cash

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brownsfan2k5
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Joined: Tue Jun 28, 2016 9:33 pm

cash

Post by brownsfan2k5 » Fri Dec 28, 2018 4:14 pm

Hello

I currently have $150,000 in cash and save around $10,000 monthly after all bills and investments. I will have over $250,000 in cash by 2020, and getting nervous about where to park it all safely.

Currently just use Vanguard Prime money market.


Any advise?


p.s. No debt!

livesoft
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Re: cash

Post by livesoft » Fri Dec 28, 2018 4:16 pm

What is the purpose of your cash?
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GerryL
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Re: cash

Post by GerryL » Fri Dec 28, 2018 4:21 pm

The answer will depend on when you expect to use this money.
Safety is relative. If you will need to access the money in the next 5 years or so, you will want to keep it in a low-interest vehicle like a money market fund. But if this is for long-term use -- 10 years or more -- keeping it in a "safe" vehicle will cause you to lose to inflation.

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JoMoney
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Re: cash

Post by JoMoney » Fri Dec 28, 2018 4:23 pm

As others indicated, your ability/willingness to take some risks with it influences the answer.
Prime Money market is good, but if this is money that you won't be spending for more than a year out, there are higher earning lower risk options.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

KJVanguard
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Re: cash

Post by KJVanguard » Fri Dec 28, 2018 4:49 pm

I would park the money in Short-Term Investment Grade Admiral shares. That's what I use for the entire bond portion of my portfolio (25%).

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ruralavalon
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Location: Illinois

Re: cash

Post by ruralavalon » Fri Dec 28, 2018 5:13 pm

brownsfan2k5 wrote:
Fri Dec 28, 2018 4:14 pm
Hello

I currently have $150,000 in cash and save around $10,000 monthly after all bills and investments. I will have over $250,000 in cash by 2020, and getting nervous about where to park it all safely.

Currently just use Vanguard Prime money market.


Any advise?


p.s. No debt!
What is the intended use of this cash hoard? What is the time frame for its use?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Blake7
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Location: USA

Re: cash

Post by Blake7 » Fri Dec 28, 2018 5:18 pm

If you end up keeping some or all of it in cash, this recent thread about MM funds might be helpful:

viewtopic.php?f=1&t=267698
Last edited by Blake7 on Fri Dec 28, 2018 5:38 pm, edited 1 time in total.

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Phineas J. Whoopee
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Re: cash

Post by Phineas J. Whoopee » Fri Dec 28, 2018 5:36 pm

You can keep it safe, or you can put it at risk in hopes of higher returns than available on cash. My sentence is highly oversimplified, but that's the beginning choice. If you want safety you have to give up potential return. If you want potential return you have to give up safety.

There are intricate gradations between those two alternatives, and one can mix investments to dial in one's own preference between safety and potential return. One can't simultaneously have both for each invested dollar.

The important thing is the performance of one's portfolio as a whole.

You may wish to read our wiki article Risk tolerance.

PJW

Topic Author
brownsfan2k5
Posts: 25
Joined: Tue Jun 28, 2016 9:33 pm

Re: cash

Post by brownsfan2k5 » Fri Jan 11, 2019 6:21 pm

Thanks all!

Honestly, I don't need the cash for anything. I have zero debt and I own my home. I guess the point of the $250,000 is if theres a market crash (more than 30%) I will deploy more towards the market at that time.

barnaclebob
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Re: cash

Post by barnaclebob » Fri Jan 11, 2019 6:26 pm

brownsfan2k5 wrote:
Fri Jan 11, 2019 6:21 pm
Thanks all!

Honestly, I don't need the cash for anything. I have zero debt and I own my home. I guess the point of the $250,000 is if theres a market crash (more than 30%) I will deploy more towards the market at that time.
What if the market goes up 40% before dropping 30%? Or up 20, down 10, up 20, down 10 and so on? Making silly rules of keeping money on the sidelines until a dip of X % has a way of biting you. Anyone who made one of these rules in 2016 may never come out ahead. Then even if you are lucky and the market dips 30%, will you really throw in a quarter million when everyone is talking about a new world order?

If you want to invest then pick an asset allocation that you are comfortable with and stick to it. If you can save 10k a month very little that market does should scare you. And with that savings rate you don't even need to worry about dollar cost averaging, just throw it all into the market and start meditating like the rest of us.

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tennisplyr
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Re: cash

Post by tennisplyr » Sat Jan 12, 2019 8:14 am

What is your age and AA?
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ruralavalon
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Location: Illinois

Re: cash

Post by ruralavalon » Sat Jan 12, 2019 8:29 am

It's great to see that you are debt free, with your mortgage note paid off.

What is your tax bracket, both federal and state? What State do you pay any State income taxes to?

brownsfan2k5 wrote:
Fri Jan 11, 2019 6:21 pm
Thanks all!

Honestly, I don't need the cash for anything. I have zero debt and I own my home. I guess the point of the $250,000 is if theres a market crash (more than 30%) I will deploy more towards the market at that time.
It was my policy to invest whenever I had additional money available to invest.

Keeping a large cash hoard makes it very likely that you will have a negative real return, net of inflation and taxes. You suffer a loss every month or year while waiting for a good time to invest.

Waiting for a good time to invest is a bad idea. If the market drops you will never know whether the next day, or next week, or next month, or even the next year might have a further drop and so be a better time to invest all that money.

Decide on an equity/fixed income allocation that suits you. Don't put it all in the stock market. Fixed Income like a bond fund provides some safety.

Keep an emergency fund sufficient to cover 3-6 months of basic living expenses in a federally insured savings account or federally insured short-term CDs, or in a good money market fund like Vanguard Prime Money Market Fund (VMMXX) current SEC Yield = 2.45%. (There are other possibilities to consider if the amount of the emergency fund would be large, or if you are in a high tax bracket or a high tax State.)

If it makes you nervous to invest the rest of the $150k all at once, then please consider investing in stages. Perhaps 10% on a fixed date every month for the next 10 months.

Specific investing ideas can be offered if you give some additional information. What sort of investment/retirement accounts do you currently have? What investments do you currently have in each account? Please give fund names, tickers and expense ratios. It often important to coordinate investments among all accounts,as a single unified portfolio.

Please see the post "Asking Portfolio Questions" for format and information needed. You can simply add to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

If you are already using all available tax-advantaged accounts and this money would be invested in a taxable brokerage account, then very diversified stock index funds would likely be the funds to consider. Examples would include Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04% and Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11%.
Last edited by ruralavalon on Sat Jan 12, 2019 8:55 am, edited 1 time in total.
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Watty
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Re: cash

Post by Watty » Sat Jan 12, 2019 8:55 am

brownsfan2k5 wrote:
Fri Dec 28, 2018 4:14 pm
I will have over $250,000 in cash by 2020, and getting nervous about where to park it all safely.
As long as you stay below the FDIC insurance limits it is hard to be much safer than CDs or savings accounts. About the only risk you would have would be not keeping up with inflation.

It is hard to give any suggestions about what to do with the money since we don't know if that is all the money you have or if you have a million dollars in other investments and that is just your excess cash. If you post more of your information roughly following this suggested format you will better suggestions about how to invest.

viewtopic.php?f=1&t=6212

mortfree
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Re: cash

Post by mortfree » Sat Jan 12, 2019 9:06 am

brownsfan2k5 wrote:
Fri Jan 11, 2019 6:21 pm
Thanks all!

Honestly, I don't need the cash for anything. I have zero debt and I own my home. I guess the point of the $250,000 is if theres a market crash (more than 30%) I will deploy more towards the market at that time.
That’s pretty confident of you to think you will know when.

How much would buying the Brown’s cost? :D

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