Author Topic: Where to park about 50k  (Read 4426 times)

MsPeacock

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Where to park about 50k
« on: July 27, 2015, 10:42:56 AM »
I am in need of some suggestions on where to park about 50k emergency fund. I don't want to put any more into stock indexes because a lot of my money is already is such funds. Money doesn't have to be super fluid, but available and not likely to decrease in value.

Bond fund at Vanguard? If so, any recommendations about which one? Money market? Savings account (where it is now - pathetic). CD?

Frankies Girl

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Re: Where to park about 50k
« Reply #1 on: July 27, 2015, 10:51:08 AM »
If it is truly an emergency fund, then you need to stick with savings accounts or CDs (maybe a laddered CD arrangement). Investing it in the market in any form (including bonds) means that you stand the risk of losing some of the money at any given point.

Seppia

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Re: Where to park about 50k
« Reply #2 on: July 27, 2015, 11:05:38 AM »
I have some money I might have to use in the near future for a down payment on an apartment "parked" 50% in savings and 50% in Vanguard's LifeStrategy Income fund.

forummm

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Re: Where to park about 50k
« Reply #3 on: July 27, 2015, 11:09:17 AM »
Do you really need $50k for *emergency*? That sounds like an expensive emergency. Especially since you say you have a lot saved in VG funds (which could be in your account in 2 days).

MsPeacock

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Re: Where to park about 50k
« Reply #4 on: July 27, 2015, 02:07:47 PM »
It is non retirement cash/savings. Not sure if emergency fund is exactly the right term - but I want it in a lower risk investment that would be available if a major emergency occurred. (To put it in perspective, my ex husband has taken me back to court 5 times since our divorce. I need the money for possible future legal fees, and would prefer a low risk investment in this case. I guess similar to money one might hold for a house down payment.) I actually came very close to running out of all my money during the initial divorce process, aside from my retirement funds - a bit paranoid because that was not a nice place to be.

Thank you for all replies!

mrpercentage

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Re: Where to park about 50k
« Reply #5 on: July 27, 2015, 04:00:57 PM »
Credit union CD

forummm

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Re: Where to park about 50k
« Reply #6 on: July 29, 2015, 06:32:24 AM »
It is non retirement cash/savings. Not sure if emergency fund is exactly the right term - but I want it in a lower risk investment that would be available if a major emergency occurred. (To put it in perspective, my ex husband has taken me back to court 5 times since our divorce. I need the money for possible future legal fees, and would prefer a low risk investment in this case. I guess similar to money one might hold for a house down payment.) I actually came very close to running out of all my money during the initial divorce process, aside from my retirement funds - a bit paranoid because that was not a nice place to be.

Thank you for all replies!

Sorry to hear that. I assume you won't need all of it immediately. Maybe put some in a savings account, some in a bond fund or CD, and some in a balanced fund.

KBecks2

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Re: Where to park about 50k
« Reply #7 on: July 29, 2015, 06:36:55 AM »
6 months of expenses into a money market account at Vanguard or at your local bank.

The rest, in a money market account at Vanguard or at your local bank.  What is your goal for the surplus beyond your e-fund?   Are you planning a purchase?    Just keep it in a money market / savings account.  That is OK. 

Keep investing from your cash flow and put that money into investments.  You can start up a taxable investment if your tax-advantaged accounts are maxed out. 
« Last Edit: July 29, 2015, 06:38:58 AM by KBecks2 »

Roots&Wings

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Re: Where to park about 50k
« Reply #8 on: July 29, 2015, 06:43:42 AM »
GE Capital Bank. I tried the 'low risk' Vanguard bond fund approach previously and managed to lose money (granted not a huge amount), but with your timing it might work out.

forummm

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Re: Where to park about 50k
« Reply #9 on: July 29, 2015, 06:49:49 AM »
GE Capital Bank. I tried the 'low risk' Vanguard bond fund approach previously and managed to lose money (granted not a huge amount), but with your timing it might work out.

When was this? If you go with long term bonds, those are more volatile. But generally the volatility has been positive the past 8 years as interest rates have dropped. For a place of safety I would go with shorter or medium term bonds--and broadly diversified (and Treasuries not junk bonds). Those are pretty stable. The idea for the OP is to not have $50k just sitting there losing ground to inflation each month.

Roots&Wings

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Re: Where to park about 50k
« Reply #10 on: July 29, 2015, 10:52:48 AM »
GE Capital Bank. I tried the 'low risk' Vanguard bond fund approach previously and managed to lose money (granted not a huge amount), but with your timing it might work out.

When was this? If you go with long term bonds, those are more volatile. But generally the volatility has been positive the past 8 years as interest rates have dropped. For a place of safety I would go with shorter or medium term bonds--and broadly diversified (and Treasuries not junk bonds). Those are pretty stable. The idea for the OP is to not have $50k just sitting there losing ground to inflation each month.

Right, in my case, this was Vanguard's Short-Term Investment-Grade Bond fund. If OP needs the money available short term and does not want to risk a loss, then a bond fund might not be the answer.

seattlecyclone

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Re: Where to park about 50k
« Reply #11 on: July 29, 2015, 11:01:38 AM »
Series I savings bonds are worth considering. You can invest $10k per year in an inflation-protected instrument. The current rate is 0% because inflation was actually negative over the past six months, but was over 0.5% for the past couple of years before that. One caveat is that you literally can't get your money back within a year of investing (unless you live in a federally-recognized disaster area), but after that you can withdraw at any time.

forummm

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Re: Where to park about 50k
« Reply #12 on: July 29, 2015, 11:05:51 AM »
GE Capital Bank. I tried the 'low risk' Vanguard bond fund approach previously and managed to lose money (granted not a huge amount), but with your timing it might work out.

When was this? If you go with long term bonds, those are more volatile. But generally the volatility has been positive the past 8 years as interest rates have dropped. For a place of safety I would go with shorter or medium term bonds--and broadly diversified (and Treasuries not junk bonds). Those are pretty stable. The idea for the OP is to not have $50k just sitting there losing ground to inflation each month.

Right, in my case, this was Vanguard's Short-Term Investment-Grade Bond fund. If OP needs the money available short term and does not want to risk a loss, then a bond fund might not be the answer.

That fund did briefly dip (maybe 7%) during the worst financial crisis in 75 years, but has been solidly growing otherwise. Scroll down to see the graph on the right:
https://personal.vanguard.com/us/funds/snapshot?FundId=0539&FundIntExt=INT

Short term government bonds had essentially no dip
https://personal.vanguard.com/us/funds/snapshot?FundId=5132&FundIntExt=INT