Parking Cash?

[LAL]

Where would people suggest to park some cash for a year.  We are moving, selling the house, moving without jobs for a few months, taking a sabbatical from work, and have a lot of cash.

My DH will start work again in January but we are moving in July and we have a lot of cash on hand for the unemployement.  We have a lot of cash on hand from sale of home. 

We were thinking not the capitol one savings but maybe a bond or dividend fund?  Suggestions please.

[slugline]

When I was saving up my house downpayment I used Vanguard's Short-Term Investment Grade Fund (VFSTX) as a parking place. If you know you're tapping the money in less than a year, then I don't see a compelling reason to take on more volatility to chase yield.

[captainawesome]

It really depends how "available" you want that money and what risk you are willing to assume. From your description, (and assuming you don't have consumer debts?) it sounds like you want that money pretty available and that will be your only monetary source for a little while.  I would recommend trying to accurately estimate your living expenses until February (since I theory you'll still have expenses in January before your DH gets paid), and keep that in an account like a high yield savings account that you can easily pull from.  If you have money left over, you may look into some bonds or other funds, or even a CD that you can park, but still access fairly easily. 

If you are willing to assume more risk, there are other options, but from your description I'd probably stay conservative so as not to stress during your transition. 

[LAL]

Unsure when we are buying and parking a lot of cash from home equity.  As soon as house sells we won't have any consumer debt.

We have about 3-4 years of cash on hand right now at current burn rate (which is VERY high) to live off of.  So we are cash heavy right now in our portfolio knowing we planned on moving.

I am unsure of our living but we are budgeting our current burn rate of $5k/month.  It might be more or less but we have over $200k in cash for the move and another $300k in home equity.  So we were thinking of investing $400-450k and keeping the rest liquid. 

This also assumes we don't tap any taxable investments or our retirement accounts which we prefer not to touch at this time.  We probably are FI but we need to carefully manage our money because we aren't planning on FIRE.

[captainawesome]

Now that there are some actual figures, it makes it a little easier to understand your challenge.  Have you discussed how much you want to spend moving forward on housing?  Are you planning on taking out another mortgage, or paying in cash? A very personal decision that people have differing opinions on in here (Invest at a better rate than what a mortgage would cost or have the peace of mind of owing no one anything). I personally like the idea of OWNING my home free and clear (and can't wait for that day to happen) but you may feel the financial benefits of investing that money are better for your peace of mind.  That will also help to determine that risk you are willing to assume with that remaining money.

[LAL]

Honestly no idea.  Depends on what housing will cost where we move.  We aren't adverse to a paid for home but we aren't against mortgages and we were carrying a large one before.  We are 35 and 37 with 2 kids and maybe a 3rd.