Seeking Advice: Where To Put Cash Short Term

[holden99]

Greetings - I just sold a property that I owned outright and so now I have $130,000 burning a hole in my pocket.  I'm not sure what I'll do with it yet and so I'm looking for advice for on where I should put it for the next 3 months until I decide what will be done with it.  I'll want quick access to it in case an opportunity comes up. 

A quick look at money market rates today shows 1%.  Is that the best I can do in this case? 

Thanks in advance for your thoughts and suggestions. 

[forummm]

If you *need* the money in the short term, put it in a money market or savings account. If you are just deciding what to invest it in, and this money is for retirement, you can just put it in a Vanguard account with any reasonable asset allocation (such as Target Retirement Fund for approximately the year you turn 65). And just leave it there until you retire.

[holden99]

I was planning to just go with a money market with the best rate - I don't need it for retirement, I'm just looking for/waiting for an opportunity and want to have it available in the coming months.  I wanted to get other individual's opinion here on what they would do with it.  Thanks forummm.

[grettman]

So I am in a similar sitaution....What banks (online or brick-mortar) offer the best MM rates?

[Jeremy E.]

If you're like me and like to gamble, you'll just throw it in a Vanguard Total Stock Market fund and cross your fingers :D although I'm only doing this with $20,000 and don't need the money for 6 months.

[GGNoob]

Here's the best savings account rates: https://www.nerdwallet.com/rates/savings-account

[holden99]

Good info GGNoob - I had done quick search earlier today and the best I found was .99%, this list has a bank offering 1.25%.  Thanks for the resource.

[Bob W]

I vote vanguard total market.  70% chance of 10% or more loss in 3 months. 30% of even or better.  If it goes down then you are a long term investor and no further decision is needed.

[Jeremy E.]

I vote vanguard total market.  70% chance of 10% or more loss in 3 months. 30% of even or better.  If it goes down then you are a long term investor and no further decision is needed.

70% chance that the total stock market will lose 10% or more in 3 months?!?!?!

[Jeremy E.]

I don't like market timing, I'm keeping my money in Total Stock Market short term (6 months) because I like to gamble. If you really believed the stock market will drop 10% in the next 3 months, sell all your shares now and rebuy them in 3 months, but don't get mad at me when I laugh at you because the market has gone up 3% instead

[MDM]

I vote vanguard total market.  70% chance of 10% or more loss in 3 months. 30% of even or better.

Percentages based on ______?

[forummm]

I vote vanguard total market.  70% chance of 10% or more loss in 3 months. 30% of even or better.  If it goes down then you are a long term investor and no further decision is needed.

If true, that would imply a 10% drop in the total market nearly every single year. And that stocks would be more likely to go down than up. Hmmm. Your number generator appears to be on the fritz. You might need to go to a proctologist to have that looked at.

[Retire in CO]

Everbank offers 1.40% for the first 6 months on the Yield Pledge Checking ($100,000 max deposit) and 1.40% on the Yield Pledge MM ($50,000 max) if you are a first time client. I did this back in November. You can open both accounts for yourself and both for your spouse ($300,000 total) if you have that much $$ riding on the side. I would recommend moving it out at the end of the 6 month period though, because after 6 months, the rate drops to .61%. The website is not clear and makes it seem like the ongoing rate is .98% following the 6 month period but actually the .98% is factoring in the bonus during the first 6 months. After the 6 month period, I closed the accounts in April/May. No problems closing, no unsuspected fees to do so. Assume that hasn't changed.

[Patrick A]

I vote vanguard total market.  70% chance of 10% or more loss in 3 months. 30% of even or better.  If it goes down then you are a long term investor and no further decision is needed.

If true, that would imply a 10% drop in the total market nearly every single year. And that stocks would be more likely to go down than up. Hmmm. Your number generator appears to be on the fritz. You might need to go to a proctologist to have that looked at.

Might he be referring to the fact that the fed is expected to raise rates in September now?  (Or December?)

I also have a pile of money sitting around right now that will be invested.  I'm very seriously thinking about waiting until the fed raises rates, and the dreaded correction ensues, to put it in.  I just hope that the social and unreasonable part of the market kicks in and makes the prophecies of an upcoming correction true.

I'd love to hear others thoughts on it.  I'm not a fan of market timing but there doesn't seem to be too much of a downside to waiting a few months to see at the moment.

[Bob W]

I vote vanguard total market.  70% chance of 10% or more loss in 3 months. 30% of even or better.  If it goes down then you are a long term investor and no further decision is needed.

If true, that would imply a 10% drop in the total market nearly every single year. And that stocks would be more likely to go down than up. Hmmm. Your number generator appears to be on the fritz. You might need to go to a proctologist to have that looked at.

Might he be referring to the fact that the fed is expected to raise rates in September now?  (Or December?)

I also have a pile of money sitting around right now that will be invested.  I'm very seriously thinking about waiting until the fed raises rates, and the dreaded correction ensues, to put it in.  I just hope that the social and unreasonable part of the market kicks in and makes the prophecies of an upcoming correction true.

I'd love to hear others thoughts on it.  I'm not a fan of market timing but there doesn't seem to be too much of a downside to waiting a few months to see at the moment.

I was being on the conservative side for the OPs sake.   It is summer (markets typically are flat or down),  we are in a down or flat trend,  everything has been up for a long time.    My crystal ball is broke by the way.

The basic premise holds though -- invest in stocks -- if in the short term their down,  buy more and then you are a longer term holder. 

People tend to fear the market as a parking place because "what?  oh my God,  what if it goes down?"   The answer is of course that if it goes down to simply wait till it goes back up.   

In this posters case he has no specific need or target for the money, so it is not like he will miss something if he becomes a longer term holder.

Granted if he had said "I have a specific need for the cash in 90 days and I must have X amount" the answer may be different.

What is the value of $2,000 left in a checking account at zero interest in 60 years?   $300 inflation adjusted. 
What is the value of $2,000 left in a 10% average account in 60 years?   $300,000 inflation adjusted.   

You decide where to keep your money ---------

[Jeremy E.]

I vote vanguard total market.  70% chance of 10% or more loss in 3 months. 30% of even or better.  If it goes down then you are a long term investor and no further decision is needed.

If true, that would imply a 10% drop in the total market nearly every single year. And that stocks would be more likely to go down than up. Hmmm. Your number generator appears to be on the fritz. You might need to go to a proctologist to have that looked at.

Might he be referring to the fact that the fed is expected to raise rates in September now?  (Or December?)

I also have a pile of money sitting around right now that will be invested.  I'm very seriously thinking about waiting until the fed raises rates, and the dreaded correction ensues, to put it in.  I just hope that the social and unreasonable part of the market kicks in and makes the prophecies of an upcoming correction true.

I'd love to hear others thoughts on it.  I'm not a fan of market timing but there doesn't seem to be too much of a downside to waiting a few months to see at the moment.

The harm could be that the market goes up 10% in the next few months, and then keeps going up for the next couple years, then when you finally decide to go for it, the correction finally happens and you lose your money, timing the market is a fools game. If you are really worried, you could try dollar cost averaging (putting in a portion each month). But on average you lose money doing that, it is a tiny bit safer though and it might make you feel more at ease. Read these posts.
http://jlcollinsnh.com/2014/11/12/stocks-part-xxvii-why-i-dont-like-dollar-cost-averaging/
http://jlcollinsnh.com/2011/06/02/why-i-cant-pick-winning-stocks-and-you-cant-either/
http://jlcollinsnh.com/2012/04/25/stocks-part-iii-most-people-lose-money-in-the-market/