Where to stash money for grad school in three years

[ryanpj]

I plan to attend grad school in three years once I finish out my ADSO on active duty in the Army. Once I leave active duty I should have 80% of the post 9/11 GI bill. My question is where to stash the money I will be saving to cover the remaining amount. My initial thought was to invest $10,000 dollars in I bonds for the next three years in order to have some inflation protection. However, I have also accumulated significant un realized gains in my taxable accounts. Would it make sense to just continue to invest as I have a split between Total Market and Total International and then sell some of my lots that have the highest gains in three years in order to fund my education as my taxable income would be very low and I would likely be able to keep myself in the 0% gains bracket?

[stimulacra]

Cash, CD or high yield savings account.

Maybe a lifestyle fund if you're feeling aggressive.

[arcticpineapplecorp.]

if it's money you need in three years it shouldn't be in total stock market (US or international).

what if the market falls 30%-50% in the next three years and doesn't recover for a few more years?

then you don't have the money you need.

money you need in the short term shouldn't be invested except in safe assets like short/intermediate term bonds or cds, savings, etc.

that means low returns.

since inflation is low and expected to be, loss of purchasing power over 3 years isn't a major factor.

return of principle is more important than return on principle over the next three years in your case.

[SquawkIdent]

Cash, CD, online bank account or under your mattress.

I wouldn’t take any risk with money I need in a coupe of years...anything can happen.

[GerryL]

Cash, CD, online bank account or under your mattress.

I wouldn’t take any risk with money I need in a coupe of years...anything can happen.

We repeatedly see questions like "Where should I stash money I will need for X in three years."
The "X" is irrelevant. It's the "need" and "three years" that determine the answer, which Squawkldent has provided above.

[SquawkIdent]

Cash, CD, online bank account or under your mattress.

I wouldn’t take any risk with money I need in a coupe of years...anything can happen.

We repeatedly see questions like "Where should I stash money I will need for X in three years."
The "X" is irrelevant. It's the "need" and "three years" that determine the answer, which Squawkldent has provided above.

+1

[z3r0c00l]

Maybe an Ally 2 year raise your rate CD or a 3 year CD from same.

[anon_investor]

I Bonds since you may be able to exempt the earned interest from taxes to pay for education expenses.

[aristotelian]

Do you get a 529 deduction or tax credit in your state? I would use that with a safe bond fund or CD inside the 529.

HM Bradley offers a savings account with 3% interest if you do direct deposit.

[Dominic]

I agree that I Bonds are a good idea. Even with the 3 month interest penalty, the inflation rate for the next 3 years is probably going to be far higher than high-yield savings account or CD yields. And as an additional bonus, the interest on I Bonds is tax-free if used to cover education expenses.

Anything beyond that, I'd invest extremely conservatively. No/low-penalty/raise-your-rate CDs are a good option. If you're feeling risky, you could do a 20/80 stock/bond allocation.