Stable investment location?

[jstage]

Hello,

We have a large lump sum (65k) from selling our home that we need to invest. This is not our emergency fund stash, but it is money we may tap into in the next 5 to 10 years if we decide to buy a new car, remodel a bathroom, etc. So we need it accessible, but not in any emergency situation. I want it to make more then our online savings (currently 4.4%), but I don't want it in a risky place. What fund should I put it in? We already have a brokerage account at Vanguard so thinking in something I can purchase through them?

Thank you!

[jebmke]

Risk is a relative term. If you want zero NAV risk, a money market fund.

[Itzapi]

Given you're with Vanguard, maybe consider their short to intermediate term bond funds. They typically offer better returns than savings accounts and are less volatile than stocks.

[rich126]

I had a much larger sum from a house sale and for a couple of years I used high yield savings accounts and then when interest rates rose, moved to treasuries. I took a bit of risk and put about 10% or so in the stock market. I figured even if that lost a little bit of money it wasn't to change things much and fortunately it did quite well.

I don't think 4.4% is bad. How much do you want to risk losing trying to get 1%, 2%, etc. more?

[suemarkp]

Just put it in to the settlement fund, VMFXX. It is yielding over 5% right now at no risk. The only risk is if interest rates drop it will yield less, but so will you high yield savings account.

I would not do a bond fund yet. If the distribution yield on the bond fund approaches or exceeds the settlement fund yield, then consider switching. If rates rise, the bond fund value will go down. It will recover eventually, but could be 2X the duration of the fund (e.g. a short trrm bond fund with a 2.5 year duration could reduces its NAV and get back to where it was 5 years later).

If you know you will not need the money for a fixed period of time you could buy say 1 or 2 year Treasury bills/notes and hold them to maturity. You are shielded from a rate drop, but miss out if rates increase.

[Doctor Rhythm]

If you don’t want to lose any principal but won’t tap into it for 5 years, I’d consider a 60 month CD (currently around 4.8%).

[pizzy]

Hello,

We have a large lump sum (65k) from selling our home that we need to invest. This is not our emergency fund stash, but it is money we may tap into in the next 5 to 10 years if we decide to buy a new car, remodel a bathroom, etc. So we need it accessible, but not in any emergency situation. I want it to make more then our online savings (currently 4.4%), but I don't want it in a risky place. What fund should I put it in? We already have a brokerage account at Vanguard so thinking in something I can purchase through them?

Thank you!

Are you retired? What is the current size of your taxable account?