Where to keep $50k liquid?

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crit
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Where to keep $50k liquid?

Post by crit » Mon Jan 05, 2015 1:07 pm

I have just over $50k that I want keep liquid enough to use over the next 3-4 years. Right now it's in an ING (CapitalOne) savings account earning 0.75%. Can I do substantially better?

I noticed in a thread here that there are online savings accounts getting ~1%, and CDs getting more (after a bunch of hoop-jumping), but I'm not convinced they are so much better over 3-4 years to justify the transaction pain.

I'm fully funding retirement accounts this year, have no debt aside from a young mortgage at 3.4%. I understand that prepaying is an option, but I'd rather not: the loan is <70% value, and I really resented how illiquid I was between 2008 and 2014 when I had "equity" in another property, so I'm a bit burnt out on wanting to put it into mortgage.

poker27
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Re: Where to keep $50k liquid?

Post by poker27 » Mon Jan 05, 2015 1:18 pm

Substantially better? No. The top online savings account would be .90-1.00%. You could dabble with Ibonds, which are secure, but there is a 10k per person annual max, and you cannot touch them for 12 months.

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Sbashore
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Re: Where to keep $50k liquid?

Post by Sbashore » Mon Jan 05, 2015 1:32 pm

Substantially Better? Nope. Stay put.
Steve | Semper Fi

whitecliff
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Re: Where to keep $50k liquid?

Post by whitecliff » Mon Jan 05, 2015 1:46 pm

GE capital online savings is 1%

whitecliff
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Re: Where to keep $50k liquid?

Post by whitecliff » Mon Jan 05, 2015 1:47 pm

poker27 wrote:Substantially better? No. The top online savings account would be .90-1.00%. You could dabble with Ibonds, which are secure, but there is a 10k per person annual max, and you cannot touch them for 12 months.


what is average return on Ibonds now for a 12 month duration?

inbox788
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Re: Where to keep $50k liquid?

Post by inbox788 » Mon Jan 05, 2015 1:52 pm

How meaningful is $500 before taxes (1% of $50k)?

I doubt you'll find anything that's more than 1% a year. More likely, you'll find some offers around 0.25% a year for 4 years to get a net 1% over 4 years. So $500 over total timeframe to open/close accounts and deal with tax paperwork? Maybe/maybe not. Now if it were annually, then I'd consider it.

What I'd do is to put it in my secondary emergency fund, which is bonds side of investing. Either BND or intermediate bond (tax-free is an option). It's not risk free, but I can absorb any small variance, and my expected gain is about 1% difference from savings.

What's your use in 3-4 years and what would you do if you lost 5% of principal? If you have a proper plan, you may not need to keep it cash/risk-free. If the use is not specific, you may reconsider paying down mortgage or investing it long term at your AA.

crit
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Re: Where to keep $50k liquid?

Post by crit » Mon Jan 05, 2015 2:33 pm

The difference between $375 (0.75%) and $500 (1%) isn't so meaningful that I'm going to change banks and linkages etc. over it. But it feels stupid to lose value to inflation, hence the original question.

There isn't a specific use, actually. My original plan was to max out my 403b contribution for a few years and slowly use the $50k to replace that income. However, I've had a big jump in income two years ago that I haven't gotten the habit of actually spending; and my spouse just got a very good job after a long gap. So honestly the need to replace the income that is getting diverted to 403b ... isn't really there.

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Lionhearted
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Re: Where to keep $50k liquid?

Post by Lionhearted » Mon Jan 05, 2015 4:27 pm

crit wrote:I noticed in a thread here that there are online savings accounts getting ~1%, and CDs getting more (after a bunch of hoop-jumping), but I'm not convinced they are so much better over 3-4 years to justify the transaction pain.


Ally Savings is .99%, compounded daily.

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Toons
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Re: Where to keep $50k liquid?

Post by Toons » Mon Jan 05, 2015 4:35 pm

As has been said ,substantially ? No.
You can do some rate chasing but you aren't chasing substantial dollars.
I have been with Capital One for years (formerly ING)
I park a substantial amount of money in the Cap360 checking accout,the rate is not the "best",but it is good enough. :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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