short-term treasuries for short-term savings?

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cresive
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short-term treasuries for short-term savings?

Post by cresive » Wed Jul 18, 2018 6:42 am

Hello All,

I am thinking of moving to a HCOL city and will have many challenges in completing the move. I currently own my home and will have to deal with closing up shop at work, selling my house, establishing myself in my new office AND buying a new home in a new town. For this reason, I have thought about reducing my stresses by renting for a period in the new town. My thought process is this; by renting, I won’t have to deal with a sell/buy closing in two different towns. By renting, I will enable the identification of exactly where I want to live once I decide to buy a house. And finally, I can focus on making a good impression on my new position, versus having the struggles of that AND setting up a new house.

On the down side, I will have two moves, etc. so I am only considering this as an option. I have time to scout out a home and am in the process of looking, but I wanted to explore the first option in this thread.

If I do rent, I will rent for 6 months to a year. My question is to where to park the equity of my present home. I estimate my equity to equal a little over $200,000. I was thinking of buying 3-month T-bills with automatic renewal. My thinking is that this will give me a safe haven with a little growth potential. By buying the short-term bills, I can access my money once I find a house. I will be limited in closing dates, but not too harshly as inspections, etc. will take time.

If I rent for 6 months, I can believe I can access my money after that time and close on a house. If I rent for longer, I will just have to do increments of 3 months. If not, I can cash out early and take a month or two of reduced interest.

Does anyone in the group have a better plan? I am open to suggestions!!

Thanks,
Ben

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whodidntante
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Re: short-term treasuries for short-term savings?

Post by whodidntante » Wed Jul 18, 2018 6:56 am

Sounds fine to me. You can sell T-bills prior to maturity if you hold them at your broker, not at Treasury Direct.

livesoft
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Re: short-term treasuries for short-term savings?

Post by livesoft » Wed Jul 18, 2018 7:00 am

I did the experiment of buying short-term Treasuries, specifically a 3-month T-bill. There is nothing wrong with that, but it would be slightly more complicated than buying Vanguard Prime Money Market or a T-bill ETF.

My point is that there is nothing magic about short-term Treasuries and there are other investments which will accomplish what you want. Plus you can do a combination of investments if you are just wanting to try out some different things for the novelty of it.
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Desert
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Re: short-term treasuries for short-term savings?

Post by Desert » Wed Jul 18, 2018 7:22 am

If you have a Vanguard account, you could consider the Treasury Money Market Fund yielding 1.84%. That would give a combination of simplicity and the safety of treasuries.

asif408
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Re: short-term treasuries for short-term savings?

Post by asif408 » Wed Jul 18, 2018 8:04 am

Sounds reasonable. Considering that the difference between 1 month and 3 months T-bills is 0.08%, and the Fed indicated they will probably raise rates by 0.25-0.50% this year, you could do some short term market timing and consider rolling 1 month T-bills, which may give you a little better return over the next 6 months if rates go higher.

hafjell
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Re: short-term treasuries for short-term savings?

Post by hafjell » Wed Jul 18, 2018 8:05 am

Desert wrote:
Wed Jul 18, 2018 7:22 am
If you have a Vanguard account, you could consider the Treasury Money Market Fund yielding 1.84%. That would give a combination of simplicity and the safety of treasuries.
Anything similar at Fidelity?

Desert
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Re: short-term treasuries for short-term savings?

Post by Desert » Wed Jul 18, 2018 8:13 am

hafjell wrote:
Wed Jul 18, 2018 8:05 am
Desert wrote:
Wed Jul 18, 2018 7:22 am
If you have a Vanguard account, you could consider the Treasury Money Market Fund yielding 1.84%. That would give a combination of simplicity and the safety of treasuries.
Anything similar at Fidelity?
Fidelity offers the Treasury Only Money Market Fund, FDLXX, but its yield is lower at 1.49%.

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alpenglow
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Re: short-term treasuries for short-term savings?

Post by alpenglow » Wed Jul 18, 2018 9:21 am

Vanguard Prime Money Market (VMMXX) is yielding 2.05%.

mega317
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Re: short-term treasuries for short-term savings?

Post by mega317 » Wed Jul 18, 2018 11:30 am

Kind of funny for you to worry so much over a few basis points which will amount to less than 1k.

The MUCH more important factor is doing the move right ie definitely rent first, don't pay more than you have to (many people, myself included, rent a nicer place than they need because "it's only a year"), and buy the right house. And yes, spend the most energy kicking butt at your new job so you don't have to move again!

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Sandtrap
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Re: short-term treasuries for short-term savings?

Post by Sandtrap » Wed Jul 18, 2018 11:45 am

Lot's of options.
Vanguard Brokerage "Fixed Income" rates.
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