Best place to keep a liquid ~$50,000?

[The 585]

For the past few years, I've had ~$50k sitting in my Ally high interest savings account (1% interest rate) ready for a down payment on a home, but haven't yet made a purchase due to moving around and not being certain in having a permanent dwelling yet.

I do plan on eventually buying within the next couple years, but is there any better place I can keep this money for the time being and get a better return but still be able to have it accessible when I need it? Should I just invest it?! Thanks in advance!

[daverobev]

If you will buy a house with it, don't invest it. Investing is for long (decades) time horizons.

Just find the highest interest rate cash savings you can. Try FWF, here https://www.fatwallet.com/forums/finance/783099

[2Birds1Stone]

For the past few years, I've had ~$50k sitting in my Ally high interest savings account (1% interest rate) ready for a down payment on a home, but haven't yet made a purchase due to moving around and not being certain in having a permanent dwelling yet.

I do plan on eventually buying within the next couple years, but is there any better place I can keep this money for the time being and get a better return but still be able to have it accessible when I need it? Should I just invest it?! Thanks in advance!

If you don't mind jumping through some hoops (not that bad at all) like me, you can use that $50k to make a couple of thousand a year by churning bank account bonuses. www.doctorofcredit.com I started back in august and earned $2,500 in bonuses. Most are as follows, deposit $X for X amount of time and receive X bonus. They usually range from $100-$400 per bonus and require you keep you $ tied up anywhere from 1-6 months at a clip. Easy way to earn at least 5%+ on that $50k while you hold on it it.

[.22guy]

Redneck Bank offers 1.25 percent.  Not much more, but every little bit helps.

[Ryland]

Never would have thought of this, but I really like this recommendation.

If you don't mind jumping through some hoops (not that bad at all) like me, you can use that $50k to make a couple of thousand a year by churning bank account bonuses. www.doctorofcredit.com

I've done this once before, and it made $300 from about 1 hour of work. If you can do two $300 bonuses, you've already surpassed Ally's 1% savings interest (which I use too!)

But yeah, if you are seriously in the market for a home, leave it in a savings account. You need it liquid for when the right moment comes up.

Write back when you're done and tell us how you did!

[rickhuizinga]

Use Robinhood as a high-yield bank account by holding ultra-short, interest-rate hedged bond fund ETFs such as MINT. Price is extremely stable, 2-3 month average bond duration in the portfolio, with about a 1.35% dividend. Compare how the NAV behaved compared to VCSH during the November market rate increase.

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[PizzaSteve]

Keep it where it is.  You are fine.

[Mr Mark]

Well, I think it depends on the rest of your 'stash and savings rate. The whole keep it where it is under the FDIC mattress where you've had it " for the past few years" hasn't in hindsight been that great an idea. You've ended up missing out on thousands of dollars.

Sp500 index for past 3 years would have you sitting on 65k. Wellesley fund with a load of bonds, 60k (both before tax).

So yes there would have been risk. but you talk of sitting on the money for a couple more years.

You're already loosing lots of money through your hesitation.

[NorthernBlitz]

For the past few years, I've had ~$50k sitting in my Ally high interest savings account (1% interest rate) ready for a down payment on a home, but haven't yet made a purchase due to moving around and not being certain in having a permanent dwelling yet.

I do plan on eventually buying within the next couple years, but is there any better place I can keep this money for the time being and get a better return but still be able to have it accessible when I need it? Should I just invest it?! Thanks in advance!

If you don't mind jumping through some hoops (not that bad at all) like me, you can use that $50k to make a couple of thousand a year by churning bank account bonuses. www.doctorofcredit.com I started back in august and earned $2,500 in bonuses. Most are as follows, deposit $X for X amount of time and receive X bonus. They usually range from $100-$400 per bonus and require you keep you $ tied up anywhere from 1-6 months at a clip. Easy way to earn at least 5%+ on that $50k while you hold on it it.

We do this too. It's sometimes hard to find places where they'll give you a bonus without setting up direct deposit, but we've had some luck.

It's worth remembering that these are interest payments, so you'll pay income tax on them (unlike credit card bonuses)

[2Birds1Stone]

We do this too. It's sometimes hard to find places where they'll give you a bonus without setting up direct deposit, but we've had some luck.

It's worth remembering that these are interest payments, so you'll pay income tax on them (unlike credit card bonuses)

Both are valuable, just to make a quick addition to your comments above.

A lot of the accounts that require DD can be triggered without actually setting up employer DD.

An ACH push from some accounts can code as DD and trigger the bonus. Often times they will collect data points in the comment section of each offer on DoC and let you know which ACH pushes were successful. YMMV.

[The 585]

Thanks all for the suggestions. I have in fact made several hundred over the past few years on churning credit card signup bonuses, but hadn't thought about using my liquid savings for earning savings/checking account bonuses. I'll look into some of these and try to put some of my sidelined money to work! I'll also check out some of the other alternatives to Ally.

Well, I think it depends on the rest of your 'stash and savings rate. The whole keep it where it is under the FDIC mattress where you've had it " for the past few years" hasn't in hindsight been that great an idea. You've ended up missing out on thousands of dollars.

At the time, all my research pointed to NOT investing your down payment money if you plan on buying a house within the next ~5 years. In hindsight, yes this money clearly would have grown more over the past few years in the stock market, but it just as easily could have crashed. Fortunately, I've managed to put away ~$100k in my investment accounts during this time, so I haven't completely missed out on the gains.

That being said, I'm now living in the DC area, where buying might not even be smart given the outrageously overpriced market. So I'll think it over for the next year or so, and maybe lump some of this into investments if there's a significant crash anytime soon.

[Mr Mark]

..... I'm now living in the DC area, where buying might not even be smart given the outrageously overpriced market. So I'll think it over for the next year or so, and maybe lump some of this into investments if there's a significant crash anytime soon.

I'm afraid I just think this is badly flawed logic that flies in the face of historical facts, and that you are continuing in all probability to do yourself financial harm. Continuing to hold cash and avoiding investing is one of the reasons why so few people reach FI.

- Your cash is losing value right now, due to inflation. After 5 years of 3% inflation your original sum of cash will have lost over 14% of its value. It's a crash in slow motion that is not a risk, it is already happening.
- For your intended use as a down payment, if house prices continue to go up, your % of an eventual house purchase price is getting smaller and smaller over time.

Think of a subsistence farmer who has a load of seed corn. He thinks, wow, that's not a lot of corn, and I have to feed my family next year, and the year after that! I'd better keep it safe so I know I have something to eat in future. Afterall, my Uncle once planted his corn and there was a drought and he lost everything! So that's what he does. And even while he keeps it, rodents are nibbling away at it.

A different strategy is to plant the corn, and grow a load more. And do the same thing year after year. Yes, there is a risk that the rains don't come and his crop fails. But the way to insure against that risk is so obviously NOT to never plant the corn. He might swap some of the corn for some seeds of a few different crops and plant those too. Maybe get a few chickens. Grow some grass and have some goats or a cow. Sell some of his land and get some land elsewhere and plant there too. Save enough to dig a well for irrigation. The answer to his fear is clearly diversification and the accumulation and investment of capital.

No, indeed, I can't say with high probability what will happen to future house prices in DC. Or if there will or won't be stock market fluctuations. But I am confident the best way to address these uncertainties is not to hold a large % of your 'stach in cash.