Where to Allocate $600,000 New Cash Into Fixed Income in Current Evironment?

[Baseballmom94]

Just wanted to update everyone on our fixed income situation - thanks to all who provided input - certainly gave us a lot of options to consider. Our main concern at this point is safety. At almost 60% stock allocation, we feel we are taking enough risks on that side. I have another post coming soon on that particular topic

We decided to break the 600,000 up and spread it into three different "buckets". We will pay off about half the mortgage ($120,000) - this allows us to still have cash on hand in case we find the perfect lot and decide to build a house. $300,000 is in a short-term CD ladder at Ally. And the remaining $180,000 will go into either the Vanguard tax-exempt intermediate bond fund or TIPs - still thinking about that one! Again, many thanks to all of you.

[White.Beard.Doc]

I have the same dilemma.  Should I pay off my last two remaining mortgages (I own a home and multiple investment properties) which are at 2.625% and 3.25% or put the money in CDs or savings or munis?

When you have won the game by reaching FI, it is wise to prioritize protecting your assets to some degree.  So that means some portion of the money goes into things like FDIC interest bearing accounts or government bonds or paying off the mortgage.

Given your plan to buy land and build in the future, you will easily be able to get a construction loan given your assets.  You could even collateralize a paid off current home for the construction and sale phase of the transition from the current house to the new one.  Maybe just pay off that current mortgage if you have sufficient liquidity.  Or at least pay off part of it since you will be getting a better rate than you would with CDs.  I do understand the psychology of wanting to hold onto that sweet mortgage rate. I am currently working on that issue so that I will be comfortable to pay off my 2.625% mortgage despite the sad feeling of never in my lifetime being likely to see a rate like that again.

Financial psychology isn't always logical.  I know I have to work to get to a place of higher logic in some of my financial decisions.

 

[Antares]

“I know I have to work to get to a place of higher logic in some of my financial decisions“

You said it, brother!