best safe place to put 100K

[bobbee25]

I have iras, roths and I bonds.
Am receiving 100k life insurance, what would be a good conservative investment ?

 

[Sunset]

How long are you planning hold the 100K until you use it ? (example maybe buying a house).

 

[Midpack]

Depends on your risk tolerance and what you consider a worthwhile return. Right now treasuries or CDs kept to maturity and even online savings accounts pay pretty well - but that won’t last forever. About as conservative as there is.

 

[gauss]

If you live in a state with an income tax, you may wish to consider short term government bonds (or ETFS).

The reason is that U.S obligations (treasuries, agency bond etc) are exempt from state income tax. If you go this route, you would want to make sure you know the advantages/disadvantages of holding the securities directly vs in a fund/ETF.

If you have a brokerage account, either the actual securities or ETFS that invest in them, should be easy to buy.

As an example I have the 'BIL' ETF for money that I may want to spend at any time. The NAV varies throughout the month but that is mostly due to the accrued interest within the month. BIL invests in 1-3 month U.S. Treasury bills and it pays a bit more than money market funds, and I avoid my state income tax on this.

I also have longer term individual bonds that I plan to hold until maturity.

-gauss

 

[Exchme]

Since you are collecting on life insurance, presumably someone close to you passed away, so condolences on that.

You are going to need to provide some more information for the good folks here to have reasonable suggestions. All choices have trade-offs, you are going to have to decide what your needs, time of life, and plans are and how this money fits in.

A bank account is safe but pays very low interest, so is unsafe in the long run as inflation chews on the value of the principal.

A money market account like Vanguard's VMFXX is currently paying 5.28%. It is not directly insured, but owns short term Treasuries, so is quite secure. It is completely liquid. But interest rates are widely believed to be dropping as the year goes on, so you are taking re-investment risk (meaning you could invest in something longer term now and lock in reasonable returns for longer).

CDs currently have similar yields to money markets and are insured, but may have penalties if you need the money sooner.

TIPS have inflation adjustments built-in, and are currently offering a positive yield, but have duration risk if you need the money before the term of the bond (the price may have gone down if inflation picked up).

Treasuries don't have default risk, but have duration risk and inflation risk.

Bond funds have inflation risk, duration risk and some default risk.

Stocks are quite risky for time periods less than 10 years but over the long term holding some has reduced the risk of running out of money.

Using the cash to defer taking social security until benefits are maximized reduces longevity risk.

 

[Route246]

In the short term get it into something like VMFXX as noted. That is the safest thing to do in the short term until you figure out what your endgame is. If it were me I choose to ladder zero-coupon treasuries in the secondary market which are yielding 5-1/4 give or take for now and hold them to maturity but that is not going to last forever. I currently have a triple ladder at 30/60/90 days out. I have to rebuy every 30 days but I don't mind that, you may not want the hassle.

This is an exercise in convenience, risk tolerance and yield. If you want convenience the yield will suffer. If you want max yield then it may get inconvenient and involve small risk, etc. It is a trade off.

Since you are collecting on life insurance, presumably someone close to you passed away, so condolences on that.

You are going to need to provide some more information for the good folks here to have reasonable suggestions. All choices have trade-offs, you are going to have to decide what your needs, time of life, and plans are and how this money fits in.

A bank account is safe but pays very low interest, so is unsafe in the long run as inflation chews on the value of the principal.

A money market account like Vanguard's VMFXX is currently paying 5.28%. It is not directly insured, but owns short term Treasuries, so is quite secure. It is completely liquid. But interest rates are widely believed to be dropping as the year goes on, so you are taking re-investment risk (meaning you could invest in something longer term now and lock in reasonable returns for longer).

CDs currently have similar yields to money markets and are insured, but may have penalties if you need the money sooner.

TIPS have inflation adjustments built-in, and are currently offering a positive yield, but have duration risk if you need the money before the term of the bond (the price may have gone down if inflation picked up).

Treasuries don't have default risk, but have duration risk and inflation risk.

Bond funds have inflation risk, duration risk and some default risk.

Stocks are quite risky for time periods less than 10 years but over the long term holding some has reduced the risk of running out of money.

Using the cash to defer taking social security until benefits are maximized reduces longevity risk.

 

[Sojourner]

A money market account like Vanguard's VMFXX is currently paying 5.28%. It is not directly insured, but owns short term Treasuries, so is quite secure. It is completely liquid.

+1

Based on the wording of OP's question, I think putting it all in VMFXX is the way to go.

 

[pb4uski]

I have iras, roths and I bonds.
Am receiving 100k life insurance, what would be a good conservative investment ?

Open a taxable brokerage account. Perhaps with the same broker that you have your IRA or Roth with. Deposit the $100k in it. Then buy a 1-year, 4-rung ladder of Treasuries or brokered CDs.

At today's rates it should yield about 5% and will at least temporarily protect you from the upcoming decline in money market fund rates.

Depending on the broker you can even set it up to automatically renew as each CD or Treasury matures.

 

[Kings over Queens]

A bank account is safe but pays very low interest, so is unsafe in the long run as inflation chews on the value of the principal.

typically, but discover bank and marcus are both paying 4.5% for online savings. discover will give a cash bonus and marcus an extra point for 3 months.

 

[freedomatlast]

VMRXX is presently paying 5.29% and is totally liquid.

 

[Route246]

Personally, I don't like automatic renewals as they are hard to back out in some cases and require actions on a specific date range to effect the outcome you desire. I was not aware of packaged ladders. Do they have a product name at any of the popular brokerages?

Open a taxable brokerage account. Perhaps with the same broker that you have your IRA or Roth with. Deposit the $100k in it. Then buy a 1-year, 4-rung ladder of Treasuries or brokered CDs.

At today's rates it should yield about 5% and will at least temporarily protect you from the upcoming decline in money market fund rates.

Depending on the broker you can even set it up to automatically renew as each CD or Treasury matures.

 

[pb4uski]

Personally, I don't like automatic renewals as they are hard to back out in some cases and require actions on a specific date range to effect the outcome you desire. I was not aware of packaged ladders. Do they have a product name at any of the popular brokerages?

I've never done automatic renewal, wouldn't, but know it is available to customers.

I know Schwab has a CD/UST ladder tool that with clicks will provide offerings for a ladder.

I'm not a fan of that tool because the securities it suggests are suboptimal vs just picking ~3, 6, 9 and 12 month maturities.

I built a 5-year, 10-rung ladder for a friend a few months ago and was able to squeeze another 30 bps (5.3% vs 5.0%) compared to Schwab's recommendation... in some cases by conceding to a maturity that was a month earlier or later than target.

BlackRock iBonds defined maturity bond ETFs also has a ladder tool but I'm not keen on using ETFs for Treasuries since you can easily buy Treasuries on your own, but if you want easy, then it isn't a totally bad compromise.

https://www.ishares.com/us/strategies/bond-etfs/build-better-bond-ladders

 

[jim584672]

8 week T-Bills went for 5.4% today, and no state taxes.

 

[cloud9nd]

Not to hijack this thread, but where are you guys looking at all of these options?

I have a similar situation coming up.

 

[kgtest]

Not to hijack this thread, but where are you guys looking at all of these options?

I have a similar situation coming up.

I believe they are just adding their comments through their knowledge learned and wisdom acquired over time.

"Conservative" to me will taste different in my mouth than it would to someone else.

But, to me, conservative would be buying into VOO, and closing my eyes.

But people will be eager to understand eachother's level of risk to understand how to define conservative.

If you don't need the money for a LONG time, I would go VGT. But that is probably not conservative to most people lol.

 

[motley]

A bank account is safe but pays very low interest

There are banks paying saving account rates comparable to Money Markets and CDs.

Looks like the OP disappeared, but I'd put it in a higher yield savings account or CD, where you can get 4-5%+.

 

[latexman]

There are banks paying saving account rates comparable to Money Markets and CDs.

Looks like the OP disappeared, but I'd put it in a higher yield savings account or CD, where you can get 4-5%+.

I got a flyer in the snail mail recently from Fifth Third Bank. IIRC it was for 5.3%

 

[DrRoy]

To hold return for a longer period of time than a CD I would say bonds of whatever quality you are comfortable with.

 

[retire48in2018]

You’d have to define conservative and timeline to get best advice.

If you mean long term (more than 5 years, like a decade or decades) - then inflation is enemy and a conservative investment considers that - and it would be in 1 or 2 index/ETF funds. A total market and bond fund. The mix between needs a further definition of conservative. If you’re decades away and want it for retirement and want it to be set it and forget - than perhaps it’s a single total market equity fund (like FZROX). It is very low turnover and creates little to no taxes (most of dividends are qualified and count as capital gains, and depending on income that could be no federal taxes)

If you’re talking a few months - than a money market (suggestions are listed in earlier posts) or CD.

Timeline is a major factor in decision making.
Everyone’s definition of “conservative” is different.

I feel conservative because I don’t do single stocks/bonds and am a multi year buy & hold. Someone else may think anything in the market is risky and not conservative. Someone else may think unless you’d have a high mix of bonds and stocks it’s risky. Risk is measurement from your heart (and conservative w.r.t. risk) is therefore an individual heart felt decision. Until you are somewhat knowledgeable about options, I’d recommend nothing more than a bank CD - so you can adequately gauge your risk tolerance/conservative and timeline

If you’re talking years, that gives you time to get some knowledge. MM and CDs is not a long term answer for being conservative.

 

[Onda]

I have iras, roths and I bonds.
Am receiving 100k life insurance, what would be a good conservative investment ?

Conservative on a short- or long-term basis?

Short term: SWVXX may do
Long term: 50% VTI 50% QQQM