How to invest money that you may need in 6 months to a year.

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utlax20
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How to invest money that you may need in 6 months to a year.

Post by utlax20 » Sat Sep 15, 2018 4:09 pm

Hi,
I am 38 years old and I have about $100,000-200,000 to invest but I may need this money in 6 months to a year for a down payment for a business loan. My tax bracket is :39.6%. I always max out the 401k and Backdoor Roth IRA. I am a father of two kids under two and I have just started their 529 funds with $25000 each. I keep a simple three/four fund portfolio. These include VTSAX (total stock), VBTLX( Total Bond), Vanguard Interm-Term Tx exempt, and Vanguard Total Intl Stock Index. I keep a 80/20 portfolio. Any advice on how to invest this money just in case I need it in the near future for a down payment for a business bank loan.

mhalley
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Re: How to invest money that you may need in 6 months to a year.

Post by mhalley » Sat Sep 15, 2018 5:09 pm

This short term money needs to be saved, not invested. High yield bank savings, money market or CDs. I don’t know the current yield on muni mm funds, so check into those to see if your tax equivalent yield would be better.
https://investor.vanguard.com/mutual-fu ... nd-returns

https://personal.vanguard.com/us/funds/ ... =9#results


Hmm, I had some problems with the vanguard calculator, maybe it’s my iPad but here is another site to calculate it.
https://www.calcxml.com/do/inc11

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Toons
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Re: How to invest money that you may need in 6 months to a year.

Post by Toons » Sat Sep 15, 2018 5:24 pm

High Yield Savings or
Money Market Account.

: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

Flyer24
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Re: How to invest money that you may need in 6 months to a year.

Post by Flyer24 » Sat Sep 15, 2018 5:27 pm

Ally savings account...1.85%

UpperNwGuy
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Re: How to invest money that you may need in 6 months to a year.

Post by UpperNwGuy » Sat Sep 15, 2018 5:42 pm

Vanguard Prime Money Market Fund. Beats Ally.

Turbo29
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Re: How to invest money that you may need in 6 months to a year.

Post by Turbo29 » Sat Sep 15, 2018 5:52 pm

6 mo treasury 2.33%. State tax free.

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randomizer
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Re: How to invest money that you may need in 6 months to a year.

Post by randomizer » Sat Sep 15, 2018 5:53 pm

Treasuries held to maturity. No state taxes on those. No default risk. Easily bought via any brokerage.
87.5:12.5, EM tilt — HODL the course!

lostdog
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Re: How to invest money that you may need in 6 months to a year.

Post by lostdog » Sat Sep 15, 2018 6:27 pm

Vanguard Federal Money Market or Vanguard Prime Money Market.

Grt2bOutdoors
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Re: How to invest money that you may need in 6 months to a year.

Post by Grt2bOutdoors » Sat Sep 15, 2018 6:57 pm

You don’t. You put the money in an FDIC insured savings account and call it a day.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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triceratop
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Re: How to invest money that you may need in 6 months to a year.

Post by triceratop » Sat Sep 15, 2018 7:00 pm

I would buy 52-week treasury bills.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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mickeyd
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Re: How to invest money that you may need in 6 months to a year.

Post by mickeyd » Sun Sep 16, 2018 1:40 pm

PMMF is the correct response here. Currently has a yield of 2.09% but that will quickly jump up as soon as the FED bumps their rate up (this month?). FDIC insurance is a non-factor for such a short term.
Part-Owner of Texas | | “The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle

retiredjg
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Re: How to invest money that you may need in 6 months to a year.

Post by retiredjg » Sun Sep 16, 2018 2:04 pm

Money needed in 6 or 12 months should not be invested. It should be preserved in a safe place.

jb1
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Re: How to invest money that you may need in 6 months to a year.

Post by jb1 » Sun Sep 16, 2018 3:11 pm

UpperNwGuy wrote:
Sat Sep 15, 2018 5:42 pm
Vanguard Prime Money Market Fund. Beats Ally.
Yes but do you pay taxes when you sell?

UpperNwGuy
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Re: How to invest money that you may need in 6 months to a year.

Post by UpperNwGuy » Sun Sep 16, 2018 3:24 pm

jb1 wrote:
Sun Sep 16, 2018 3:11 pm
UpperNwGuy wrote:
Sat Sep 15, 2018 5:42 pm
Vanguard Prime Money Market Fund. Beats Ally.
Yes but do you pay taxes when you sell?
There are no capital gains, so there are no taxes. Same as a savings account or a CD. The taxes are on the interest earned.

flyingaway
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Re: How to invest money that you may need in 6 months to a year.

Post by flyingaway » Sun Sep 16, 2018 3:26 pm

lostdog wrote:
Sat Sep 15, 2018 6:27 pm
Vanguard Federal Money Market or Vanguard Prime Money Market.
What is the difference between these two, in addition to the rates?
My understanding is that you can sell and buy at any time with the Vanguard Federal Money Market fund, but you will be restricted to the normal 30 holding period for the Vanguard Prime Money Market fund. It that true?

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welderwannabe
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Re: How to invest money that you may need in 6 months to a year.

Post by welderwannabe » Sun Sep 16, 2018 6:09 pm

flyingaway wrote:
Sun Sep 16, 2018 3:26 pm
What is the difference between these two, in addition to the rates?
My understanding is that you can sell and buy at any time with the Vanguard Federal Money Market fund, but you will be restricted to the normal 30 holding period for the Vanguard Prime Money Market fund. It that true?
Not true. You can buy and sell either as often as you want.

Also, to everyone recommending the Federal MM I would probably recommend Treasury MM instead. It is 100% state tax free. Federal MM is only about 70% state tax free since it uses a lot of repos. Treasury MM is an option due to fact the OP appears to have more than the $50K buyin.
Last edited by welderwannabe on Sun Sep 16, 2018 8:19 pm, edited 1 time in total.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

lostdog
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Re: How to invest money that you may need in 6 months to a year.

Post by lostdog » Sun Sep 16, 2018 6:44 pm

welderwannabe wrote:
Sun Sep 16, 2018 6:09 pm
flyingaway wrote:
Sun Sep 16, 2018 3:26 pm
What is the difference between these two, in addition to the rates?
My understanding is that you can sell and buy at any time with the Vanguard Federal Money Market fund, but you will be restricted to the normal 30 holding period for the Vanguard Prime Money Market fund. It that true?
Not true. You can buy and sell either as often as you want.

Also, to every recommending the Federal MM I would probably recommend Treasury MM instead. It is 100% state tax free. Federal MM is only about 70% state tax free since it uses a lot of repos. Treasury MM is an option due to fact the OP appears to have more than the $50K buyin.
+1

Grt2bOutdoors
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Re: How to invest money that you may need in 6 months to a year.

Post by Grt2bOutdoors » Mon Sep 17, 2018 8:33 am

mickeyd wrote:
Sun Sep 16, 2018 1:40 pm
PMMF is the correct response here. Currently has a yield of 2.09% but that will quickly jump up as soon as the FED bumps their rate up (this month?). FDIC insurance is a non-factor for such a short term.
Yes, a non-factor except ask those who invested in The Reserve Fund how that played out in 2008. That was the oldest money market fund in the country that actually broke the buck. Other funds also broke the buck, but the parent investment companies bought the bad paper to prevent those funds from actually posting below $1.00 net asset values. I realize we are not talking about The Reserve Fund, we are talking about Prime Money Market Fund, but as you might recall, the entire commercial paper froze in 2008. I saw upfront and close what happened over those 6-12 months, if you did not have cash, trades would not settle. Before, companies were able to roll over maturing commercial paper with new commercial paper. After Lehman went down, that market dried up. GE couldn't roll their paper, others had the same problem. Were it not for the various programs put in place, money funds would have went the way of the dodo bird. Remember, that what many believe are not factors gets thrown out the window when there is a lack of trust in the securities markets. Prime ratings by rating agencies is worth zero, a handshake is worth zero, a promise to pay is worth zero, a dollar in your hand - that is worth exactly one dollar and then some. The underlying value in anything non-tangible is based on trust.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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