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  • What to do with $100k cash?

    I've recently had a 2% CD mature and am not interested in plunking the money back into a CD. I feel cash heavy at this time. My spouse prefers cash.

    I am considering keeping a portion of the money for an EF, using it towards my student loans, investing or speculating.

    Summary:
    -Less than 2 years into surgical subspecialty practice. Nearly 34 years of age.
    -S-Corp
    -Saving 30% of gross income towards retirement (backdoor Roth x2, solo 401k, HSA maxed; remainder in brokerage).
    -Mostly total domestic and international stocks. A small amount of Apple and Tesla in my Roth IRA (basically what I saved in my Roth during residency).
    -Approximately $178,000 student loans at 0.35% interest due in 4 years. Making minimum monthly payment ~$3,773.
    -Recently purchased home with physician loan, 5% down, 3.275% interest. Unlikely that we will stay in this home for more than 5 years. Plan to stay local for work unless I'm fired.
    -Spouse stays at home. 20 month old child. Second child due June 2021.
    -Student loans and mortgage only debt.
    -Current net worth is positive.

    I don't feel that I need a large cash EF since the brokerage is in the six figures. But this would make my spouse more comfortable, which is wise.

    I have considered depleting the cash reserves over the next 14 months and paying off my student loans on my 35th birthday. This is an arbitrary number. Feels silly to pay it off faster than I need to given such a low interest rate, though I do believe that "the borrower is slave to the lender" as noted in Proverbs.

    Am I able to get another physician loan (5% downpayment or less) while I currently have a physician loan? This is assuming we transition to a different home in less than 5 years. I don't want to keep the cash in a high yield savings (0.5%) account during that time for a traditional down payment if I can indeed get another physician loan.

    I've considered just plugging the money into my brokerage, but this feels boring, but likely the correct answer.

    I've considered speculating in Bitcoin/Ethereum, but I honestly haven't even looked into how to purchase this. I would feel pretty stupid if I lost it all.

    What would you do?

  • #2
    Although you don't give us in a ton of info in this post, and if you have in previous posts I don't recall, but what is your EF and taxable account value? I'm guessing with $178,000 in loans, you're not in a place for your money to be placed in anything you consider "speculating."

    I'm debt-averse except mortgage. I would pay off 100k of loans. That move would have proven stupid over the past several years. So many wouldn't fault you for investing it in a taxable account.

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    • #3
      taxable, possibly saving some cash if you want brownie points though agree not needed

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      • #4
        absolutely no point in having large amounts of cash and student loans unless you are saving for a down payment or going for PSLF.

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        • #5
          Did you set up the solo 401k to allow mega backdoor Roth? If not, look into that. Basically plan must allow after tax contributions and in service rollovers to Roth. Limit annually is $58k - employer contributions - employee contributions. May or may not help.

          What is your brokerage invested in? What is your planned asset allocation? Put the proceeds of the CD in no cost mutual funds to true up to your proposed AA.

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          • #6
            Originally posted by Larry Ragman View Post
            Did you set up the solo 401k to allow mega backdoor Roth? If not, look into that. Basically plan must allow after tax contributions and in service rollovers to Roth. Limit annually is $58k - employer contributions - employee contributions. May or may not help.

            What is your brokerage invested in? What is your planned asset allocation? Put the proceeds of the CD in no cost mutual funds to true up to your proposed AA.
            I am able to max both the employee and employer portions of the 401k.

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            • #7
              “I've considered just plugging the money into my brokerage, but this feels boring, but likely the correct answer.”

              What was your real question?
              If you want excitement, tell the wife you plan to save a new downpayment in the next 5 years. Shoot for 20%, Don’t know what interest rates will be.

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              • #8
                80 VTI/20 muni bond

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                • #9
                  Originally posted by endo4jc View Post

                  I am able to max both the employee and employer portions of the 401k.
                  Well, if you max out to $58k in the 401k, then I would just go with investing in your brokerage account to your intended overall asset allocation. Though I do think MPMD makes a good point.

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                  • #10
                    Originally posted by Larry Ragman View Post

                    Well, if you max out to $58k in the 401k, then I would just go with investing in your brokerage account to your intended overall asset allocation. Though I do think MPMD makes a good point.
                    MPMD Hoarding cash serves no purpose. As pointed out, a specific planned purchase or need is fine.

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                    • #11
                      I would not accelerate the student loans with such a tiny interest rate. I like the above post with 80% VTI and 20% Munis.

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                      • #12
                        Originally posted by Hatton View Post
                        I would not accelerate the student loans with such a tiny interest rate. I like the above post with 80% VTI and 20% Munis.
                        I didn’t see the interest rate earlier. I would absolutely put it in taxable. Except without the bonds at your age. But whatever your IPS says.

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                        • #13
                          Originally posted by endo4jc View Post
                          I've considered speculating in Bitcoin/Ethereum, but I honestly haven't even looked into how to purchase this. I would feel pretty stupid if I lost it all.

                          What would you do?
                          For some one who has put money in safe CD and still has student loans this is not the correct answer. You speculate in crypto when you are flush with net worth, not flush with 100K cash.

                          I would keep some money in EF. You will have two young children son. So 6 month EF.

                          Invest the rest. I would personally not use bonds given your age and long time frame to retirement. Either 100% VTI or 100% S & P 500 or some combo. The nitty gritty does not matter. Putting the money to work does.

                          Saving for home 5 or 6 years down the line is a waste of investing time. Save for it when you are ready. The market might be quite different then. Also, pay off student loans as slowly as possible given its low interest rate. Over 25 years you will come out far ahead paying the minimum amount at 0.35% interest rate for student loans, and conservatively getting a 4-5% return in the market.

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                          • #14
                            I’d establish the emergency fund. Using your taxable as an EF won’t make sense to you next time markets drop, which could be when you need it. Plus, from what you write, it’ll make your wife happier.

                            Then I’d jump start 529’s for both kids. Better than taxable if you plan to pay for some of their education in the future.

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                            • #15
                              Originally posted by Kamban View Post

                              For some one who has put money in safe CD and still has student loans this is not the correct answer. You speculate in crypto when you are flush with net worth, not flush with 100K cash.

                              I would keep some money in EF. You will have two young children son. So 6 month EF.

                              Invest the rest. I would personally not use bonds given your age and long time frame to retirement. Either 100% VTI or 100% S & P 500 or some combo. The nitty gritty does not matter. Putting the money to work does.

                              Saving for home 5 or 6 years down the line is a waste of investing time. Save for it when you are ready. The market might be quite different then. Also, pay off student loans as slowly as possible given its low interest rate. Over 25 years you will come out far ahead paying the minimum amount at 0.35% interest rate for student loans, and conservatively getting a 4-5% return in the market.
                              0.35%?! Sign me up!
                              ​​​​​​

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