Scuba]

Quote:

Originally Posted by Montecfo Money market or savings account. T-Mobile Money 1.0%, FDIC insured.

Thanks. Didn’t know about this. Is there a ticker symbol? Wondering if I can hold this within my Fidelity portfolio.

[Luvtoride]

Quote:

Originally Posted by Camas Lilly Thanks! I do have a Capital One Account at .40%, but I might check into that as well.

Please reconsider NOT putting it into the stock market. 10 months is too short a time frame where any dip could happen and cause you to lose some of your principal earmarked for this specific purpose at this specific time. Put it in your Capital One account and be safe.

[Camas Lilly]

Thanks guys! Appreciate your input.

I think I will err on the side of caution and keep that cash close.

[Montecfo]

Quote:

Originally Posted by Scuba Thanks. Didn’t know about this. Is there a ticker symbol? Wondering if I can hold this within my Fidelity portfolio.

I am not aware of a way to hold this bank savings account ( It is essentially a private label bank account through Customers Bank) within a brokerage portfolio, like you could with say a brokered CD. I set it up outside of my brokerage and have moved money to the account as needed.

[mrfeh]

Quote:

Originally Posted by pjigar Keep it in the bank. You should not invest in the market for such a short time period.

+1

[EastWest Gal]

You could consider a Treasury Direct account. You can keep it as cash in such an account (Zero percent of C), or invest in T bills, which have maturity dates of 4 weeks, 8 weeks, 13 weeks, 26 weeks, and 52 weeks, and you can set up automatic reinvestments, which you can stop at any time. More flexible than CDs for sure. And you can link it to your bank account which makes it easy to move the money out when you need it.

[OldShooter]

Quote:

Originally Posted by Camas Lilly I have $200,000 I am going to use about 2/3rds of it for construction in the next 10-12 months. The rest of it would make the 12 month mark. ...

We are in a similar situation, with $750K earmarked to pay the builder over the next 10 months or so. I have it parked in VUBFX, Vanguard Ultra-Short-Term Bond fund. Staying simple probably keeps us from getting the last few basis points, but staying simple is a virtue in investing IMO. As we finish up the house design, we are making decisions that cost us thousands or even tens of thousands. The yield on this short term cash bucket doesn't even show in the round-offs.

[RunningBum]

Quote:

Originally Posted by OldShooter We are in a similar situation, with $750K earmarked to pay the builder over the next 10 months or so. I have it parked in VUBFX, Vanguard Ultra-Short-Term Bond fund. Staying simple probably keeps us from getting the last few basis points, but staying simple is a virtue in investing IMO. As we finish up the design, we are making decisions that cost us thousands or even tens of thousands. The yield on this short term cash bucket doesn't even show in the round-offs.

VUBFX is a good choice, but did you consider VTAPX, short-term TIPS, instead? I know you are a TIPS fan, as am I. A little too volatile even with it being short-term TIPS? Just curious.

[OldShooter]

Quote:

Originally Posted by RunningBum VUBFX is a good choice, but did you consider VTAPX, short-term TIPS, instead? I know you are a TIPS fan, as am I. A little too volatile even with it being short-term TIPS? Just curious.

No. I really see TIPS as long-term inflation insurance. Over the short term the TIPs values can be herky-jerky due to inflation changing faster than the TIPS adjust. There are also some short-term value issues where the adjustment is coming and known but has not yet happened. I looked at that once for some other short-term cash but decided I did not want to get into the pit with the traders. This is consistent with my rule to not buy things I don't understand. And I don't understand very short TIPs.