Hello,
I have been around this site for years and recently came back around to it. I lost my old username and password so starting anew. I wanted to see if anyone had a few minutes to give a little bit of advise to my situation. I will give a brief synopsis and then look forward to any responses you may have.
I am a general contractor specializing in commercial remodels in Oklahoma. I started the business back in early 2016 and we have luckily been steady ever since. Last year was our largest revenue year, doing about $2,500,000 in total sales. We make a good living and have low overhead costs as I work from home still thus far. With the Covid-19 stuff going on though I see a likelihood that our market is going to be hit as I've already seen slowing of bids, etc. So I'm trying to be somewhat cautious with my investments, but I feel I have too much cash on hand even with needing cash flow for my business.
I currently have about $152,000 in cash in a high yield savings account through American Express, $100,000 in a high yield business savings account at my bank, $50,000 in a standard personal savings account, and maintain around a $50,000 buffer in my business checking account typically. I did apply for the PPP loan and due to only my wife and I being considered actual employees of my business I could only qualify for about $30,000, so assuming all goes as planned I should get that in the coming weeks. I would obviously leave that in the business account for cash flow purposes as it is intended. I also have about $40,000 coming from refinancing our home with the lower interest rates. I cashed out a little of our equity in case we needed money in a pinch. Our home is worth about $500,000 and we currently owe about $335,000. I'm refinancing at over 1% lower rate for about $384,000. We have only lived in the house for 2 years and the rate being right around 3% I figure that $40,000 could be invested or put to good use somewhere in case we needed it. I still plan to pay the house off in 15-20 years.
So with all of that it leaves me with around $342,000 in cash not counting the $30,000 PPP loan money or any money in my business checking account. Keeping in mind $100,000 of that is in the business savings account as a back-up for business cash flow. Being in the commercial construction business some invoices are paid in 30 days but many drag on further, so I do have to maintain that cash flow back-up in some form.
What would be your advice with these cash funds at least for now? I would love to invest in a commercial property at some point but with the market and business outlook somewhat bleak I am worried about tying up a bunch of money somewhere I couldn't get it down the road. Should I just put it in some sort of basic investment account or something else? I have a 401k set up through the business for my wife and I that has about $100,000 in it currently that I started putting money in to back in 2017 a little at a time and last year put in almost the max to really bump it up since we had a good year. I put at least $1,500/month into it as well. I also have an old S-IRA I have about $25,000 in that I haven't put anything into since I left my previous job in 2016.
I probably am leaving out information you may need or something so just let me know if there is. I appreciate anyone taking the time to read and provide any pointers or advice. I just hate to have so much cash sitting in these high yield accounts but I also tend to be a little nervous in times like this to invest it all or put it in something I can't get it back out if needed. I am new to making this kind of money so trying to be as smart as possible with it. Thanks!
***EDIT: I also own a property/cabin in Norther New Mexico in the mountains that is wort around $240,000 - $275,000 that I still owe about $30,000 on. I contemplated paying it off this year as well, but haven't made that decision yet.
-Grant