The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: GetItRight on November 10, 2016, 08:05:14 PM
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I have about $47k currently sitting in my checking account doing nothing for me. I need to stay liquid and may need to use about $25k of this within a few days notice, but probably a few months away. The rest will be used as EF and any surplus paid to student loans. What should I do with this money in the next 1-6 months?
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Vanguard index fund.
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In the next 1-6 months? Leave it in cash. There is no reason to invest your money if you anticipate requiring it within such a short time horizon.
What is the interest rate on your student loans, and is the interest tax-deductible? This will help determine whether to carry out the debt our pay it out immediately.
Why do you need access to $25k so shortly? If it's a mortgage or other debt, what are the interest rate and repayment provisions?
Finally, do you have any experience investing in the stock market and the inevitable volatility that comes along with it?
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Your best bet is probably a high yield checking account for maybe 25Kish of the money (you might have to make some debit card purchases...). You should be able to yield 2% or so. I earn 2.5% on up to 25K. It is also possible that the same bank will pay you 1% in a savings account on the balance of your money in which case you are "done".
Look this over to find a bank: https://www.depositaccounts.com/kasasa/
After the high yield checking account, I would put the rest in an online savings account or whoever will pay you around 1%.
If the extra $20 per month or so is not worth the trouble, just use the 1% ish savings/money market account (Ally, Capitalone360, whatever...).
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Student loans are about $67k at 3.85% and $7k at 4.25%. Student loan interest is not tax deductible. I've been paying around $25k/yr on these until recently when I've been building up some cash.
I'll need a large amount of cash on fairly short notice for sale of a property I'm not able to use, I'll eat whatever the loss ends up being to be done with the hassle and ongoing cost.
I don't have much experience investing, just into a Vanguard fund via my 401k and I did a few individual stocks through Etrade several years ago. When it makes sense to do some after tax investing for real I'll likely just do VTSAX, I'm not a gambler.
I opened a savings account with Ally and initially funded with $500, just to see how it works and how quickly and easily I can transfer money in and out. Looks like it's easy to transfer money out and have it in my checking account inside of a week. Good enough for 1% so I'll likely park about $30k there. 2% with some of the options frugaliknowit suggested would be nice but those banks are not local and don't have the reputation Ally does so I am hesitant to use them for anything I may need relatively quick access to.