Where to put $1.5M for 12-18 months?

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foursix
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Where to put $1.5M for 12-18 months?

Post by foursix » Wed Jul 24, 2019 7:42 am

I’m looking for suggestions on where to keep 1.5M liquid for 12 to 18 months. I’m considering Vanguard prime MM or Ally 11 month penalty free CD, or some in each. Both are around 2.3%.

Can anyone recommend a better option? Income will be taxed at 37% most likely.

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Sandtrap
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Re: Where to put $1.5M for 12-18 months?

Post by Sandtrap » Wed Jul 24, 2019 7:45 am

Yes. Good idea. Keep it simple.
For so short a term you need, security of principal, liquidity, accessibility.

For convenience, you can also consider brokered CD's, etc.
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pyld76
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Re: Where to put $1.5M for 12-18 months?

Post by pyld76 » Wed Jul 24, 2019 7:52 am

CDs or Treasuries or a primarily Treasury backed MM fund. Vanguard has a couple that would suffice.

ivk5
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Re: Where to put $1.5M for 12-18 months?

Post by ivk5 » Wed Jul 24, 2019 7:55 am

What is your marginal state tax rate?

Topic Author
foursix
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Re: Where to put $1.5M for 12-18 months?

Post by foursix » Wed Jul 24, 2019 7:57 am

ivk5 wrote:
Wed Jul 24, 2019 7:55 am
What is your marginal state tax rate?
No state income tax.

a_movable_life
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Re: Where to put $1.5M for 12-18 months?

Post by a_movable_life » Wed Jul 24, 2019 8:57 am

Lemongrab can the OP get a sign up bonus somewhere?

retiredjg
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Re: Where to put $1.5M for 12-18 months?

Post by retiredjg » Wed Jul 24, 2019 9:30 am

Have you considered a tax-exempt money market fund?

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foursix
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Re: Where to put $1.5M for 12-18 months?

Post by foursix » Wed Jul 24, 2019 12:13 pm

retiredjg wrote:
Wed Jul 24, 2019 9:30 am
Have you considered a tax-exempt money market fund?
Haven't really done the math or research there.

Sandi_k
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Re: Where to put $1.5M for 12-18 months?

Post by Sandi_k » Sun Jul 28, 2019 1:01 pm

You're going to have to break it up to multiple banks if you want FDIC protection on the whole amount...

sf_tech_saver
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Re: Where to put $1.5M for 12-18 months?

Post by sf_tech_saver » Sun Jul 28, 2019 1:10 pm

In your tax bracket, I'd consider putting part of it in VWSUX. Match your bond duration to your investment horizon. Duration on this bond fund is 1.3 years so perfect for you.

https://investor.vanguard.com/mutual-fu ... view/vwsux

Tax-free, which means that after the ~40% hit your MM is only paying %1.40 vs. the 1.50% SEC on VWSUX. Its last distribution was also up at 1.76%.

This is where I parked $1.3M downpayment while I house shopped and was pleased with it.
VTI is a modern marvel

illumination
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Re: Where to put $1.5M for 12-18 months?

Post by illumination » Sun Jul 28, 2019 4:19 pm

For a similar amount of money, I did both Money Market mutual funds and brokered CDs, and I preferred the liquidity and ease of use of the MM fund that I don't see myself ever using CDs again. They were so close in yield that it just seemed an unnecessary headache. Worrying about FDIC limits, penalties, etc. Also took several days after expiration to actually get them back and liquid in your account, etc.

I also liked buying a bit of equity when stocks dipped and the MM allowed me to easily do that with my brokerage. Regret not buying more. CD's can be a headache if you want to break them, and that's by design. I usually don't have things so perfectly planned for my savings portion, but everyone is different.

At the time, I thought the "tax-free" MM funds made the most sense. I like that you can do specific thinks like T-Bills, municipal, corporate, etc.

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