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Where to park money for 3-9 months?

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  • Where to park money for 3-9 months?

    I have $135K that I will be using to do some renovations on the house but I'm not in any hurry. My contractor is busy until Spring at the earliest and many of these projects require warm weather. None of these projects are urgent either and so I'd like to see if inflation eases a bit and I'm shooting for late Spring or early summer to get started for the majority of it but some projects can be done this winter too. Where is the best place to park this money to earn something but still have access to liquidity?

    Thank you in advance.

  • #2
    Invest it, set up a HELOC, pay for the construction with the HELOC, then attack the loan full stop until it’s zero.

    Debt and assets are your friends when facing inflation. Cash is a liability.
    Last edited by Molar Mechanic; 12-30-2021, 11:43 AM.

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    • #3
      In a plain old bank or savings account. The priority for any money you must have within 5 yrs is liquidity and safety. Investments are for long-term (5+ yrs) growth.
      Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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      • #4
        Originally posted by jfoxcpacfp View Post
        In a plain old bank or savings account. The priority for any money you must have within 5 yrs is liquidity and safety. Investments are for long-term (5+ yrs) growth.
        USAA will give me 0.08% APY in my savings account...I mean it's not nothing but still losing ground to inflation...lol

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        • #5
          Originally posted by PWMDMD View Post

          USAA will give me 0.08% APY in my savings account...I mean it's not nothing but still losing ground to inflation...lol
          Better than a sharp stick in the eye. The problem with investing over the short term is that you are taking the very high risk that the market will be down right when you need the $$. Now…if you DON’T have to have that money within 5 years (i.e. if the market has declined 30% when you need it but you have an alternate resource and can wait for your investment to recover) then accept the risk and invest away. But just acknowledge the risk you are taking.

          I believe many, many investors currently have not been through a serious decline and have become complacent about the market. Very dangerous attitude that will teach many a lesson they will never forget. Like a high stakes game of musical chairs.
          Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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          • #6
            Originally posted by jfoxcpacfp View Post

            Better than a sharp stick in the eye. The problem with investing over the short term is that you are taking the very high risk that the market will be down right when you need the $$. Now…if you DON’T have to have that money within 5 years (i.e. if the market has declined 30% when you need it but you have an alternate resource and can wait for your investment to recover) then accept the risk and invest away. But just acknowledge the risk you are taking.

            I believe many, many investors currently have not been through a serious decline and have become complacent about the market. Very dangerous attitude that will teach many a lesson they will never forget. Like a high stakes game of musical chairs.
            THIS. march 2020 recovered too quickly for some of those who use it as their basis for experiencing "risk".

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            • #7
              Originally posted by jfoxcpacfp View Post
              I believe many, many investors currently have not been through a serious decline and have become complacent about the market. Very dangerous attitude that will teach many a lesson they will never forget. Like a high stakes game of musical chairs.
              Why I'm eternally grateful that the 2008 crash happened when I was young and had very little money in the market. I learned my lesson comparatively cheaply.

              OP, there are several online high-yeild savings accounts that give a bit more interest than a place like USAA. Ally is a popular one. No, they won't keep up with inflation, but you'll lose less ground. Only you can decide if the hassle of opening another account is worth it

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              • #8
                Buy Gemini Dollar and reap 8.05% APR

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                • #9
                  I bonds for part of it. If you've got a wife, you can get 40K in. Do 10K each before 1/1/22 and once again right after.

                  Your plan will involve redeeming sometime next year, but even taking the penalty for that into account you should come out head over other options with comparable safety.

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                  • #10
                    Originally posted by Craigslist View Post
                    Buy Gemini Dollar and reap 8.05% APR
                    I have a Gemini account and I’ve seen the Gemini Dollar offers. Obviously, I’m going to do my due diligence but what’s the quick and dirty info on Gemini Dollar?

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                    • #11
                      Originally posted by AR View Post
                      I bonds for part of it. If you've got a wife, you can get 40K in. Do 10K each before 1/1/22 and once again right after.

                      Your plan will involve redeeming sometime next year, but even taking the penalty for that into account you should come out head over other options with comparable safety.
                      I bonds can’t be redeemed for a year. Locked up. So a poor choice if you need liquidity before then

                      lose 6 mos interest if redeemed before 5 years

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                      • #12
                        Originally posted by jacoavlu View Post

                        I bonds can’t be redeemed for a year. Locked up. So a poor choice if you need liquidity before then

                        lose 6 mos interest if redeemed before 5 years
                        Yeah, you're right. I should have looked up the redemption rules first. If he redeems at 1 yr he gets about 3.5% interest after penalty. Is that right? So that only works if his timeline is a bit longer than 9 months.

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                        • #13
                          Originally posted by AR View Post

                          Yeah, you're right. I should have looked up the redemption rules first. If he redeems at 1 yr he gets about 3.5% interest after penalty. Is that right? So that only works if his timeline is a bit longer than 9 months.
                          something like that. I wouldn’t buy ibonds if there was any chance I needed the liquidity short term.

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                          • #14
                            Originally posted by PWMDMD View Post

                            I have a Gemini account and I’ve seen the Gemini Dollar offers. Obviously, I’m going to do my due diligence but what’s the quick and dirty info on Gemini Dollar?
                            https://www.gemini.com/dollar

                            Blockfi is paying 9% APY. GUSD Coin is backed 1:1. Parking money in it is not guaranteed against theft or company going under, but Gemini seems pretty solid.

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                            • #15
                              Great Question PWMDMD! There are some great observations/suggestions already on this thread and I think it comes down to your appetite for RISK; equities have the potential for above inflation returns while Fixed Income may not have the liquidity you require. Alternatives worth exploring are HELOC (Thanks, Molar Mechanic) and Securities Based Lending programs offered by many firms, where the "Principle" is invested and earns while you still have the ability to "draw" from the principle. A thoughtful approach, weighing the risk, will allow you to sleep at night while those renovations are on-going! All The Best!

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