What to do with some savings

[sigpros]

Ok guys here is the plan. I have 3 years before I can retire. I will probably work 8 more and leave at 35 years. What my wife and I want to do is move back where I grew up. We would like to buy a house there and fix it up before I retire. What we want to do is buy the place use it as a weekend/ vacation home and pay it off. That way when I retire and we sell our house here and use the money from it to buy some property. I have about $10K sitting in a high interest savings account. I am saving up to about $30K to use as a down payment on a second home. Is the high interest savings the best place to put the money? I need to be able to withdraw it easily if a house comes up so I can have the down payment. Or are there better options for the money?

 

[Pucky Freak]

It sounds like you might need to access the money in about 3-4 years, but no set date for sure?? If so, don’t be tempted by higher risk, higher reward investments. A solid high yield or similar sounds like a good plan, as you referenced.

It is a different question if you’re parking the funds for at least 5 years, but this doesn’t sound like the case.

 

[Pucky Freak]

I have 3 tears before I can retire. I will probably work 8 more and leave at 35 years.

I have 10,411 tears before I can retire, but I’m eligible as soon as 2037

 

[rjthehunter]

The S&P 500 is up almost 70% in the past 3 years.

I'd invest it.

 

[Pucky Freak]

The S&P 500 is up almost 70% in the past 3 years.

I'd invest it.

Buy high sell low

 

[brymoore]

Assuming you want low risk to not lose funds but earn interest, look at high yield savings or a money market mutual funds.

 

[rogerthat]

6 month cds are about as high as you can get with zero risk and shorter term access to your money. If 6 months isn’t short enough term for you than stay online high yield. Don’t be tempted to put it in the market with your short time high horizon. Bunch of fools are fixing to get an education in the next 3 years is my bet

 

[SAJ-99]

Ok guys here is the plan. I have 3 tears before I can retire. I will probably work 8 more and leave at 35 years. What my wife and I want to do is move back where I grew up. We would like to buy a house there and fix it up before I retire. What we want to do is buy the place use it as a weekend/ vacation home and pay it off. That way when I retire and we sell our house here and use the money from it to buy some property. I have about $10K sitting in a high interest savings account. I am saving up to about $30K to use as a down payment on a second home. Is the high interest savings the best place to put the money? I need to be able to withdraw it easily if a house comes up so I can have the down payment. Or are there better options for the money?

What's the rate on the HY savings account? Is it locked in or does it change?

 

[sigpros]

It is locked in and it is 3.2% I believe. I can double check that tonight

 

[SAJ-99]

It is locked in and it is 3.55 I believe. I can double check that tonight

Ugh. Just buying a treasury would get you a better rate. Do that or just buy an interval bond fund in a brokerage account- IBDV (Inv Grade 2030) yield to mat is 4.4%. You want more risk, the High yield 2030 IBHJ YTM is 6.8%. Both very diversified and pretty cheap on fees, but you have to be comfortable with that. In the end, every 1% higher gets you $100 on every $10,000 each year. Probably won't add up to enough to matter much when you are purchasing a home.

 

[sigpros]

Since I don't know much about these things can I draw out of a brokerage account with out penalty? And are my contributions to it taxed?

 

[jryoung]

What's the rate on the HY savings account? Is it locked in or does it change?

I know Wells Fargo is offering 3.125% for one year with $25,000 in new money.

 

[SAJ-99]

I know Wells Fargo is offering 3.125% for one year with $25,000 in new money.

Does Well Fargo provide lube with that? A one year Tbill is over 3.5%. Taking 35bps charge on a risk free asset seems a bit rich for being a "trusted partner" or whatever they are selling themselves as.

 

[NoWiser]

I recently opened a Vanguard Cash Plus account. Their rate is 3.35% currently. I put the money from that account into their Treasury Money Market Fund and am hoping to get closer to 4.5%. No fees to open the account and an expense ratio of .07%.

I’m sure someone more knowledgeable could find a better option, but I already have my investments in Vanguard so went with this to keep it simple. I haven’t had to pull money out yet but it sounds like I can have it back into my checking account in a day or two.

 

[jryoung]

Does Well Fargo provide lube with that? A one year Tbill is over 3.5%. Taking 35bps charge on a risk free asset seems a bit rich for being a "trusted partner" or whatever they are selling themselves as.

I always sucked at bond accounting so forgive me if my math is off, but you need to hold the Tbill for the term right? Is the cost associated with the HYS worth the monthly accrual of interest and liquidity?

 

[SAJ-99]

I always sucked at bond accounting so forgive me if my math is off, but you need to hold the Tbill for the term right? Is the cost associated with the HYS worth the monthly accrual of interest and liquidity?

No. You can buy it or sell it whenever you want. There may be some small valuation change (yield down price up, or reverse) but it is a 1yr bill. It won’t be much. And the HY saving account will reflect same thing just bank wins when rates go down.

 

[Bonasababy]

No. You can buy it or sell it whenever you want. There may be some small valuation change (yield down price up, or reverse) but it is a 1yr bill. It won’t be much. And the HY saving account will reflect same thing just bank wins when rates go down.

T bonds still need to be held for a few months before you can sell them, right?

What about tax exempt bond funds or ETFs?

Looks like they can beat the best savings rates and help with taxes as well, and taking just a few days to settle them into cash helps with liquidity.

 

[SAJ-99]

T bonds still need to be held for a few months before you can sell them, right?

What about tax exempt bond funds or ETFs?

Looks like they can beat the best savings rates and help with taxes as well, and taking just a few days to settle them into cash helps with liquidity.

Nope. Buy and sell whenever you want. Settle T+1 so you have to wait a day if you want to move the money. That might impact the decision.

I apologize if I’m on an anti bank tirade probably because my bank sent me a 2025 1099-Int for $1. What’s the point of even having an interest rate? Just make it 0%. The 0.01% is like they are taking joy to remind me they are screwing me.

 

[SFC B]

Simple and no risk right now for me are CDs......I'm getting 3.87% APY on 9 month CDs currently. Last couple of years they have been from 3.5 to almost 5 depending on timing.

 

[rogerthat]

I just locked in a 6 month cd at 4.05. Marcus by Goldmans online savings is 3.65% also. Vanguards money market vmfxx has dropped and it’s 7 day sec yield is down to 3.59% which sucks because it was beating both cds and high yield savings handily for quite some time