Any advice on investing 200k, short term 1 yr?

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leleballpen
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Any advice on investing 200k, short term 1 yr?

Postby leleballpen » Fri May 19, 2017 4:42 pm

Hello~
I am a beginner to the market, and just got the book ‘The Bogleheads' Guide to Investing’ two days ago and now reading. Thanks for sharing all the information here!

My question is I have 200k in saving. We are planning to use this money to purchase a house in 1-2 years. Now the money is on our banking account. We are wondering what investment we should do about this 200k to 1) get a higher return than interest in bank, beat the inflation. 2) low risk, since we will use it to buy a property. 3) short term, we are planning to withdraw the money in 1-2 years.

We have been looking for bonds.. But have little idea about which bonds are best for my case. So I am here to get some help. Thanks in advance!!

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LadyGeek
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Re: Any advice on investing 200k, short term 1 yr?

Postby LadyGeek » Fri May 19, 2017 6:41 pm

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MotoTrojan
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Re: Any advice on investing 200k, short term 1 yr?

Postby MotoTrojan » Fri May 19, 2017 6:45 pm

CD. Maybe a 2-3 year CD with a removal penalty that would still maintain more value than a 1.5-2 year CD.

aristotelian
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Re: Any advice on investing 200k, short term 1 yr?

Postby aristotelian » Fri May 19, 2017 6:46 pm

If you can take a little risk to earn more return than a CD and better liquidity, consider Vanguard Short Term Investment Grade (VFSTX) or Short Term Corporate ETF (VCSH). I have my 2nd tier emergency fund in VCSH. Stay away from anything intermediate or long term.

leleballpen
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Re: Any advice on investing 200k, short term 1 yr?

Postby leleballpen » Tue May 23, 2017 8:12 pm

Thanks for all the replies!!! :D I will try to diversify these money, CD, bond and market! Thanks!

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badbreath
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Re: Any advice on investing 200k, short term 1 yr?

Postby badbreath » Tue May 23, 2017 8:43 pm

this may help all are good suggestions but I would also listen in on the podcast cuz he gives a bit more info.

http://www.doughroller.net/investing/th ... vestments/
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Bogle_Feet
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Re: Any advice on investing 200k, short term 1 yr?

Postby Bogle_Feet » Wed May 24, 2017 2:03 am

leleballpen wrote:We have been looking for bonds.. But have little idea about which bonds are best for my case. So I am here to get some help. Thanks in advance!!

Don't invest in INDIVIDUAL bonds. Invest in a total bond market index fund. BTW 100% bonds is actually more risky than 72% bonds / 28% stocks.
http://investingadvicewatchdog.com/imag ... return.jpg
http://investingadvicewatchdog.com/imag ... 2-year.jpg

aqan
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Re: Any advice on investing 200k, short term 1 yr?

Postby aqan » Wed May 24, 2017 5:40 am

aristotelian wrote:If you can take a little risk to earn more return than a CD and better liquidity, consider Vanguard Short Term Investment Grade (VFSTX) or Short Term Corporate ETF (VCSH). I have my 2nd tier emergency fund in VCSH. Stay away from anything intermediate or long term.

thanks. I was looking for something like VCSH for my 2nd tier emergency fund.

aqan
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Re: Any advice on investing 200k, short term 1 yr?

Postby aqan » Wed May 24, 2017 11:46 am

Bogle_Feet wrote:
leleballpen wrote:We have been looking for bonds.. But have little idea about which bonds are best for my case. So I am here to get some help. Thanks in advance!!

Don't invest in INDIVIDUAL bonds. Invest in a total bond market index fund. BTW 100% bonds is actually more risky than 72% bonds / 28% stocks.
http://investingadvicewatchdog.com/imag ... return.jpg
http://investingadvicewatchdog.com/imag ... 2-year.jpg


@Bogle_Feet - is there an ETF/MF you can suggest that implements this magic 72/28 formula?

BogleAlltheWay
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Re: Any advice on investing 200k, short term 1 yr?

Postby BogleAlltheWay » Wed May 24, 2017 12:43 pm

The Vangaurd life strategy Income does close to this 80/20

https://personal.vanguard.com/us/funds/snapshot?FundId=0723&FundIntExt=INT

mega317
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Re: Any advice on investing 200k, short term 1 yr?

Postby mega317 » Wed May 24, 2017 2:16 pm

I suggest you just leave it in a high-yield savings account. Yes you can get another 1% using VCSH but you can also lose that or more from the principle. And what if the bank doesn't let you break a CD? Or you happen to find a house you want in less than a year?

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Bogle_Feet
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Re: Any advice on investing 200k, short term 1 yr?

Postby Bogle_Feet » Wed May 24, 2017 2:28 pm

aqan wrote:@Bogle_Feet - is there an ETF/MF you can suggest that implements this magic 72/28 formula?

A total bond market index fund like BND or AGG
And an S&P 500 index fund like SPY

Tamarind
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Re: Any advice on investing 200k, short term 1 yr?

Postby Tamarind » Wed May 24, 2017 2:40 pm

Another vote for leaving it in a high yield savings account. Collect your $2000 in interest and then buy the house. Don't take any risk with your down payment when it is not needed to hit the number you need.

leleballpen
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Re: Any advice on investing 200k, short term 1 yr?

Postby leleballpen » Tue May 30, 2017 11:22 pm

Bogle_Feet wrote:
leleballpen wrote:We have been looking for bonds.. But have little idea about which bonds are best for my case. So I am here to get some help. Thanks in advance!!

Don't invest in INDIVIDUAL bonds. Invest in a total bond market index fund. BTW 100% bonds is actually more risky than 72% bonds / 28% stocks.
http://investingadvicewatchdog.com/imag ... return.jpg
http://investingadvicewatchdog.com/imag ... 2-year.jpg


Thanks for the chart!! What about treasury bond? Can I put 72% all in treasury? Thanks!

TIAX
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Re: Any advice on investing 200k, short term 1 yr?

Postby TIAX » Tue May 30, 2017 11:31 pm

If your marginal tax rate is high enough, consider a tax-exempt bond fund.

EnjoyIt
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Re: Any advice on investing 200k, short term 1 yr?

Postby EnjoyIt » Wed May 31, 2017 12:27 am

Tamarind wrote:Another vote for leaving it in a high yield savings account. Collect your $2000 in interest and then buy the house. Don't take any risk with your down payment when it is not needed to hit the number you need.


If you are confident in the 1-2 year range then I would strongly consider CDs or high yield savings account. I like the idea of Ally's 5 year CD at 2.25% and a 5 month withdrawal penalty. If you keep it for at least 9-10 months it will be better than a majority of those high yield 1%ish savings accounts. See this calculator to see how it works. https://www.depositaccounts.com/tools/e ... lator.aspx. It is a nice alternative without the interest rate risk or the equity risk.


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