Author Topic: Where to keep a chunk of money I'm going to use in 3-6 months  (Read 1391 times)

joenorm

  • 5 O'Clock Shadow
  • *
  • Posts: 52
Where to keep a chunk of money I'm going to use in 3-6 months
« on: December 27, 2018, 02:39:40 PM »
I did a cash-out refinance on my house and took out 100K which I plan to use beginning in the spring of 2019 for a building project.

It has been sitting in a checking account doing nothing for a couple months now. I am wondering what a good option would be for short term parking for something like this?

Maybe a CD? Maybe an interest bearing checking account? Also, as builds go, the whole chunk will not be spent all at once, so some of that money might sit for even longer than 6 months.

thanks for the ideas.

 

ginjaninja

  • Stubble
  • **
  • Posts: 214
    • My Journal
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #1 on: December 27, 2018, 03:15:12 PM »
I have a CapitalOne Money market that is making 2% interest and goes up equally with the Fed.  If you are interested in getting an extra $100 for opening an account send me a PM and I'll get you a referral link. 

This is what I use and it works really well and is extremely easy to use!  I have been very happy with CapitalOne.

joenorm

  • 5 O'Clock Shadow
  • *
  • Posts: 52
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #2 on: December 27, 2018, 05:10:36 PM »
I have a CapitalOne Money market that is making 2% interest and goes up equally with the Fed.  If you are interested in getting an extra $100 for opening an account send me a PM and I'll get you a referral link. 

This is what I use and it works really well and is extremely easy to use!  I have been very happy with CapitalOne.

This almost sounds like an advertisement, but that does seem like a good option.

Anyone else have good experience with a money market account, seems like a no-brainer if there is not a better option I am still not aware of.

TheHardenedInvestor

  • 5 O'Clock Shadow
  • *
  • Posts: 60
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #3 on: December 27, 2018, 05:12:11 PM »
Marcus

katsiki

  • Handlebar Stache
  • *****
  • Posts: 1287
  • Age: 38
  • Location: La.
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #4 on: December 27, 2018, 06:37:32 PM »
If you might hold the money for longer (or can wait), there are a number of CDs over 2.5%.  Capital One has one for example:

https://www.capitalone.com/bank/cds/online-cds/

2.70% for 12 months

joenorm

  • 5 O'Clock Shadow
  • *
  • Posts: 52
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #5 on: December 27, 2018, 07:28:34 PM »

katsiki

  • Handlebar Stache
  • *****
  • Posts: 1287
  • Age: 38
  • Location: La.
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #6 on: December 27, 2018, 07:30:41 PM »
He/she is referring to this:

https://www.marcus.com/us/en/savings

One of the many high yield savings options.

TheHardenedInvestor

  • 5 O'Clock Shadow
  • *
  • Posts: 60
Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #7 on: December 27, 2018, 07:30:46 PM »
Marcus

Why do you keep saying this?
Because it’s a very flexible and performant location to put money for 3-6 months.

joenorm

  • 5 O'Clock Shadow
  • *
  • Posts: 52
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #8 on: December 27, 2018, 07:58:06 PM »
thank you for elaborating. I would have had no idea, I will check it out now!

Radagast

  • Handlebar Stache
  • *****
  • Posts: 1315
  • Location: West of the Mountains, East of the Sea
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #9 on: December 27, 2018, 08:06:08 PM »
If you actually happen to have $150,000, then Capital One https://www.capitalone.com/value2018/ has a $1,000 signup bonus with a short waiting period, followed by 2% interest after, which matches your situation pretty nicely.

Otherwise there's a list:
https://www.doctorofcredit.com/high-interest-savings-to-get/

And another list (looks like Prime Money Market is the winner here):
https://investor.vanguard.com/mutual-funds/list?filterAllAssetClasses=false&filterMoneyMarket=true&filterFiftyThousandAndUp=true&filterLowCostInvestor=true#/mutual-funds/asset-class/month-end-returns

Loren Ver

  • Bristles
  • ***
  • Posts: 320
  • Location: Indianapolis IN
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #10 on: December 28, 2018, 07:02:02 AM »
A CD through vanguard offers the same 2.65% yield for 1 year as marcus.  Vanguard offers quite a few options. 

LV

joenorm

  • 5 O'Clock Shadow
  • *
  • Posts: 52
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #11 on: December 28, 2018, 08:16:18 AM »
But is it a "no penalty" CD like Marcus offers?

I have not figured out if the the transactions are limited with the Marcus account.

joenorm

  • 5 O'Clock Shadow
  • *
  • Posts: 52
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #12 on: December 28, 2018, 08:34:27 AM »
So it looks like with Capital One I could get 2% as long as I am above $10,000 in my account. No Fees, and unlimited withdrawals.


Marcus is a better rate at 2.25% with no penalties for early withdrawals. But It appears to be a "one time withdrawal, in full" if you do want access to your money. Not quite as flexible.

Then of course there are the higher yielding CD's at 2.65% with Marcus or Vanguard. No ability to draw out of them.

I am thinking the first option is the best for me. I could put part of the chunk in the Marcus account and transfer it into the capital one account when needed.

Radagast

  • Handlebar Stache
  • *****
  • Posts: 1315
  • Location: West of the Mountains, East of the Sea
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #13 on: December 28, 2018, 09:58:34 AM »
Vanguard Prime Money Market is at 2.44%. If you can't get the $1,000 signup bonus from Capital One then you will do better at Vanguard.

TomTX

  • Magnum Stache
  • ******
  • Posts: 3225
  • Location: Texas
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #14 on: December 28, 2018, 12:11:40 PM »
If you actually happen to have $150,000, then Capital One https://www.capitalone.com/value2018/ has a $1,000 signup bonus with a short waiting period, followed by 2% interest after, which matches your situation pretty nicely.

Otherwise there's a list:
https://www.doctorofcredit.com/high-interest-savings-to-get/

And another list (looks like Prime Money Market is the winner here):
https://investor.vanguard.com/mutual-funds/list?filterAllAssetClasses=false&filterMoneyMarket=true&filterFiftyThousandAndUp=true&filterLowCostInvestor=true#/mutual-funds/asset-class/month-end-returns

Yep. Go for one or more bank account opening bonuses.

MTBmustachian

  • 5 O'Clock Shadow
  • *
  • Posts: 34
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #15 on: December 28, 2018, 01:32:43 PM »
Vanguard Prime Money Market is at 2.44%. If you can't get the $1,000 signup bonus from Capital One then you will do better at Vanguard.

2.44% is really good!

CIT Bank just launched a "Savings Builder" money market account that's currently at 2.25%, which is what I'm using.

To the Op, if you're really planning to use your money in 3-6 months, I'd recommend a money market account over a CD.

Calvin

  • 5 O'Clock Shadow
  • *
  • Posts: 39
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #16 on: December 28, 2018, 02:29:52 PM »
I have a business with very seasonal income. I keep ~6 months of the "salary" I pay myself in VMMXX, the Vanguard Prime Money Market fund. Other cash I have I keep in an Ally savings account, ~2% return.

katsiki

  • Handlebar Stache
  • *****
  • Posts: 1287
  • Age: 38
  • Location: La.
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #17 on: December 28, 2018, 05:04:06 PM »
Another option worth considering...

https://www.doctorofcredit.com/capital-one-200-money-market-account-bonus/

* Deposit $10,000 or more by March 31st, 2019
* Capital One is offering a bonus of $200 when you open a 360 Money Market account and complete the following requirements:
* Plus, you'll earn 2.00% Annual Percentage Yield (APY) on balances of $10,000 or more. See details below.

P.S. I don't work for Capital One but I have taken advantage of several of their promotions. :)

joenorm

  • 5 O'Clock Shadow
  • *
  • Posts: 52
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #18 on: January 03, 2019, 06:45:29 AM »
Can someone touch on the difference between a money market fund and a high yield account with an online bank or establishment such at CapitalOne?


I already have accounts with Vanguard, so opening a money market with them would keep things simple.

Questions

1) Is this easy and penalty free to transfer funds out of? Let's say each month I am transferring 10K into my local bank(checking) account, Is this suited for that?

2) Does a money market have more risk involved than one of these guaranteed rate savings accounts? If deciding between .25% difference in return I would choose the more "guaranteed" return. What I don't understand is if a money market and a high yield savings account are essentially the same thing?


zoochadookdook

  • Stubble
  • **
  • Posts: 114
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #19 on: January 03, 2019, 02:58:30 PM »
I have a lump sum of 65k right now and need maybe 20-25k for business activities and paying home expenses/such through the year. Wondering if a CD or money market would be better.

COEE

  • Pencil Stache
  • ****
  • Posts: 563
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #20 on: January 03, 2019, 07:29:33 PM »
Can someone touch on the difference between a money market fund and a high yield account with an online bank or establishment such at CapitalOne?


I already have accounts with Vanguard, so opening a money market with them would keep things simple.

Questions

1) Is this easy and penalty free to transfer funds out of? Let's say each month I am transferring 10K into my local bank(checking) account, Is this suited for that?

2) Does a money market have more risk involved than one of these guaranteed rate savings accounts? If deciding between .25% difference in return I would choose the more "guaranteed" return. What I don't understand is if a money market and a high yield savings account are essentially the same thing?

Money market funds are usually invested in extremely short-term securities.  Usually through banks, corporations, or governments of all levels (local to federal) (not necessarily US).  Money Market funds are NOT FDIC insured and there is risk of losing principle.  However, because of the short-term of these securities they are generally considered very safe investments.

Bank savings accounts are generally FDIC insured meaning that the government guarantees the funds against the bank defaulting.

I put together a pretty comprehensive analysis of benefits and drawbacks of the different short-term investment options here: https://forum.mrmoneymustache.com/investor-alley/where-should-you-put-your-short-term-investment-money-(0-2-years)/

joenorm

  • 5 O'Clock Shadow
  • *
  • Posts: 52
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #21 on: January 03, 2019, 07:35:57 PM »
Read this morning, thanks!

I just split my funds between a high yield bank(Capital One) account and VMMXX.


freedomfightergal

  • 5 O'Clock Shadow
  • *
  • Posts: 36
Re: Where to keep a chunk of money I'm going to use in 3-6 months
« Reply #22 on: January 04, 2019, 06:37:11 PM »
Citizens Access High Yield savings is at 2.25% and is FDIC Insured.  I've noticed it doesn't come up much in high yield savings account searches...