Author Topic: What to do with chunks of change?  (Read 1673 times)

a.g

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What to do with chunks of change?
« on: February 16, 2014, 01:26:59 AM »
So, my FIRE plan involves the purchase of multiple rental properties, which each require around a years worth of savings as a down payment. It's not optimal for me to keep these funds in my 'savings' account losing money, so what should I do until the time comes when I have enough for another down payment? Thoughts? Any inputs appreciated!

Cyrano

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Re: What to do with chunks of change?
« Reply #1 on: February 16, 2014, 06:31:49 AM »
If you invest the down payment in something that could lose value over a year, and it does, how do you feel about that?

If the answer is, that's OK, I'll just buy a different rental later, you can invest it however you're comfortable investing for the long haul, but sometimes it won't all be there.

If the answer is, dang, good rental investment opportunities don't come every day, I needed that down payment money, take the 1% the banking industry gives you.

If the answer is between here and there, Vanguards short term corporate bond index has a little bit of risk and a little bit more yield than 1%.

Personally, for money I need within five years, I shop around for the best bank rate. Guarantees cost what they cost.

frugally

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Re: What to do with chunks of change?
« Reply #2 on: February 16, 2014, 07:35:00 AM »
If you invest the down payment in something that could lose value over a year, and it does, how do you feel about that?

If the answer is, that's OK, I'll just buy a different rental later, you can invest it however you're comfortable investing for the long haul, but sometimes it won't all be there.

If the answer is, dang, good rental investment opportunities don't come every day, I needed that down payment money, take the 1% the banking industry gives you.

If the answer is between here and there, Vanguards short term corporate bond index has a little bit of risk and a little bit more yield than 1%.

Personally, for money I need within five years, I shop around for the best bank rate. Guarantees cost what they cost.

I second this - I know it's tough to have a large chunk of change sitting in a savings account, but sometimes it really is the smart thing to do.