Where to Park $400K for a Year?

[ShokWaveRider]

You don't have to put it into different institutions if you don't want to. FDIC will cover multiple accounts in the same institution if you title them right. You could put half in your name and half in your spouse's name. Other options include adding a payable on death, joint accounts, etc. A married couple could use various combinations to put well over a million into one institution FDIC insured.

https://www.fdic.gov/deposit/deposits/brochures/your_insured_deposits-english.html

Credit unions. NCUA is better for insurance. Name 3 Beneficiaries and you can get $1.25m Insurance. the CU will advise how to do the title.

 

[pb4uski]

One thing you might consider is going with a longer term CDs and breaking it and paying the early withdrawal penalty. For example if your choice is between a 1.5% CD for a year or a 3% long term CD with a 6 month then you might be better off with the longer term CD and the early withdrawal penalty... especially if your plans change and you end up leaving the money invested for a bit longer than you think.

 

[travelover]

Well it seemed easy enough, but somehow I tripped an alarm when I tried to apply on-line for an account at PenFed and they said I needed to send them a notarized copy of my SS card, notarized utility bill with my new address and a notarized copy of my drivers license. Tonight, they said this was still not good enough as the SS card looks very old (it is, I got it when I was 14 ) and the address on my license did not match the utility bill. Of course they don't, the whole purpose of the utility bill is to prove I live there now.

I did a quick search here and see that Nords tangled with these same Keystone Kops back in 2015. If the rate wasn't so good, I'd tell them to stick it.

 

[Just_Steve]

Thanks Hyperborea - you are right and I stand corrected!

Only a single joint account would be required for 400K, according to the FDIC website. I was told differently by an employee at SACU, but maybe they didn't have it right, or maybe each bank can have more restrictive rules than the FDIC itself?

PS: the FDIC link you provided is dead for some reason

Could be because credit union accounts are NOT FDIC insured?
That should have been the first answer to your question.

https://www.ncua.gov/legal/guidesetc/guidesmanuals/ncuayourinsuredfunds.pdf

^The correct answer to your credit union question.^

 

[brucethebroker]

When we sold our house in 2005, our plan was to full time RV for at least 5 years, so it seemed best to invest the house sale funds in a diversified portfolio, to grow while we traveled. I chose OAKBX which turned out to be a huge stroke of luck, because it wasn't hit nearly as hard in 2008 as other funds. By the time we bought a new place in 2010, our "house fund" had appreciated quite nicely, so it worked out well. Whereas the housing market - not so good.

More $ AND cheaper house prices?? Nice timing!

 

[Nords]

I did a quick search here and see that Nords tangled with these same Keystone Kops back in 2015. If the rate wasn't so good, I'd tell them to stick it.

Once you give them your money, or try to get it back, the customer service will only get worse.

Not worth the difference in the rates...

 

[travelover]

Once you give them your money, or try to get it back, the customer service will only get worse.

Not worth the difference in the rates...

Thanks for the warning. I did decide on a 12 month instead of a 15 month CD in order to give me time to pry my money back loose from them when it is time to buy a new house.

 

[audreyh1]

You can set up a CD to automatically transfer to your checking or savings at PenFed as soon as it matures. No problems there so far for me.

Many other banks make you contact them to arrange for CDs NOT to reinvest when they mature which is a pain.

 

[travelover]

You can set up a CD to automatically transfer to your checking or savings at PenFed as soon as it matures. No problems there so far for me.

Many other banks make you contact them to arrange for CDs NOT to reinvest when they mature which is a pain.

Thanks, I'll make sure I arrange that transfer as the maturity approaches. I did make sure it did not automatically reinvest.

 

[audreyh1]

Thanks, I'll make sure I arrange that transfer as the maturity approaches. I did make sure it did not automatically reinvest.

You've already selected where they will deposit the funds once it matures, then. BTW they allow the selection of whether to reinvest or not to be made online anytime during life of the CD.

I have mine deposited in my PenFed checking account, and then once the funds are deposited I use another institution such as Fidelity to pull the funds. I haven't encountered problems pulling funds via ACH from my other institutions.

 

[RHONDAVE]

We just parked $500K in Everbank @1.35 for 1 year as we search for new spec homes in Phoenix for cash.

 

[MrLoco]

I think I know the answer to this, but before I do something stupid, like put it all on red, I thought I'd ask.

We just sold our house and have a check for about $400K. Plan is to rent for the next 12 to 16 months*, then buy a new home for cash.

The obvious answer is to park it in a CD at some place like Ally. Any other creative alternatives? It kills me to be paying $1700 a month for rent and earning 1% on my money.



* We'll be buying in a new state and want to try it out before buying

Trust me...it would kill you that much more if you invested the $400k in an investment that lost 20% over the next year. Especially when you will need all or most of it for a new home.

Don't get greedy. Take the 1% and be happy.

 

[meierlde]

May I also suggest you place it in multiple institutions? This eliminates the 250,000 cap on FDIC insurance and also the hassle factor (delay) if there were to be a limit. In addition, if you did have to break a CD for some reason (e.g. you find a buy that you can't resist so you decide to cash out enough for a down payment), you won't be penalized on the entire investment.

Since it presumably is joint money you can get 750k in a limit easily by titleing 3 different accouts a with payable on death to B, B with payable on death to A, and A &B you also could do A alone and B alone going to 1.25 million that way alone.

 

[phil1ben]

We just parked $500K in Everbank @1.35 for 1 year as we search for new spec homes in Phoenix for cash.

We are in the process of doing the same. However, it is a surprisingly long process to open an account. One would think this could be done immediately and I wire the funds in. However, three days have now passed and my account is not yet opened.

 

[jollystomper]

Trust me...it would kill you that much more if you invested the $400k in an investment that lost 20% over the next year. Especially when you will need all or most of it for a new home.

Don't get greedy. Take the 1% and be happy.

+1

Heck, I have enough in cash earning 1% so that we are not forced to sell any investments between the time I retire and the time we plan to take SS... the peace of mind is worth more than the potential risk.

 

[travelover]

We are in the process of doing the same. However, it is a surprisingly long process to open an account. One would think this could be done immediately and I wire the funds in. However, three days have now passed and my account is not yet opened.

I struggled with this as well. I can't help but think that it costs me $100 a week while they dither.