Where to park 130k for 6 months

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newbieinvestor1
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Where to park 130k for 6 months

Post by newbieinvestor1 »

First the backstory...

We are looking to do a bit of a home remodel (kitchen, flooring, etc). We had met with one contractor to get an initial bid, and after doing so started the process of a home equity loan (since rates are super low) which we are using to finance the work. The home equity loan process went quickly, and so we now have money in hand (well, sitting in the bank).

We ended up talking with 2 more contractors to get bids from them so we could compare. What we found is the first contractor was the most expensive (135k), but could start the work the soonest (July/August). The other two contractors came in lower (85k/95k), but are booked out until November and so are just now taking on new work for January.

After talking it over with the wife, and doing some more research, we are going forward with the bid for 95k, and will end up using the rest of the money to do some other work in the backyard (get pool resurfaced, pool equipment fixed/repaired, concrete redone, etc).

All of that said, we now have 130k sitting in our Ally account earning 0.50%. The plan is to hold off on any backyard work until we are done with the interior of the house (in case of change orders, or other things that come up). So basically, we sitting on this money for the next 6 months.

Keeping it in the Ally account is the safest bet, obviously, but I feel like it could be doing better. Is there any thing that is pretty safe, I can leave it for 6 months, and maybe see 1-2%? I'm not looking for so huge return, but I feel silly just letting it sit in the Ally account.
chassis
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Re: Where to park 130k for 6 months

Post by chassis »

Equities.

Leave half in Ally and put the other half in your favorite vanilla equity etf or stock. I like a blue chip dividend stock for this purpose. It’s what I did. You would also be just fine with SPY in my view.
Makefile
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Re: Where to park 130k for 6 months

Post by Makefile »

newbieinvestor1 wrote: Sat Jun 12, 2021 7:16 pm Keeping it in the Ally account is the safest bet, obviously, but I feel like it could be doing better. Is there any thing that is pretty safe, I can leave it for 6 months, and maybe see 1-2%? I'm not looking for so huge return, but I feel silly just letting it sit in the Ally account.
Would it feel sillier explaining to your wife why the $130k remodeling fund is now $104k?
lakpr
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Re: Where to park 130k for 6 months

Post by lakpr »

Your intended horizon for this money is between 6 to 9 months, so there really aren't a lot of choices.

You might want to start playing the checking account / savings account bonuses game. You know those offers -- keep $15k with us for a minimum of 90 days, earn $150 bonus --

You will be taxed on that bonuses earned, but so will you be on the Ally Bank interest. The yield from these bonuses can be between 4% to 5% (annualized), considerably better than the 0.5% you are going to earn with Ally.
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Kevin M
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Re: Where to park 130k for 6 months

Post by Kevin M »

newbieinvestor1 wrote: Sat Jun 12, 2021 7:16 pm Keeping it in the Ally account is the safest bet, obviously, but I feel like it could be doing better. Is there any thing that is pretty safe, I can leave it for 6 months, and maybe see 1-2%? I'm not looking for so huge return, but I feel silly just letting it sit in the Ally account.
Define "pretty safe" and "maybe see".

There is nothing as safe as an Ally online bank account for a 6-month term that earns more, unless you want to join a credit union to earn 0.70% or 0.75% on a 6-month CD.

The real yield on a 0.6-year TIPS is about -4%. If inflation runs at an average of 3.5% over the next six month, you'd earn about the same real return on the Ally account as on the 0.6-year TIPS. If you want to bet on inflation being higher than that, the TIPS is a better bet, and vice versa.

The 6-month Treasury yield is 0.04%. You can lock in your 0.5% at Ally for 11 months with no term risk by buying a no-penalty 11-month CD, earning a yield premium of 0.46% over the Treasury.

The only way you're going to "maybe" earn 1-2% is by taking the risk that you'll earn less than 0.5%. Taking a bit more term risk and/or credit risk in bonds might do it, or it might not (that's the nature of risk).

Your best investment probably is to spend the money sooner rather than later, as the market expectation is for inflation in the 4% ballpark (annualized) over the next six months. Of course what matters is the inflation on the things you're planning on spending the money on. Most of the things I've been spending money on for my house are significantly more expensive now than a few months ago.

Kevin
If I make a calculation error, #Cruncher probably will let me know.
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nedsaid
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Re: Where to park 130k for 6 months

Post by nedsaid »

chassis wrote: Sat Jun 12, 2021 8:04 pm Equities.

Leave half in Ally and put the other half in your favorite vanilla equity etf or stock. I like a blue chip dividend stock for this purpose. It’s what I did. You would also be just fine with SPY in my view.
Six months is not a long enough time horizon for a stock investment, in my opinion you need a minimum of 5 years and even that might not be long enough. I would put 100% of the money in an FDIC Insured bank account and get the highest interest rate you can. Bad things can happen to good stock markets.
A fool and his money are good for business.
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arcticpineapplecorp.
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Re: Where to park 130k for 6 months

Post by arcticpineapplecorp. »

newbieinvestor1 wrote: Sat Jun 12, 2021 7:16 pm All of that said, we now have 130k sitting in our Ally account earning 0.50%. The plan is to hold off on any backyard work until we are done with the interior of the house (in case of change orders, or other things that come up). So basically, we sitting on this money for the next 6 months.

Keeping it in the Ally account is the safest bet, obviously, but I feel like it could be doing better. Is there any thing that is pretty safe, I can leave it for 6 months, and maybe see 1-2%? I'm not looking for so huge return, but I feel silly just letting it sit in the Ally account.
if a savings acct offers 0.5% then if you're looking for 1-2% then by definition you would need to accept the higher risk that goes with the higher returns.

are you willing to take higher risk than the bank acct?

or are you trying to get something for nothing? (i.e., are you wanting higher returns for the same amount of risk)?

is this possible or does it violate the fundamental relationship between risk and return?
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
nguy44
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Re: Where to park 130k for 6 months

Post by nguy44 »

newbieinvestor1 wrote: Sat Jun 12, 2021 7:16 pm Keeping it in the Ally account is the safest bet, obviously, but I feel like it could be doing better. Is there any thing that is pretty safe, I can leave it for 6 months, and maybe see 1-2%? I'm not looking for so huge return, but I feel silly just letting it sit in the Ally account.
Better to feel silly but know for certain that in 6 months you'll still have $130K plus a little interest (perhaps around $325, nothing to sneeze at, that can play for some fun things) than take more risk hoping to get $650 or $1200 but have the increased possibility of ending up with less than $130K.
ososnilknarf
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Re: Where to park 130k for 6 months

Post by ososnilknarf »

Money you need in 6 months should not be in the stock market. You probably don't have a better place for it than your savings account.
Outer Marker
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Re: Where to park 130k for 6 months

Post by Outer Marker »

Savings account or CD is the only suitable place for a time horizon that short. It's enough cash you should be able to qualify for a "relationaship bonus" by opening a new account at Chase, Merrill, etc. To get the top tier award of, say, $1,500, you need to park $200,000 for six months, but you can probably get $500 or so for $130K.
chassis
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Re: Where to park 130k for 6 months

Post by chassis »

nedsaid wrote: Sat Jun 12, 2021 8:20 pm
chassis wrote: Sat Jun 12, 2021 8:04 pm Equities.

Leave half in Ally and put the other half in your favorite vanilla equity etf or stock. I like a blue chip dividend stock for this purpose. It’s what I did. You would also be just fine with SPY in my view.
Six months is not a long enough time horizon for a stock investment, in my opinion you need a minimum of 5 years and even that might not be long enough. I would put 100% of the money in an FDIC Insured bank account and get the highest interest rate you can. Bad things can happen to good stock markets.
@nessaid To each their own. I am acting in accordance with the suggestion.

It’s my belief that many, likely most, posters on this thread and this site are extremely risk averse owning to their state in investing life - capital distribution, spend down and liquidation. Nothing wrong with that, for those people whose risk aversion needs satisfaction.

For those in the ascendant phase of investing life, capital formation and growth is the goal, and risk is part of the picture.
rockstar
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Re: Where to park 130k for 6 months

Post by rockstar »

In the past when I needed money within a year, I'd park them in t-bills. But right now, they earn less than your savings account. CDs don't look any better. And I can't find any bonds that mature within that timeframe that will better either. I don't think I'd change what you're doing.
J295
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Re: Where to park 130k for 6 months

Post by J295 »

newbieinvestor1 wrote: Sat Jun 12, 2021 7:16 pm …..

Keeping it in the Ally account is the safest bet, obviously, but I feel like it could be doing better. Is there any thing that is pretty safe, I can leave it for 6 months, and maybe see 1-2%? I'm not looking for so huge return, but I feel silly just letting it sit in the Ally account.
Let’s say you were looking for 1.5% return that is “pretty safe.” That is one percent greater than the Ally account. One percent additional return on this amount over six months gains you $650 pretax. Let’s estimate that a third of that gain goes to taxes, leaving you with a net after-tax gain of $440. Given that no such “pretty safe” option exists, I suggest you stick with Ally.
Robert20
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Re: Where to park 130k for 6 months

Post by Robert20 »

newbieinvestor1 wrote: Sat Jun 12, 2021 7:16 pm First the backstory...

We are looking to do a bit of a home remodel (kitchen, flooring, etc). We had met with one contractor to get an initial bid, and after doing so started the process of a home equity loan (since rates are super low) which we are using to finance the work. The home equity loan process went quickly, and so we now have money in hand (well, sitting in the bank).

We ended up talking with 2 more contractors to get bids from them so we could compare. What we found is the first contractor was the most expensive (135k), but could start the work the soonest (July/August). The other two contractors came in lower (85k/95k), but are booked out until November and so are just now taking on new work for January.

After talking it over with the wife, and doing some more research, we are going forward with the bid for 95k, and will end up using the rest of the money to do some other work in the backyard (get pool resurfaced, pool equipment fixed/repaired, concrete redone, etc).

All of that said, we now have 130k sitting in our Ally account earning 0.50%. The plan is to hold off on any backyard work until we are done with the interior of the house (in case of change orders, or other things that come up). So basically, we sitting on this money for the next 6 months.

Keeping it in the Ally account is the safest bet, obviously, but I feel like it could be doing better. Is there any thing that is pretty safe, I can leave it for 6 months, and maybe see 1-2%? I'm not looking for so huge return, but I feel silly just letting it sit in the Ally account.
If you are fine to invest in income ETFs then consider QYLD, NUSI, JEPI etc.
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arcticpineapplecorp.
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Re: Where to park 130k for 6 months

Post by arcticpineapplecorp. »

chassis wrote: Sat Jun 12, 2021 9:27 pm
nedsaid wrote: Sat Jun 12, 2021 8:20 pm
chassis wrote: Sat Jun 12, 2021 8:04 pm Equities.

Leave half in Ally and put the other half in your favorite vanilla equity etf or stock. I like a blue chip dividend stock for this purpose. It’s what I did. You would also be just fine with SPY in my view.
Six months is not a long enough time horizon for a stock investment, in my opinion you need a minimum of 5 years and even that might not be long enough. I would put 100% of the money in an FDIC Insured bank account and get the highest interest rate you can. Bad things can happen to good stock markets.
@nessaid To each their own. I am acting in accordance with the suggestion.

It’s my belief that many, likely most, posters on this thread and this site are extremely risk averse owning to their state in investing life - capital distribution, spend down and liquidation. Nothing wrong with that, for those people whose risk aversion needs satisfaction.

For those in the ascendant phase of investing life, capital formation and growth is the goal, and risk is part of the picture.
if the average intrayear loss in the stock market is 14% then how can one possibly justify putting any money into stocks that they will need in 6 months???

every single year over the past 40 years had intrayear declines, the smallest being -3% (1995 and 2017) and the largest being -49% (2008).

if you need 100% of your $130k in 6 months what if you are in a period during the year where an intrayear declined has occurred?? You will most certainly not be receiving 100% of your money if you cash in at that time.

the OP needs his/her money to be kept safe. Stocks are for risk (therefore, not safe). So to take money that you want safe and transfer it from a safe asset (Ally bank acct) to a risky asset (stocks) is not prudent advice.

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Rdytoretire
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Re: Where to park 130k for 6 months

Post by Rdytoretire »

$700 for opening a savings ($50k) and checking account with Citibank for 4 months. I just claimed my $700 and closed the accounts recently. Opening and closing the accounts was pretty easy. The rest in Ally.

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Last edited by Rdytoretire on Sat Jun 12, 2021 10:33 pm, edited 2 times in total.
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anon_investor
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Re: Where to park 130k for 6 months

Post by anon_investor »

ososnilknarf wrote: Sat Jun 12, 2021 9:10 pm Money you need in 6 months should not be in the stock market. You probably don't have a better place for it than your savings account.
+1.
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Random Musings
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Re: Where to park 130k for 6 months

Post by Random Musings »

chassis wrote: Sat Jun 12, 2021 9:27 pm
nedsaid wrote: Sat Jun 12, 2021 8:20 pm
chassis wrote: Sat Jun 12, 2021 8:04 pm Equities.

Leave half in Ally and put the other half in your favorite vanilla equity etf or stock. I like a blue chip dividend stock for this purpose. It’s what I did. You would also be just fine with SPY in my view.
Six months is not a long enough time horizon for a stock investment, in my opinion you need a minimum of 5 years and even that might not be long enough. I would put 100% of the money in an FDIC Insured bank account and get the highest interest rate you can. Bad things can happen to good stock markets.
@nessaid To each their own. I am acting in accordance with the suggestion.

It’s my belief that many, likely most, posters on this thread and this site are extremely risk averse owning to their state in investing life - capital distribution, spend down and liquidation. Nothing wrong with that, for those people whose risk aversion needs satisfaction.

For those in the ascendant phase of investing life, capital formation and growth is the goal, and risk is part of the picture.
Risk is not part of this picture. This is a known cash flow expenditure in about a half of a year. If the market does go up, you can say you're right. If not, it won't be your problem, just the OP and spouse having to defer some projects. That, and some 'splainin to do.

To the OP, don't change a thing.

RM
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drumboy256
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Re: Where to park 130k for 6 months

Post by drumboy256 »

newbieinvestor1 wrote: Sat Jun 12, 2021 7:16 pm First the backstory...

We are looking to do a bit of a home remodel (kitchen, flooring, etc). We had met with one contractor to get an initial bid, and after doing so started the process of a home equity loan (since rates are super low) which we are using to finance the work. The home equity loan process went quickly, and so we now have money in hand (well, sitting in the bank).

We ended up talking with 2 more contractors to get bids from them so we could compare. What we found is the first contractor was the most expensive (135k), but could start the work the soonest (July/August). The other two contractors came in lower (85k/95k), but are booked out until November and so are just now taking on new work for January.

After talking it over with the wife, and doing some more research, we are going forward with the bid for 95k, and will end up using the rest of the money to do some other work in the backyard (get pool resurfaced, pool equipment fixed/repaired, concrete redone, etc).

All of that said, we now have 130k sitting in our Ally account earning 0.50%. The plan is to hold off on any backyard work until we are done with the interior of the house (in case of change orders, or other things that come up). So basically, we sitting on this money for the next 6 months.

Keeping it in the Ally account is the safest bet, obviously, but I feel like it could be doing better. Is there any thing that is pretty safe, I can leave it for 6 months, and maybe see 1-2%? I'm not looking for so huge return, but I feel silly just letting it sit in the Ally account.
OP, I had really stupid ideas about putting vacation money in the market. I got that one wrong once and had to explain that one to the wife. Don't be me. Keep it in Ally.
Promise is one thing. Fulfilling that promise is quite another. - Sir Alex Ferguson | 20% IVV / 40% IBIT / 20% IXUS / 20% VGLT + chill
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nedsaid
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Re: Where to park 130k for 6 months

Post by nedsaid »

chassis wrote: Sat Jun 12, 2021 9:27 pm
nedsaid wrote: Sat Jun 12, 2021 8:20 pm
chassis wrote: Sat Jun 12, 2021 8:04 pm Equities.

Leave half in Ally and put the other half in your favorite vanilla equity etf or stock. I like a blue chip dividend stock for this purpose. It’s what I did. You would also be just fine with SPY in my view.
Six months is not a long enough time horizon for a stock investment, in my opinion you need a minimum of 5 years and even that might not be long enough. I would put 100% of the money in an FDIC Insured bank account and get the highest interest rate you can. Bad things can happen to good stock markets.
@nessaid To each their own. I am acting in accordance with the suggestion.

It’s my belief that many, likely most, posters on this thread and this site are extremely risk averse owning to their state in investing life - capital distribution, spend down and liquidation. Nothing wrong with that, for those people whose risk aversion needs satisfaction.

For those in the ascendant phase of investing life, capital formation and growth is the goal, and risk is part of the picture.
Stocks are a volatile investment, it isn't the place for short term money. I would say that you have a 60% chance of being correct as stocks on a daily basis are up about 60% of the time. So you have probably a 40% chance of your stock investment being lower in 6 months. Stocks are not the place you put money you need in 6 months.

Yes, I am 61 years old and yes I am more risk averse than I was as a younger man. But I would have given the exact same advice 20 years ago.

I was a member of a congregation that was setting money aside for a building program and the Pastor put most of the money into three or four rather speculative stocks. He had no idea the risks he was taking and didn't understand how volatile the stock market as a whole could be much less 3-4 speculative stocks. It was reckless in my view and as I remember the building fund lost about half a million dollars.

There is no guarantee what stocks will do well over any length of time, there are rolling periods of up to 15 years where stocks lost money, but these are rare. In normal times, if you have a bear market, recovery time to new all-time highs is two to three years. After the high-tech bubble of the late 1990's, the market suffered two 50% down bear markets, one from 2000-2002 and the other from 2008-2009. The market didn't really get back to all time highs until sometime in 2013. So the stock market was essentially flat for 12 years or so. But it is the very risk of prolonged losses over longer time periods that create the equity risk premium in the first place. I will say that these prolonged bear markets are relatively rare, there was one after 1929, another after 1968, and yet another after 1999. An investor might see one or two of these events in their lifetimes, I have seen two.

I think what you are doing is reckless but hopefully everything will work out. Again, the odds are in your favor but a 40% chance of losing money with stocks is too much for money you just have to have in a few months. You need to give stocks at least five years and that might not be enough.

I suspect that you have never been through a prolonged bear market.
A fool and his money are good for business.
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anon_investor
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Re: Where to park 130k for 6 months

Post by anon_investor »

drumboy256 wrote: Sat Jun 12, 2021 10:43 pm
newbieinvestor1 wrote: Sat Jun 12, 2021 7:16 pm First the backstory...

We are looking to do a bit of a home remodel (kitchen, flooring, etc). We had met with one contractor to get an initial bid, and after doing so started the process of a home equity loan (since rates are super low) which we are using to finance the work. The home equity loan process went quickly, and so we now have money in hand (well, sitting in the bank).

We ended up talking with 2 more contractors to get bids from them so we could compare. What we found is the first contractor was the most expensive (135k), but could start the work the soonest (July/August). The other two contractors came in lower (85k/95k), but are booked out until November and so are just now taking on new work for January.

After talking it over with the wife, and doing some more research, we are going forward with the bid for 95k, and will end up using the rest of the money to do some other work in the backyard (get pool resurfaced, pool equipment fixed/repaired, concrete redone, etc).

All of that said, we now have 130k sitting in our Ally account earning 0.50%. The plan is to hold off on any backyard work until we are done with the interior of the house (in case of change orders, or other things that come up). So basically, we sitting on this money for the next 6 months.

Keeping it in the Ally account is the safest bet, obviously, but I feel like it could be doing better. Is there any thing that is pretty safe, I can leave it for 6 months, and maybe see 1-2%? I'm not looking for so huge return, but I feel silly just letting it sit in the Ally account.
OP, I had really stupid ideas about putting vacation money in the market. I got that one wrong once and had to explain that one to the wife. Don't be me. Keep it in Ally.
Congrats! You are still alive! :beer If I did that, I am 100% sure my spouse would have killed me!
SxSW
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Re: Where to park 130k for 6 months

Post by SxSW »

chassis wrote: Sat Jun 12, 2021 8:04 pm Equities.

Leave half in Ally and put the other half in your favorite vanilla equity etf or stock. I like a blue chip dividend stock for this purpose. It’s what I did. You would also be just fine with SPY in my view.
This is an outrageously irresponsible suggestion.
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nedsaid
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Re: Where to park 130k for 6 months

Post by nedsaid »

SxSW wrote: Sat Jun 12, 2021 10:51 pm
chassis wrote: Sat Jun 12, 2021 8:04 pm Equities.

Leave half in Ally and put the other half in your favorite vanilla equity etf or stock. I like a blue chip dividend stock for this purpose. It’s what I did. You would also be just fine with SPY in my view.
This is an outrageously irresponsible suggestion.
Yep. It is one of the most irresponsible things I have seen posted here.
A fool and his money are good for business.
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drumboy256
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Re: Where to park 130k for 6 months

Post by drumboy256 »

anon_investor wrote: Sat Jun 12, 2021 10:50 pm
drumboy256 wrote: Sat Jun 12, 2021 10:43 pm
newbieinvestor1 wrote: Sat Jun 12, 2021 7:16 pm First the backstory...

We are looking to do a bit of a home remodel (kitchen, flooring, etc). We had met with one contractor to get an initial bid, and after doing so started the process of a home equity loan (since rates are super low) which we are using to finance the work. The home equity loan process went quickly, and so we now have money in hand (well, sitting in the bank).

We ended up talking with 2 more contractors to get bids from them so we could compare. What we found is the first contractor was the most expensive (135k), but could start the work the soonest (July/August). The other two contractors came in lower (85k/95k), but are booked out until November and so are just now taking on new work for January.

After talking it over with the wife, and doing some more research, we are going forward with the bid for 95k, and will end up using the rest of the money to do some other work in the backyard (get pool resurfaced, pool equipment fixed/repaired, concrete redone, etc).

All of that said, we now have 130k sitting in our Ally account earning 0.50%. The plan is to hold off on any backyard work until we are done with the interior of the house (in case of change orders, or other things that come up). So basically, we sitting on this money for the next 6 months.

Keeping it in the Ally account is the safest bet, obviously, but I feel like it could be doing better. Is there any thing that is pretty safe, I can leave it for 6 months, and maybe see 1-2%? I'm not looking for so huge return, but I feel silly just letting it sit in the Ally account.
OP, I had really stupid ideas about putting vacation money in the market. I got that one wrong once and had to explain that one to the wife. Don't be me. Keep it in Ally.
Congrats! You are still alive! :beer If I did that, I am 100% sure my spouse would have killed me!
Needless to say, she is more gracious than I could have ever imagined. :sharebeer
Promise is one thing. Fulfilling that promise is quite another. - Sir Alex Ferguson | 20% IVV / 40% IBIT / 20% IXUS / 20% VGLT + chill
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anon_investor
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Re: Where to park 130k for 6 months

Post by anon_investor »

drumboy256 wrote: Sat Jun 12, 2021 11:04 pm
anon_investor wrote: Sat Jun 12, 2021 10:50 pm
drumboy256 wrote: Sat Jun 12, 2021 10:43 pm
newbieinvestor1 wrote: Sat Jun 12, 2021 7:16 pm First the backstory...

We are looking to do a bit of a home remodel (kitchen, flooring, etc). We had met with one contractor to get an initial bid, and after doing so started the process of a home equity loan (since rates are super low) which we are using to finance the work. The home equity loan process went quickly, and so we now have money in hand (well, sitting in the bank).

We ended up talking with 2 more contractors to get bids from them so we could compare. What we found is the first contractor was the most expensive (135k), but could start the work the soonest (July/August). The other two contractors came in lower (85k/95k), but are booked out until November and so are just now taking on new work for January.

After talking it over with the wife, and doing some more research, we are going forward with the bid for 95k, and will end up using the rest of the money to do some other work in the backyard (get pool resurfaced, pool equipment fixed/repaired, concrete redone, etc).

All of that said, we now have 130k sitting in our Ally account earning 0.50%. The plan is to hold off on any backyard work until we are done with the interior of the house (in case of change orders, or other things that come up). So basically, we sitting on this money for the next 6 months.

Keeping it in the Ally account is the safest bet, obviously, but I feel like it could be doing better. Is there any thing that is pretty safe, I can leave it for 6 months, and maybe see 1-2%? I'm not looking for so huge return, but I feel silly just letting it sit in the Ally account.
OP, I had really stupid ideas about putting vacation money in the market. I got that one wrong once and had to explain that one to the wife. Don't be me. Keep it in Ally.
Congrats! You are still alive! :beer If I did that, I am 100% sure my spouse would have killed me!
Needless to say, she is more gracious than I could have ever imagined. :sharebeer
:beer
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ApeAttack
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Re: Where to park 130k for 6 months

Post by ApeAttack »

anon_investor wrote: Sat Jun 12, 2021 10:28 pm
ososnilknarf wrote: Sat Jun 12, 2021 9:10 pm Money you need in 6 months should not be in the stock market. You probably don't have a better place for it than your savings account.
+1.
+2

The pain of losing a huge fraction of the savings far outweighs the benefit of making some money during that time frame.
May all your index funds gain +0.5% today.
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ApeAttack
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Re: Where to park 130k for 6 months

Post by ApeAttack »

nedsaid wrote: Sat Jun 12, 2021 10:57 pm
SxSW wrote: Sat Jun 12, 2021 10:51 pm
chassis wrote: Sat Jun 12, 2021 8:04 pm Equities.

Leave half in Ally and put the other half in your favorite vanilla equity etf or stock. I like a blue chip dividend stock for this purpose. It’s what I did. You would also be just fine with SPY in my view.
This is an outrageously irresponsible suggestion.
Yep. It is one of the most irresponsible things I have seen posted here.
The 50% equities advice will be right more often than not since the market generally goes up. However, there is an enormous asymmetry in the pain of failure vs benefit of success.

I would never put money for short term needs in equities.
May all your index funds gain +0.5% today.
MishkaWorries
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Re: Where to park 130k for 6 months

Post by MishkaWorries »

In your mind, play act the scene where you tell your wife the remodel is going to be postponed or cancelled because you put the money in the market and the market has fallen.

Then you'll know the answer.
We plan. G-d laughs.
mnugent512
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Re: Where to park 130k for 6 months

Post by mnugent512 »

Total market Bond mutual funds or ETFs meet the criteria you listed. Everyone highlighted the importance of keeping the money in a bank account if you can't afford to lose any of it. But if you have a tiny bit of room, something like BND is at 1.4% yield, with a maximum drawdown of 3.8% (according to morningstar). You can take on a bit more risk with a corporate bond fund like USIG for a 2.1% yield with a maximum drawdown of 7.2%. I'm sure others can suggest other funds with different levels of yield, duration, credit risk, etc. But that way you don't have to find a bond with a 6 month duration, you just own the market for 6 months and collect the 1.4-2% yield until you need the money. Since that is what you asked about and they weren't really discussed. Maximum drawdowns are unlikely (but do obviously occur).

If you have no wiggle room and must have 130k exactly with no room for risk, your bank account is priced to yield exactly what you can get. I personally park short term spending money in bond funds because I can cover small losses and am not in a tax bracket where that makes much difference. I'm sure there is critique on that strategy, just trying to answer the question with another option. Risk is typically priced fairly into asset classes, so the yield you get is proportionate to the risk
GoneOnTilt
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Re: Where to park 130k for 6 months

Post by GoneOnTilt »

chassis wrote: Sat Jun 12, 2021 9:27 pm
nedsaid wrote: Sat Jun 12, 2021 8:20 pm
chassis wrote: Sat Jun 12, 2021 8:04 pm Equities.

Leave half in Ally and put the other half in your favorite vanilla equity etf or stock. I like a blue chip dividend stock for this purpose. It’s what I did. You would also be just fine with SPY in my view.
Six months is not a long enough time horizon for a stock investment, in my opinion you need a minimum of 5 years and even that might not be long enough. I would put 100% of the money in an FDIC Insured bank account and get the highest interest rate you can. Bad things can happen to good stock markets.
@nessaid To each their own. I am acting in accordance with the suggestion.

It’s my belief that many, likely most, posters on this thread and this site are extremely risk averse owning to their state in investing life - capital distribution, spend down and liquidation. Nothing wrong with that, for those people whose risk aversion needs satisfaction.

For those in the ascendant phase of investing life, capital formation and growth is the goal, and risk is part of the picture.
None of that changes the fact that money needed in six months doesn't belong in the stock market.
ChiKid24
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Re: Where to park 130k for 6 months

Post by ChiKid24 »

Have you seen any of the posts on HM Bradley? They have an FDIC insured savings account that pays 3% on up to $100k. There are some hoops to follow to get it, like making a monthly dircect deposit of part of your paycheck (I send $25 every 2 weeks) and not withdrawing more than 80% of what you put in each quarter. I set one up back in March and have been earning 3% since.

Bank bonus game as suggested is another good one if you don't mind a little work. Doctorofcredit has a list of a bunch and the rules to get them at each bank. Pay attention to the requirements to avoid junk fees.
Parkinglotracer
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Re: Where to park 130k for 6 months

Post by Parkinglotracer »

I’d suggest Toyota or GM income driver notes paying 1.35% / 1.5% respectfully. Not fdic insured but financially sound.
reader79
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Re: Where to park 130k for 6 months

Post by reader79 »

If I were you, I would keep it liquid and move on with the rest of my life.
VTI: 50%, QQQM: 30%, VO: 10%, VB: 10%
UpperNwGuy
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Re: Where to park 130k for 6 months

Post by UpperNwGuy »

Leave the money where it is. Don't take risks with money you need within a year. Don't tinker.
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nedsaid
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Re: Where to park 130k for 6 months

Post by nedsaid »

ApeAttack wrote: Sun Jun 13, 2021 2:04 am
nedsaid wrote: Sat Jun 12, 2021 10:57 pm
SxSW wrote: Sat Jun 12, 2021 10:51 pm
chassis wrote: Sat Jun 12, 2021 8:04 pm Equities.

Leave half in Ally and put the other half in your favorite vanilla equity etf or stock. I like a blue chip dividend stock for this purpose. It’s what I did. You would also be just fine with SPY in my view.
This is an outrageously irresponsible suggestion.
Yep. It is one of the most irresponsible things I have seen posted here.
The 50% equities advice will be right more often than not since the market generally goes up. However, there is an enormous asymmetry in the pain of failure vs benefit of success.

I would never put money for short term needs in equities.
Bingo. You 100% got what I was trying to say. Right answer, you go right to the head of the class.
A fool and his money are good for business.
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newbieinvestor1
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Re: Where to park 130k for 6 months

Post by newbieinvestor1 »

MishkaWorries wrote: Sun Jun 13, 2021 2:18 am In your mind, play act the scene where you tell your wife the remodel is going to be postponed or cancelled because you put the money in the market and the market has fallen.

Then you'll know the answer.
Reading through the comments, I've seen this sentiment come up a few times. I think everyone is right.

I might go ahead and do the Citi Account Opening, and get the $700 opening bonus, and leave the rest in Ally.

Happy wife happy life and all that...
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ApeAttack
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Re: Where to park 130k for 6 months

Post by ApeAttack »

nedsaid wrote: Sun Jun 13, 2021 8:30 am
ApeAttack wrote: Sun Jun 13, 2021 2:04 am
nedsaid wrote: Sat Jun 12, 2021 10:57 pm
SxSW wrote: Sat Jun 12, 2021 10:51 pm
chassis wrote: Sat Jun 12, 2021 8:04 pm Equities.

Leave half in Ally and put the other half in your favorite vanilla equity etf or stock. I like a blue chip dividend stock for this purpose. It’s what I did. You would also be just fine with SPY in my view.
This is an outrageously irresponsible suggestion.
Yep. It is one of the most irresponsible things I have seen posted here.
The 50% equities advice will be right more often than not since the market generally goes up. However, there is an enormous asymmetry in the pain of failure vs benefit of success.

I would never put money for short term needs in equities.
Bingo. You 100% got what I was trying to say. Right answer, you go right to the head of the class.
Hooray! To celebrate, I'm going to put my entire emergency fund into VOO! :D
May all your index funds gain +0.5% today.
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Stinky
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Re: Where to park 130k for 6 months

Post by Stinky »

newbieinvestor1 wrote: Sun Jun 13, 2021 10:59 am
MishkaWorries wrote: Sun Jun 13, 2021 2:18 am In your mind, play act the scene where you tell your wife the remodel is going to be postponed or cancelled because you put the money in the market and the market has fallen.

Then you'll know the answer.
Reading through the comments, I've seen this sentiment come up a few times. I think everyone is right.

I might go ahead and do the Citi Account Opening, and get the $700 opening bonus, and leave the rest in Ally.

Happy wife happy life and all that...
That’s a good answer.

And the correct one.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
drummer
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Re: Where to park 130k for 6 months

Post by drummer »

Parkinglotracer wrote: Sun Jun 13, 2021 5:51 am I’d suggest Toyota or GM income driver notes paying 1.35% / 1.5% respectfully. Not fdic insured but financially sound.
Another vote for this option. I parked $150,000.00 with Toyota Income Driver Notes 6 months ago...so far so good. I don't see Toyota defaulting or going out of business anytime soon.
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nedsaid
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Re: Where to park 130k for 6 months

Post by nedsaid »

ApeAttack wrote: Sun Jun 13, 2021 12:04 pm
nedsaid wrote: Sun Jun 13, 2021 8:30 am
ApeAttack wrote: Sun Jun 13, 2021 2:04 am
nedsaid wrote: Sat Jun 12, 2021 10:57 pm
SxSW wrote: Sat Jun 12, 2021 10:51 pm

This is an outrageously irresponsible suggestion.
Yep. It is one of the most irresponsible things I have seen posted here.
The 50% equities advice will be right more often than not since the market generally goes up. However, there is an enormous asymmetry in the pain of failure vs benefit of success.

I would never put money for short term needs in equities.
Bingo. You 100% got what I was trying to say. Right answer, you go right to the head of the class.
Hooray! To celebrate, I'm going to put my entire emergency fund into VOO! :D
That will work great if you can delay your emergencies for at least 5 years, even better if you can delay them for 15 years. :wink:
A fool and his money are good for business.
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