Author Topic: investing money i might want next year  (Read 3918 times)

jonalex

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investing money i might want next year
« on: November 13, 2015, 07:31:01 AM »
HI All,
Been observing you mustachian masters from a distance for a while now, excited to get started, and this is my first post.

I have 20k sitting in my checking account, which I know should be put to work.  The thing holding me back is that I plan to continue saving aggressively and by late next year have enough to put a big down payment on a fixer-upper i'll live in and then rent out.   

knowing that short term investments in the market are the risky ones, what should I do with this money if I want to be able to access it in say 10 months from now?  Also, I have more than 25K total in cash, but I feel like I should keep some of it totally liquid...wrong?

thanks for your advice.

GizmoTX

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Re: investing money i might want next year
« Reply #1 on: November 13, 2015, 08:21:51 AM »
Put it in an online savings account that's paying at least 1%, like Synchrony or Ally. We have had good experiences with both. Your savings will be very liquid & FDIC insured. You can do no fee transfers online from or to either bank, especially if your checking account charges for online transfers.

MDM

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Re: investing money i might want next year
« Reply #2 on: November 13, 2015, 04:54:41 PM »
Put it in an online savings account that's paying at least 1%, like Synchrony or Ally. We have had good experiences with both. Your savings will be very liquid & FDIC insured. You can do no fee transfers online from or to either bank, especially if your checking account charges for online transfers.
+1

And if for some reason you don't like either of those, see http://www.magnifymoney.com/blog/earning-interest/best-online-savings-accounts275921001/ for others.

Frankies Girl

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Re: investing money i might want next year
« Reply #3 on: November 13, 2015, 05:43:52 PM »
To reiterate what the others have already suggested: any money you'd need within the net 5 (ish) years should not be invested; it should go into a high yield savings account.

Investing money needed within a short time frame is more risky as you may not have the entire principal amount at that exact time you need it due to short term market volatility.

pbkmaine

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Re: investing money i might want next year
« Reply #4 on: January 07, 2016, 06:45:35 AM »

To reiterate what the others have already suggested: any money you'd need within the net 5 (ish) years should not be invested; it should go into a high yield savings account.

Investing money needed within a short time frame is more risky as you may not have the entire principal amount at that exact time you need it due to short term market volatility.

This.

Retire-Canada

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Re: investing money i might want next year
« Reply #5 on: January 07, 2016, 07:20:38 AM »
Also, I have more than 25K total in cash, but I feel like I should keep some of it totally liquid...wrong?

thanks for your advice.

I keep no cash on hand. Some people keep 2yrs of cash on hand. What it comes down to is you need a plan for emergencies and unexpected costs. How much effort and depth you go to on that front depends on a risk assessment of your financial situation.

If you have a job which is crazy secure and a good sized line of credit and investments of significance you might decide not to hold any cash so you get every dollar working for you.

If your company has gone through some lay offs and you fear you might be next, you have a skill set that is not easily employable and you have no investments to draw on you might decide that 2yrs of cash is a very smart plan.

Personally I have a line of credit I could live off for 2yrs and a significant amount of $$ invested. I am highly employable and I am willing to go work a retail job tomorrow if I have to so I don't have to use the LOC or pull from investments. I also want to FIRE as soon as possible so leaving cash sitting around is a poor choice for me.

Having said that recently I started to worry about my contract and so I held onto 2 months of savings [~$5K] for a few weeks in case I needed to find new work. That fear passed so I invested the cash.

You need to come up with a plan for yourself.

Just keep in mind that $5K in the market getting 7% annually after inflation is $20K after 20yrs. So holding cash has a cost.

Rubic

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Re: investing money i might want next year
« Reply #6 on: January 07, 2016, 10:18:00 AM »
I park $10K of emergency funds in NetSpend/Brinks accounts.  They're prepaid debit cards with a 5% savings return up to $5000 (hence the two separate accounts).

Details:  http://www.doctorofcredit.com/netspend-5-savings-accounts-on-up-to-5000/

To obtain a $20 NetSpend bonus from my referral link:

http://www.mynetspendcard.com/prepaid-debit-card/applyNow.m?uref=1906490327

Note that NetSpend will offer to upgrade your account to the premier version, but to reduce fees you probably want to keep it on a month-to-month basis. I have my USAA checking programmed for an automatic $5 transfer every other month to avoid fees (inactivity is 90 days).

Edit:  NetSpend/Brinks accounts are FDIC insured.
« Last Edit: January 08, 2016, 05:45:36 PM by rubic »

FIRE47

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Re: investing money i might want next year
« Reply #7 on: January 08, 2016, 11:04:41 AM »
Dont.

Put it in a savings account with the highest interest you can find.

OldStachesRule

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Re: investing money i might want next year
« Reply #8 on: January 08, 2016, 04:54:26 PM »

Two quick options...
(1) Open Chase checking & savings account and get the $500 promotion.  You can close account without penalty after 6 mo.  If you are married, have your spouse do the same.
(2) Make a list of all credit unions in your area.  Call everyone and ask if they have any promotional CDs yielding high rates.  My CU currently offers 5% for 6 mo.  These are loss leaders and typically are not well advertised.

Indexer

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Re: investing money i might want next year
« Reply #9 on: January 09, 2016, 02:08:49 PM »
Just to jump on the bandwagon because I think it actually does need to be said 1 more time.

Don't put it in investments. Put it in a savings account.

Stocks have averaged 10% growth per year over the long term, but there is a lot of volatility to get that 10%. It might look like -40%, 20%, 15%, -1%, etc. The odds it could drop in 1 particular year are actually pretty high. Don't invest in the markets unless you have the time frame to make it all the way through multiple business cycles so you actually experience the 'average(normally +10%)' and not the extreme(could be -50%).


Jim2001

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Re: investing money i might want next year
« Reply #10 on: January 09, 2016, 05:33:26 PM »

+1 for all the recommendations to put it in liquid savings.  Remember, "Cash" is an investment category.  Over short horizons, it can out perform other categories.  The biggest risk is inflation and that's pretty low right now.