Any advice on investing 200k, short term 1 yr?

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leleballpen
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Any advice on investing 200k, short term 1 yr?

Post by leleballpen »

Hello~
I am a beginner to the market, and just got the book ‘The Bogleheads' Guide to Investing’ two days ago and now reading. Thanks for sharing all the information here!

My question is I have 200k in saving. We are planning to use this money to purchase a house in 1-2 years. Now the money is on our banking account. We are wondering what investment we should do about this 200k to 1) get a higher return than interest in bank, beat the inflation. 2) low risk, since we will use it to buy a property. 3) short term, we are planning to withdraw the money in 1-2 years.

We have been looking for bonds.. But have little idea about which bonds are best for my case. So I am here to get some help. Thanks in advance!!
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Re: Any advice on investing 200k, short term 1 yr?

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MotoTrojan
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Re: Any advice on investing 200k, short term 1 yr?

Post by MotoTrojan »

CD. Maybe a 2-3 year CD with a removal penalty that would still maintain more value than a 1.5-2 year CD.
aristotelian
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Re: Any advice on investing 200k, short term 1 yr?

Post by aristotelian »

If you can take a little risk to earn more return than a CD and better liquidity, consider Vanguard Short Term Investment Grade (VFSTX) or Short Term Corporate ETF (VCSH). I have my 2nd tier emergency fund in VCSH. Stay away from anything intermediate or long term.
Topic Author
leleballpen
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Re: Any advice on investing 200k, short term 1 yr?

Post by leleballpen »

Thanks for all the replies!!! :D I will try to diversify these money, CD, bond and market! Thanks!
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badbreath
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Re: Any advice on investing 200k, short term 1 yr?

Post by badbreath »

this may help all are good suggestions but I would also listen in on the podcast cuz he gives a bit more info.

http://www.doughroller.net/investing/th ... vestments/
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Bogle_Feet
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Re: Any advice on investing 200k, short term 1 yr?

Post by Bogle_Feet »

leleballpen wrote:We have been looking for bonds.. But have little idea about which bonds are best for my case. So I am here to get some help. Thanks in advance!!
Don't invest in INDIVIDUAL bonds. Invest in a total bond market index fund. BTW 100% bonds is actually more risky than 72% bonds / 28% stocks.
http://investingadvicewatchdog.com/imag ... return.jpg
http://investingadvicewatchdog.com/imag ... 2-year.jpg
aqan
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Re: Any advice on investing 200k, short term 1 yr?

Post by aqan »

aristotelian wrote:If you can take a little risk to earn more return than a CD and better liquidity, consider Vanguard Short Term Investment Grade (VFSTX) or Short Term Corporate ETF (VCSH). I have my 2nd tier emergency fund in VCSH. Stay away from anything intermediate or long term.
thanks. I was looking for something like VCSH for my 2nd tier emergency fund.
aqan
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Re: Any advice on investing 200k, short term 1 yr?

Post by aqan »

Bogle_Feet wrote:
leleballpen wrote:We have been looking for bonds.. But have little idea about which bonds are best for my case. So I am here to get some help. Thanks in advance!!
Don't invest in INDIVIDUAL bonds. Invest in a total bond market index fund. BTW 100% bonds is actually more risky than 72% bonds / 28% stocks.
http://investingadvicewatchdog.com/imag ... return.jpg
http://investingadvicewatchdog.com/imag ... 2-year.jpg
@Bogle_Feet - is there an ETF/MF you can suggest that implements this magic 72/28 formula?
BogleAlltheWay
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Re: Any advice on investing 200k, short term 1 yr?

Post by BogleAlltheWay »

The Vangaurd life strategy Income does close to this 80/20

https://personal.vanguard.com/us/funds/ ... IntExt=INT
mega317
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Re: Any advice on investing 200k, short term 1 yr?

Post by mega317 »

I suggest you just leave it in a high-yield savings account. Yes you can get another 1% using VCSH but you can also lose that or more from the principle. And what if the bank doesn't let you break a CD? Or you happen to find a house you want in less than a year?
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Bogle_Feet
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Re: Any advice on investing 200k, short term 1 yr?

Post by Bogle_Feet »

aqan wrote: @Bogle_Feet - is there an ETF/MF you can suggest that implements this magic 72/28 formula?
A total bond market index fund like BND or AGG
And an S&P 500 index fund like SPY
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Tamarind
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Re: Any advice on investing 200k, short term 1 yr?

Post by Tamarind »

Another vote for leaving it in a high yield savings account. Collect your $2000 in interest and then buy the house. Don't take any risk with your down payment when it is not needed to hit the number you need.
Topic Author
leleballpen
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Re: Any advice on investing 200k, short term 1 yr?

Post by leleballpen »

Bogle_Feet wrote:
leleballpen wrote:We have been looking for bonds.. But have little idea about which bonds are best for my case. So I am here to get some help. Thanks in advance!!
Don't invest in INDIVIDUAL bonds. Invest in a total bond market index fund. BTW 100% bonds is actually more risky than 72% bonds / 28% stocks.
http://investingadvicewatchdog.com/imag ... return.jpg
http://investingadvicewatchdog.com/imag ... 2-year.jpg
Thanks for the chart!! What about treasury bond? Can I put 72% all in treasury? Thanks!
TIAX
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Re: Any advice on investing 200k, short term 1 yr?

Post by TIAX »

If your marginal tax rate is high enough, consider a tax-exempt bond fund.
EnjoyIt
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Re: Any advice on investing 200k, short term 1 yr?

Post by EnjoyIt »

Tamarind wrote:Another vote for leaving it in a high yield savings account. Collect your $2000 in interest and then buy the house. Don't take any risk with your down payment when it is not needed to hit the number you need.
If you are confident in the 1-2 year range then I would strongly consider CDs or high yield savings account. I like the idea of Ally's 5 year CD at 2.25% and a 5 month withdrawal penalty. If you keep it for at least 9-10 months it will be better than a majority of those high yield 1%ish savings accounts. See this calculator to see how it works. https://www.depositaccounts.com/tools/e ... lator.aspx. It is a nice alternative without the interest rate risk or the equity risk.
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