Where to put this cash...

[Not So Good With Numbers]

As many of us are or have been, my wife and I have found ourselves in a challenging professional predicament with substantial personal life implications. I'm a few years out of training, and she's just finished, but as two academicians we are currently stuck in different cities and trying to figure out a longer term solution. Ideally, one of us gets a job in the other person's city, but there is a still a lot up in the air.

As we navigate these uncertain waters, my savings account is getting fatter than I am comfortable with, to the tune of near $500,000. Where the heck do I put this? All of the standard retirement-related contributions are maxed out, essentially 0 debt between the two of us, and some small investments on the side beyond monthly contributions to broad index funds in a brokerage account. We are however not exposed to real estate. Is it worthwhile to get exposure there (invest in a fund or something along those lines) while we wait to figure out where we are going to live? Some of this cash was going to be used as a downpayment on a house, but we aren't ready for that yet with the uncertainty of not knowing where we are going to be.

Broad thoughts are welcome. thanks!

[Tim]

Taxable account. How much is the question.
I hate to do this, how soon are you planning to solve the employment problem. In either case, 5 year time would be the minimum I would suggest for investing any of your cash.
I would not tilt to real estate just because you don’t have a house. Until you solve the problem of “how much” cash reserves you want for an Efund and eventual house purchase, you won’t have an answer. Everything else goes into taxable broad index funds.

[bovie]

You need an IPS, like yesterday. Then what to do with the money just sorts itself from here on out.

Yes, taxable account for the investment portion. Mostly / all equities. Determine EF and down payment fund, as Tim mentioned.

Tough situation. At least with training over your wife is now mobile prior to starting a position, I assume.

Seems she can come to you, or you can both go anywhere together. I’d prioritize being together and figuring it out from there, but that’s just me.

[triad]

i bonds are a good idea. something like VTIP is pretty safe until you get an IPS

[childay]

I would dump it all in taxable. You must make good money so you can save up a downpayment in future if needed for a house.

[Lordosis]

I would keep a generous E fund while you are separated because you have more opportunity to need it and with the soonish potential to move it is useful to have cash around. But I would put the bulk of it into taxable equities.

I would not buy RE if you do not know where you want to live.

I agree with above that you should prioritize getting in the same area.

[White.Beard.Doc]

Start by defining your goals for the money you have saved, both short term and long term. Your goals determine the next steps.

Do you want to save for a house downpayment? For retirement? For having kids and paying for childcare? For offspring going to college?

Each of these goals needs a different investment plan. The goals drive the plan and the type of investments.

[Random1]

I think it all depends on what the rest of your portfolio looks like, how soon you may need the money and what is your risk tolerance.

If your risk tolerance is low, cash or cash equivalent.

If your time frame is short for needing the money for consumption or housing , < 5 years then cash or cash equivalent.

If your time frame is long and not needing the money for consumption or housing in the next 5 years, then invest. I personally would invest in a mostly equity portfolio. I would not do real estate unless you like it or know what you are doing. I own an office building , it was a good investment but definitely not free from hassles.

If you have a good income and can tolerate some bumps, you may be able to manage the bumps with out touching the principle in the short or long term, but getting in a situation where you sell when the market goes down, will almost always be worse than taking the conservative approach.

If you have a substantially large other portfolio you may be able to "invest" differently.

[Tim]

Start by defining your goals for the money you have saved, both short term and long term. Your goals determine the next steps.

Do you want to save for a house downpayment? For retirement? For having kids and paying for childcare? For offspring going to college?

Each of these goals needs a different investment plan. The goals drive the plan and the type of investments.

This is the "magic sauce". Defining you goal and needs and creating a portfolio in the right buckets. Each goal has a different timeline. And of course you will probably need to adjust each goal as life tends to have its own changes. You can shift your allocations between buckets, but the accounts are for tax optimization may conflict with the goals (taxable vs tax advantaged). Make a plan and change as your goals change.

Anecdotally, I had a recent surprise. $50k in my daughter's taxable I had tagged for a house down payment. In her mind, this was either for retirement or a "super emergency", not a house down payment. So her goal in the cash held in a checking account or HYSA emotionally was different. Dad, I am not going to use that. Actually, she simply had a different plan. My bad, it's her money.
I am glad she clarified why she was keeping so much cash. She wants to save her down payment. Mission accomplished. She straightened me out. It's her money.

[VentAlarm]

You need to answer what before you can answer how. What is the money for? The purpose drives the strategy.

[Max Power]

...we are currently stuck in different cities and trying to figure out a longer term solution. Ideally, one of us gets a job in the other person's city, but there is a still a lot up in the air...

Figure it out immediately... or get divorced.

[IlliniGopher]

Figure it out immediately... or get divorced.

A little harsh, no? This isn't Reddit. Probably best to have a different delivery.

Of note, very interesting the difference of WCI on FB, Reddit, and here

[Tangler]

I would keep a generous E fund while you are separated because you have more opportunity to need it and with the soonish potential to move it is useful to have cash around. But I would put the bulk of it into taxable equities.

I would not buy RE if you do not know where you want to live.

I agree with above that you should prioritize getting in the same area.

Yes.

1. EF for 3 mo expenses
2. IPS that explains your written financial plan
3. Taxable account ( stock index funds as young doc, VTI. or VYSAX + VXUS)
4. don’t buy RE, focus on being a good doc
5. Don’t buy a house until job/life stable

[WorkforFIRE]

Tough spot. I can understand the predicament. Sounds like y’all have a great savings rate. It’s not easy saving 500k cash.

lots of great advice here.

This is my 2 cents:
If you are debt averse, like me, then continue to save cash for now. It doesn’t sound like you guys have a job near each other in the near future. So, continue to save. When you do get ti the same city AND confident you both like your jobs and can be there long term.
buy the house cash. This is just an option

other option, put it into taxables. Create IPS. Keep e-fund.

it’s tough. I know it. I was similar to you. I sort of still am. I’m sitting on large cash, but in debt averse and we plan to build a house in the next 3-5 years, and I plan to pay cash for it.

No wrong answer to be honest. 2 physician household. You’ll make great money for a long time with the financial habits you have now.

good luck

[Chreeto]

I've been in a similar position and made the mistake of doing nothing (analysis paralysis) for a few years before I figured it out. A signifiant portion of that money I would invest in a taxable brokerage account (index funds that fit with your 401k allocation). So important: it gets the investment momentum going early which is crucial to this investment/accumulation game. Real estate investing is not entirely unreasonable, but it requires a steeper learning curve so I would avoid it unless you have a tremendous passion and knowledge for it early on. The good news though, as a high income earner you have the luxury to make a few mistakes along the way and still come out well in the end