Author Topic: Goal fund: Brokerage or Mattress?  (Read 3445 times)

Gumption

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Goal fund: Brokerage or Mattress?
« on: July 06, 2017, 08:09:55 AM »
We are looking to move in a year.
The plan now is to use equity from our current property to purchase the new property in full.
Because of what we are looking for, we may need another $100k, so I have been squirreling away money for that.
I have already maxed out all possible pretax funds this year, so those obligations have checked off (IRAs, SEPs, 401ks, HSAs.)

Our "goal" fund is up to $50k and if things go well as far as work for the next 8months, we should be on track to get to that $100k.

My question is, should I keep this in my current VTSAX brokerage fund, or put it in a safe money market?

Bracken_Joy

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Re: Goal fund: Brokerage or Mattress?
« Reply #1 on: July 06, 2017, 08:27:25 AM »
For a timeline of a year? High yield savings account or a CD, nothing riskier.

EnjoyIt

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Re: Goal fund: Brokerage or Mattress?
« Reply #2 on: July 06, 2017, 08:30:35 AM »
We are looking to move in a year.
The plan now is to use equity from our current property to purchase the new property in full.
Because of what we are looking for, we may need another $100k, so I have been squirreling away money for that.
I have already maxed out all possible pretax funds this year, so those obligations have checked off (IRAs, SEPs, 401ks, HSAs.)

Our "goal" fund is up to $50k and if things go well as far as work for the next 8months, we should be on track to get to that $100k.

My question is, should I keep this in my current VTSAX brokerage fund, or put it in a safe money market?

Ally is currently offering an 11 month CD for 1.5% with no fees for closing early
Currently looks like the best place to hold money for a short period of time.

WildJager

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Re: Goal fund: Brokerage or Mattress?
« Reply #3 on: July 07, 2017, 10:36:46 AM »
I second (fourth?) a CD.  It's the most reliable method for savings that you need in the short term.

Caveat, if you have a stash built up enough that a market correction won't be a huge deal for the amount you wish to spend, you could go that route, but the potential gain may not be worth the risk.

Gumption

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Re: Goal fund: Brokerage or Mattress?
« Reply #4 on: July 08, 2017, 09:42:27 AM »
Thanks all,
I just want some validation that, yes, if you need it short term, take it out of the market!

sokoloff

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Re: Goal fund: Brokerage or Mattress?
« Reply #5 on: July 08, 2017, 10:15:54 AM »
I'm going to go a little against the grain here. Yes, if you absolutely 100% need the money inside of 3 years, it shouldn't be in the market.

However, if it would merely be convenient to spend that money within 3 years, but you have alternatives (like getting a mortgage), then you might take the long view, leave the money in the market, and if a correction should come just as you're about to buy the other property for cash, you just get a small mortgage and leave the money invested in the market. (This is effectively "buying low" by virtue of "not selling low".)

It's all a matter of how critical the money is to spend at a specific time, which is somewhat related to why you to pay all cash. (If there's a hard reason, don't be in the market. If it's more a philosophical leaning or principle, maybe leave the money in the market.)

inline five

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Re: Goal fund: Brokerage or Mattress?
« Reply #6 on: July 08, 2017, 07:28:17 PM »
Keep in cash account at 1%-ish. If the market takes a serious dive, put it in.

Bracken_Joy

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Re: Goal fund: Brokerage or Mattress?
« Reply #7 on: July 09, 2017, 08:44:36 AM »
Thanks all,
I just want some validation that, yes, if you need it short term, take it out of the market!

Ah but see, "take it out of the market" is different than "where do you PUT the money", which indicates it is coming in and is not yet allocated to an account. Before you kneejerk to pulling it from the market, if it is already there, you need to look at tax implications and many other things. With that added detail, it is a different question. =) In this case, I will agree with sokoloff most likely. But a full host of numbers (case study style) would get better answers, since the money is already invested.

 

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