What to do with 100k for next 1 -2 years

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newuser
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What to do with 100k for next 1 -2 years

Post by newuser » Fri Nov 20, 2015 9:42 am

Hi,
I have 100k saved that I was going to use for a down payment on a house. Did not end up buying and don't anticipate doing so for at least another 1-2 years. What should I do with this money?

A. Leave in it in an online bank currently earning 0.9 %
B. Invest in a vanguard bond fund
C. Invest in more diversified spread of stocks/bonds
D. Something else

Thank you all for your thoughts!

dc81584
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Re: What to do with 100k for next 1 -2 years

Post by dc81584 » Fri Nov 20, 2015 2:06 pm

With a 1-2 yr. time horizon and a U.S. stock market that has seen handsome gains in the past 5 years, there's no reason to take on any unnecessary risk. Option A is, by far and away, the wisest choice.

Dulocracy
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Re: What to do with 100k for next 1 -2 years

Post by Dulocracy » Fri Nov 20, 2015 2:32 pm

Apparently a response requires more than 5 characters. With the filler being done, my original answer:

A
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.

wolf359
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Re: What to do with 100k for next 1 -2 years

Post by wolf359 » Fri Nov 20, 2015 2:41 pm

Keep it in the bank account for now. If you want to get slightly higher return, wait for after the Fed raises the rates in December (if they do), then buy a 1 year CD at the prevailing slightly higher rates at that time. It will lock up the money for a year, but keep your principal intact.

Currently 1 year CDs are paying 1.25%, but that should change if the Fed follows through.

Jack FFR1846
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Re: What to do with 100k for next 1 -2 years

Post by Jack FFR1846 » Fri Nov 20, 2015 3:58 pm

Ally 5 year CD. So long as it is there for a year, you will beat the savings account rate. Savings is 1% for now and 5 year CD is 2%.
Bogle: Smart Beta is stupid

ThisTimeItsDifferent
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Re: What to do with 100k for next 1 -2 years

Post by ThisTimeItsDifferent » Fri Nov 20, 2015 4:17 pm

Jack FFR1846 wrote:Ally 5 year CD. So long as it is there for a year, you will beat the savings account rate. Savings is 1% for now and 5 year CD is 2%.
If you do get a longer CD and expect or have the possibility of withdrawing it early consider the CD disclosure and whether that institution has an "if we allow it" clause on early withdrawal.

Also, if you want greater FDIC/NCUA protection than the $250K per type, in addition to the various titling options listed, you could consider Certificate of Deposit Account Registry Service (CDARS®) to spread the deposit around. I have no idea how well they pay though. There is a large difference between the worst CD rates, 0.05% and the best, 1.0 to 2.25/3.0% depending on the term.

john94549
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Re: What to do with 100k for next 1 -2 years

Post by john94549 » Fri Nov 20, 2015 5:08 pm

Just keep it safe and secure. A few basis points here and there won't matter much. Throwing it all into something that tumbles, well, that would hurt. Not hard to find savings accounts these days yielding 1% or thereabouts.
Last edited by john94549 on Fri Nov 20, 2015 5:13 pm, edited 1 time in total.

yeehaw2
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Re: What to do with 100k for next 1 -2 years

Post by yeehaw2 » Fri Nov 20, 2015 5:11 pm

If the time horizon for this question went from 1-2 to 15-20 years, everyone's answer would probably change from A to C right?

bjc3
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Re: What to do with 100k for next 1 -2 years

Post by bjc3 » Fri Nov 20, 2015 5:28 pm

newuser wrote: ... for at least another 1-2 years...
A or D, with D being a 1 or 2 year CD assuming you find a CD that provides a higher % than the savings account.

herpfinance
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Re: What to do with 100k for next 1 -2 years

Post by herpfinance » Fri Nov 20, 2015 6:30 pm

This is crystal clear. With such a short time horizon, the answer is 'A'.
"The intelligent investor is a realist who sells to optimists and buys from pessimists" - Benjamin Graham

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knpstr
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Re: What to do with 100k for next 1 -2 years

Post by knpstr » Fri Nov 20, 2015 6:34 pm

Bank account.

you don't "anticipate" but you could find the dream house tomorrow.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

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Peculiar_Investor
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Re: What to do with 100k for next 1 -2 years

Post by Peculiar_Investor » Fri Nov 20, 2015 6:34 pm

Put me down for A, "I am not so much concerned with the return on capital as I am with the return of capital" ... often misattributed to Will Rogers.
Normal people… believe that if it ain’t broke, don’t fix it. Engineers believe that if it ain’t broke, it doesn’t have enough features yet. – Scott Adams

Topic Author
newuser
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Re: What to do with 100k for next 1 -2 years

Post by newuser » Fri Nov 20, 2015 10:30 pm

Thank you all. I will heed your advice and keep my capital in the bank unless I find a worthwhile CD rate.

supernova
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Re: What to do with 100k for next 1 -2 years

Post by supernova » Sat Nov 21, 2015 12:55 pm

wolf359 wrote:Keep it in the bank account for now. If you want to get slightly higher return, wait for after the Fed raises the rates in December (if they do), then buy a 1 year CD at the prevailing slightly higher rates at that time. It will lock up the money for a year, but keep your principal intact.

Currently 1 year CDs are paying 1.25%, but that should change if the Fed follows through.
I second this answer

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