How to maximize sitting cash [short term]?

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billking70
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Joined: Thu Nov 07, 2019 11:23 am

How to maximize sitting cash [short term]?

Post by billking70 » Thu Nov 07, 2019 11:34 am

Both my wife and I have been holding out $80k each in BOA savings account with virtually nothing on return for mortgage downpayment. As we have been planning to buy house in 2020 or 2021, any suggestion on how can we get more out of our cash with minimum to low risk in short term?
Last edited by Flyer24 on Thu Nov 07, 2019 11:38 am, edited 1 time in total.
Reason: Title clarity

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ruralavalon
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Re: How to maximize sitting cash [short term]?

Post by ruralavalon » Thu Nov 07, 2019 12:03 pm

Welcome to the forum :) .

What interest do you currently receive on your Bank of America savings account?

billking70 wrote:
Thu Nov 07, 2019 11:34 am
Both my wife and I have been holding out $80k each in BOA savings account with virtually nothing on return for mortgage downpayment. As we have been planning to buy house in 2020 or 2021, any suggestion on how can we get more out of our cash with minimum to low risk in short term?
You could consider:

1) a high yield savings account or short-term CDs, for rates see www.bankrate.com;

2) a good money market fund like Vanguard Prime Money Market Fund (VMMXX) current SEC Yield = 1.84%; or

3) a very short-term bond fund like iShares Ultra Short-Term Bond ETF (ICSH) current SEC Yield = 2.17%, or Vanguard Ultra Short-term Bond Fund (VUBFX) current SEC Yield = 2.08%.
Last edited by ruralavalon on Thu Nov 07, 2019 12:06 pm, edited 1 time in total.
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David Jay
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Re: How to maximize sitting cash [short term]?

Post by David Jay » Thu Nov 07, 2019 12:05 pm

Welcome to the forum!

If you don’t have a specific timeframe when you will need the funds, I would use a brokerage Money Market fund like Vanguard Prime Money Market fund (VMMXX). Current SEC yield is 1.83%

If you do know the date, you can purchase CDs with dates shorter than your timeline, perhaps paying in the upper 2.X% range.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Wiggums
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Re: How to maximize sitting cash [short term]?

Post by Wiggums » Thu Nov 07, 2019 12:08 pm

I agree. Find the best rate that works for your time frame. Even a no penalty cd is better than the brick and mortar rates.

Silk McCue
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Re: How to maximize sitting cash [short term]?

Post by Silk McCue » Thu Nov 07, 2019 12:09 pm

I saw this on recent thread on Bogleheads that others are utilizing. You have to follow the rules but you can earn 4% on up to $30k. I would expect, but am not certain, that you could each open your own checking account.

https://orionfcu.com/checking/#premiumchecking
4% APY PREMIUM CHECKING

Orion believes your checking account should pay you.
With 4% APY Premium Checking, you can earn more than $1,000 a year in interest and also get:

Free checks
Online and mobile banking
Out-of-network ATM fee reimbursement (when Premium Perks Qualifiers are met. See conditions below)
Free bill pay

To earn your 4% APY interest, be eligible for ATM Fee Reimbursements, and waive the $5 monthly fee, just meet these two simple qualifiers per month:

Electronic deposits totaling at least $500/mo Electronic deposits include: direct deposit, mobile deposit, and electronic transfers from another financial institution.
Perform at least 8 signature-based card transactions It's easy! When using your card, choose the credit option and bypass using your PIN.
Cheers

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Wiggums
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Re: How to maximize sitting cash [short term]?

Post by Wiggums » Thu Nov 07, 2019 12:15 pm

Bankrate.com and depositaccounts.com rate the financial strength and stability of banks and credit unions. Bankrate.com uses a 5 star system. Depositaccounts.com uses a letter grading system.

Hope this helps.

Topic Author
billking70
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Joined: Thu Nov 07, 2019 11:23 am

Re: How to maximize sitting cash [short term]?

Post by billking70 » Thu Nov 07, 2019 12:34 pm

Thank you! This is a great community that I stumbled upon and has been great in learning about personal finance and investment in general. Great for rookie like me.

All great advise and I will look into these options. One question though: as returns are fairly similar with savings account, CD and money market fund; any reason why should I consider money market fund? Does it guarantee return as first two?

Thanks again.

Silk McCue
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Joined: Thu Feb 25, 2016 7:11 pm

Re: How to maximize sitting cash [short term]?

Post by Silk McCue » Thu Nov 07, 2019 12:55 pm

billking70 wrote:
Thu Nov 07, 2019 12:34 pm
Thank you! This is a great community that I stumbled upon and has been great in learning about personal finance and investment in general. Great for rookie like me.

All great advise and I will look into these options. One question though: as returns are fairly similar with savings account, CD and money market fund; any reason why should I consider money market fund? Does it guarantee return as first two?

Thanks again.
Money market funds aren't guaranteed but if they break the buck we will all have bigger issues to deal with.

Cheers

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Phineas J. Whoopee
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Re: How to maximize sitting cash [short term]?

Post by Phineas J. Whoopee » Thu Nov 07, 2019 4:28 pm

Silk McCue wrote:
Thu Nov 07, 2019 12:55 pm
...
Money market funds aren't guaranteed but if they break the buck we will all have bigger issues to deal with.
...
Silk McCue is correct, but in the years since last decade's financial crisis their risks have been taken further into account via new regulations.

PJW

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