Where to place 100K for construction?

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phxjcc
Posts: 6
Joined: Thu Aug 23, 2018 3:47 pm

Where to place 100K for construction?

Post by phxjcc » Mon Sep 17, 2018 12:58 pm

I am in the middle of a major remodel on a mid-century modern (Donald Wexler if you are interested in that sort of thing). Anyway, I need to keep the funds liquid, probably write 2-3 big checks a month to contractors for the next 6 months. It is currently in a MM checking account at a local bank @ 0.6%.

California resident, 25% bracket.

Keep it there, or put it into a Schwab MM checking?

Rates are as follows:

Corp/Intl: 1.89
USG 1.6
CA Muni's 1.15.

Yes, I know VMMXX is higher yield--V customer service is horrid and I will not deal with them.

Thanks!

bloom2708
Posts: 5012
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Where to place 100K for construction?

Post by bloom2708 » Mon Sep 17, 2018 1:17 pm

Keeping it where it is will be the easiest. Interest for 1 year won't amount to much. Determine if worth the hassle.

Consider FDIC insured Ally online bank. 1.85% currently.

Move money back and forth to your main checking.

https://www.ally.com/bank/online-saving ... c04380b743
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

Kevin8696
Posts: 155
Joined: Mon Oct 08, 2012 7:45 pm

Re: Where to place 100K for construction?

Post by Kevin8696 » Mon Sep 17, 2018 1:20 pm

Ally Bank would be my choice.

Option 1. Put all 100k in Online Savings (currently 1.85%) and ACH the funds to your checking account as needed. Six withdrawals per month are allowed.

Option 2. Break the 100k into chunks and buy multiple No Penalty CD's that pay 2.00%. It's an 11-month CD that you can close at any time with no penalty. Close the CD's one at a time as you need the money (or re-dial them if/when rates go up). Then ACH the funds to checking account.

I've used Ally for just over a year, and have been very pleased. ACH transfers are next day to (and from) my local brick and mortar bank.

lukestuckenhymer
Posts: 84
Joined: Wed May 30, 2018 11:53 am

Re: Where to place 100K for construction?

Post by lukestuckenhymer » Mon Sep 17, 2018 7:18 pm

Ally is the probably best as far as online savings account, but transferring the money in and out is a bit of a hassle in order to write checks, so I'm content with Discover MM checking at 1.65%.

phxjcc
Posts: 6
Joined: Thu Aug 23, 2018 3:47 pm

Re: Where to place 100K for construction?

Post by phxjcc » Tue Sep 18, 2018 11:28 am

Thank you to all, did not even know about no penalty CD's.
Going to use that for other funds.

For the construction funds, I am going with Discover MM checking...@ 1.85 I think it is the best solution.

JCC

Kevin8696
Posts: 155
Joined: Mon Oct 08, 2012 7:45 pm

Re: Where to place 100K for construction?

Post by Kevin8696 » Tue Sep 18, 2018 11:42 am

phxjcc wrote:
Tue Sep 18, 2018 11:28 am
Thank you to all, did not even know about no penalty CD's.
Going to use that for other funds.

For the construction funds, I am going with Discover MM checking...@ 1.85 I think it is the best solution.

JCC
Glad I could introduce you to No Penalty CD's. Here's some more about my experience with Ally.

I have an Ally Online Savings account with 100k+ balance. Also have Ally Interest Checking account with zero balance. Ally pays 1.85% at all balance levels.... Discover has tiered rates that drop when you go below 100k.

I set up 2 accounts with Ally for the same reason as you... to write a check or get cash when I need to. Immediate transfer from Savings to Checking either online or via mobile app, and then write the check or hit the ATM. Been there done that. Works great.

Interest Checking account comes with free checks and a debit/ATM card. Ally has a network of ATM's and/or they reimburse other bank's ATM charges up to $10 a month.

lukestuckenhymer
Posts: 84
Joined: Wed May 30, 2018 11:53 am

Re: Where to place 100K for construction?

Post by lukestuckenhymer » Tue Sep 18, 2018 12:11 pm

Kevin8696 wrote:
Tue Sep 18, 2018 11:42 am
I set up 2 accounts with Ally for the same reason as you... to write a check or get cash when I need to. Immediate transfer from Savings to Checking either online or via mobile app, and then write the check or hit the ATM. Been there done that. Works great.
Interest Checking account comes with free checks and a debit/ATM card. Ally has a network of ATM's and/or they reimburse other bank's ATM charges up to $10 a month.
This is a great solution, however instead of Ally Interest Checking (0.1%), you could use Ally MM checking at (0.9%)...unless you need more than 6 transactions/month.

phxjcc
Posts: 6
Joined: Thu Aug 23, 2018 3:47 pm

Re: Where to place 100K for construction?

Post by phxjcc » Wed Sep 19, 2018 11:48 am

Kevin8696 wrote:
Tue Sep 18, 2018 11:42 am
phxjcc wrote:
Tue Sep 18, 2018 11:28 am
Thank you to all, did not even know about no penalty CD's.
Going to use that for other funds.

For the construction funds, I am going with Discover MM checking...@ 1.85 I think it is the best solution.

JCC
Glad I could introduce you to No Penalty CD's. Here's some more about my experience with Ally.

I have an Ally Online Savings account with 100k+ balance. Also have Ally Interest Checking account with zero balance. Ally pays 1.85% at all balance levels.... Discover has tiered rates that drop when you go below 100k.

I set up 2 accounts with Ally for the same reason as you... to write a check or get cash when I need to. Immediate transfer from Savings to Checking either online or via mobile app, and then write the check or hit the ATM. Been there done that. Works great.

Interest Checking account comes with free checks and a debit/ATM card. Ally has a network of ATM's and/or they reimburse other bank's ATM charges up to $10 a month.
We have a winner...thanks Kevin!

Kevin8696
Posts: 155
Joined: Mon Oct 08, 2012 7:45 pm

Re: Where to place 100K for construction?

Post by Kevin8696 » Wed Sep 19, 2018 2:26 pm

phxjcc wrote:
Wed Sep 19, 2018 11:48 am
Kevin8696 wrote:
Tue Sep 18, 2018 11:42 am
phxjcc wrote:
Tue Sep 18, 2018 11:28 am
Thank you to all, did not even know about no penalty CD's.
Going to use that for other funds.

For the construction funds, I am going with Discover MM checking...@ 1.85 I think it is the best solution.

JCC
Glad I could introduce you to No Penalty CD's. Here's some more about my experience with Ally.

I have an Ally Online Savings account with 100k+ balance. Also have Ally Interest Checking account with zero balance. Ally pays 1.85% at all balance levels.... Discover has tiered rates that drop when you go below 100k.

I set up 2 accounts with Ally for the same reason as you... to write a check or get cash when I need to. Immediate transfer from Savings to Checking either online or via mobile app, and then write the check or hit the ATM. Been there done that. Works great.

Interest Checking account comes with free checks and a debit/ATM card. Ally has a network of ATM's and/or they reimburse other bank's ATM charges up to $10 a month.
We have a winner...thanks Kevin!
JCC... you are very welcome. Glad you are on your way with a plan !!

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