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Just sold my house and the net proceeds to me are $85K. I want to buy another house at some point in the future. Right now, I'm going to rent until I have clarity on whether I will stay in the area long-term or not, and until I find the right house at the right price.
In the meantime, where is the safest and best place to park my money? First, I should say that I intend to reserve a chunk of that for 1 year's worth of emergency funds in case I lose my job or something else happens. I'm thinking of setting aside about $35K for that fund.
The rest I wish to use partly for a down payment on a new house and perhaps also as a separate savings/investment fund.
For the 1 year rainy day fund, I probably should park it in a savings or money market account since it needs to stay liquid. This way, it's still gaining some small % of interest rather than nothing, while having no penalty if I need to use it for a rainy day.
For the down payment on a new house fund, I'm not sure when I'll find the right house at the right price, nor when I'll be sure I'll be staying in the area long-term. I could have clarity on those things in a couple of weeks or it could be months... would this money best be placed in a money market account as well?
For the separate savings/investment fund, I'd guess I have about $10-15K left for this purpose after creating the 2 other funds above.
What would get me the best returns with the lowest risk if I can park this money for at least a year or maybe 5 years?
As an aside...:
I'm tempted to leverage 30-year home mortgages If/when home/condo prices fall again (condos fell to about half their current value in some parts about 3 years ago - 150K condos going for $80K or so) by putting 10% down, and renting them out to generate some mostly passive income while building equity thru paying down the mortgage, and hopefully some gains from appreciation when upswings happen again. But as I mentioned above, I'm not sure if I will be staying in the area, so I'd probably end up having a property management company handle most of the landlord tasks. I'm not sure how well that would work if I end up out of state.
I keep a portion of my portfolio in "cash." For me that is either a savings account or short term bond funds. It hardly makes any difference since the bonds have such a low return.
Open a Vanguard account, and put it in one of their stable value funds. That's fairly low risk, and should at least maintain value at the inflation rate.
With no certainty in site on what to do with the money it really shouldn't be invested past a savings deposit or money market. When/if rates move the average investor is going to be floored by the bath that some fixed income takes
i know of no vanguard stable value funds that are non retirement plan funds and they certainly do not keep up with inflation. they pay a tiny fraction of a point.
Open a Vanguard account, and put it in one of their stable value funds. That's fairly low risk, and should at least maintain value at the inflation rate.
You can't get a stable value fund outside your employer sponsored retirement plan.
except cd's or short term bonds there is nowhere you can put it that is not risky in the short term and 5 years is short term
I agree with this. And a short term bond fund might not do any better than a CD or savings account and may actually do worse.
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