Author Topic: 50K$ to park for one year. Protect from inflation?  (Read 831 times)

TheBeeKeeper

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50K$ to park for one year. Protect from inflation?
« on: January 12, 2022, 09:51:45 AM »
I have 50K$ that will need to use in about a year from now.
It's currently sitting in a Vanguard money market fund. Would you invest it in something else to protect from the inevitable inflation this year?


vand

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Re: 50K$ to park for one year. Protect from inflation?
« Reply #1 on: January 12, 2022, 09:57:39 AM »
You can't, at least not with any degree of certainty. The days that you could stick your money in short money market funds and preserve purchasing power are long, long gone.

Real interest rates even on long dated Treasury bonds are are already deeply negative, never mind short dated T-Bills, so you are forced to invest in riskier assets to try to earn a real return, but that is only suitable if you lengthen your investment horizon.

This is 100% by design. Central banks don't want you sitting on cash, they want you to do something with that cash.

dividendman

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Re: 50K$ to park for one year. Protect from inflation?
« Reply #2 on: January 12, 2022, 10:04:41 AM »
You can invest a substantial chunk of that in i-series treasury bonds

You can invest 10k for yourself, 10k for your business (i.e. start a sole proprietorship), 10k for your trust. If you have a tax refund coming you can put an additional 5k in using the refund. That's 35k.

If you want to do a little extra work and trust someone you can create partnerships and each partnership can put in 10k as well.

If you have a spouse they can do all of the above (and you can get to the 50k number without creating partnerships).

The catch is that you can't withdraw it in < 12 months and if you withdraw it in < 5 years you will be penalized 3 months of interest.... still worth it IMO.

TheBeeKeeper

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Re: 50K$ to park for one year. Protect from inflation?
« Reply #3 on: January 12, 2022, 11:37:07 AM »
You can invest a substantial chunk of that in i-series treasury bonds

You can invest 10k for yourself, 10k for your business (i.e. start a sole proprietorship), 10k for your trust. If you have a tax refund coming you can put an additional 5k in using the refund. That's 35k.

If you want to do a little extra work and trust someone you can create partnerships and each partnership can put in 10k as well.

If you have a spouse they can do all of the above (and you can get to the 50k number without creating partnerships).

The catch is that you can't withdraw it in < 12 months and if you withdraw it in < 5 years you will be penalized 3 months of interest.... still worth it IMO.

That sounds like a good solution, thanks!
Between me, my spouse, and our business, we can make it happen


vand

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Re: 50K$ to park for one year. Protect from inflation?
« Reply #4 on: January 12, 2022, 11:44:04 AM »
The IBond thing is all very well, but how does that satisfy the original requirement to be able to use it in 1 yr's time?!

FLBiker

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Re: 50K$ to park for one year. Protect from inflation?
« Reply #5 on: January 12, 2022, 12:18:41 PM »
The IBond thing is all very well, but how does that satisfy the original requirement to be able to use it in 1 yr's time?!

As long as OP could use it in 1 year + 1 day, they could get 9 months of interest using an I-Bond.

TheBeeKeeper

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Re: 50K$ to park for one year. Protect from inflation?
« Reply #6 on: January 12, 2022, 12:50:27 PM »
The IBond thing is all very well, but how does that satisfy the original requirement to be able to use it in 1 yr's time?!

As long as OP could use it in 1 year + 1 day, they could get 9 months of interest using an I-Bond.

yes, that is the plan :-)

DaTrill

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Re: 50K$ to park for one year. Protect from inflation?
« Reply #7 on: January 13, 2022, 01:00:04 PM »
I'd just keep it in cash to be flexible. 

v8rx7guy

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Re: 50K$ to park for one year. Protect from inflation?
« Reply #8 on: January 13, 2022, 04:37:56 PM »
I would try and play the bank account / savings account bonuses game.  You could use the $50K and jump it around a few times to scoop up a couple thousand dollars in bonuses that would probably keep it up with inflation.  Use Doctor of Credit to find some of these bonuses, the Citi $700 checking bonus would be a good one to start with.  Good luck!