Where to invest $25k at this moment?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
hihillary
Posts: 22
Joined: Thu Jun 18, 2020 12:06 pm

Where to invest $25k at this moment?

Post by hihillary » Tue Jun 30, 2020 4:31 pm

This $25k is pretty much like an emergency fund and won't be used in the next 1-2 years. Having no idea about where to invest those money into during this time.

CD
The 1 year CD rate is 0.7% here and I have deposit anther $10k in it.

Money Market:
VMMXX in vanguard: https://investor.vanguard.com/mutual-fu ... ions/vmmxx
The most recent monthly distributions are: 04/2020: 0.79% -> 05/2020: 0.41% ->..., And I guess it will keep decreasing in the next few months. Not a good place to deposit into for now.

Treasury bill:
https://fixedincome.fidelity.com/ftgw/f ... type|te-mu
In fidelity, with 4 week, 8 week, 13 week, 26 week bills the expected yield are 0.08, 0.09, 0.1 and 0.1. I don't know clearly on how to calculating the t-bills yield but I guess those are low also.

Saving account:
Ally has 1.10% APY, which looks good (at least for now). But I don't have an ally banking account.

I'm wondering if anyone one could shed a light on where those EF money should go, other than those ways I know above. It's very useful to discuss, i think, about how to deal with small amount of money, since most of people have a little bit funding needs to go somewhere all the time.

SantaClaraSurfer
Posts: 109
Joined: Tue Feb 19, 2019 11:09 am

Re: Where to invest $25k at this moment?

Post by SantaClaraSurfer » Tue Jun 30, 2020 4:57 pm

Our credit union here in CA offers a Money Market account with a reversed interest rate ladder to encourage members to save. (So, 2% for the first $2,000, then 1% for $2,000 to $5,000.)

You can open one of these Money Market accounts per member account/social security number, so a married couple could have two Money Market accounts with $5,000 each at a blended rate of 1.4%. Or $4,000 at the full 2% if you are just interested in the top rate.

We use short term state-based Muni Money Funds and intermediate term state-based Muni Bond Funds for money in this category with 1-2 year horizon. (ie. College expenses for our current students.) The returns usually are decently competitive once you factor in taxes, and they have the advantage of quickly rebounding to better rates as the economy changes.
Last edited by SantaClaraSurfer on Tue Jun 30, 2020 5:01 pm, edited 1 time in total.

tashnewbie
Posts: 367
Joined: Thu Apr 23, 2020 12:44 pm

Re: Where to invest $25k at this moment?

Post by tashnewbie » Tue Jun 30, 2020 4:59 pm

You've pretty much laid out the most commonly recommended options. I'd probably go for a HYSA or reward checking account.

Just yesterday I learned one of my local credit unions offers a "high-yield' checking account with 5% APY on a balance of up to $10k, if you have requisite monthly direct deposits. Might be worth looking at for your area (you can even join a credit union that's not in your geographical area). These rates are subject to change, and I wouldn't be surprised if they decline in the coming months.

bryansmile
Posts: 279
Joined: Wed Feb 12, 2014 10:14 am

Re: Where to invest $25k at this moment?

Post by bryansmile » Tue Jun 30, 2020 5:13 pm

nasa fcu 9 month cd at 1.5%.

InvestorP
Posts: 15
Joined: Thu Jun 18, 2020 8:59 pm

Re: Where to invest $25k at this moment?

Post by InvestorP » Tue Jun 30, 2020 6:15 pm

tashnewbie wrote:
Tue Jun 30, 2020 4:59 pm
You've pretty much laid out the most commonly recommended options. I'd probably go for a HYSA or reward checking account.

Just yesterday I learned one of my local credit unions offers a "high-yield' checking account with 5% APY on a balance of up to $10k, if you have requisite monthly direct deposits. Might be worth looking at for your area (you can even join a credit union that's not in your geographical area). These rates are subject to change, and I wouldn't be surprised if they decline in the coming months.
Wow, 5% is pretty incredible. I thought this might've been a typo. Not even the online banks have offered anything this high.

tashnewbie
Posts: 367
Joined: Thu Apr 23, 2020 12:44 pm

Re: Where to invest $25k at this moment?

Post by tashnewbie » Tue Jun 30, 2020 6:28 pm

InvestorP wrote:
Tue Jun 30, 2020 6:15 pm
tashnewbie wrote:
Tue Jun 30, 2020 4:59 pm
You've pretty much laid out the most commonly recommended options. I'd probably go for a HYSA or reward checking account.

Just yesterday I learned one of my local credit unions offers a "high-yield' checking account with 5% APY on a balance of up to $10k, if you have requisite monthly direct deposits. Might be worth looking at for your area (you can even join a credit union that's not in your geographical area). These rates are subject to change, and I wouldn't be surprised if they decline in the coming months.
Wow, 5% is pretty incredible. I thought this might've been a typo. Not even the online banks have offered anything this high.
I was genuinely shocked! If this APY is still >3% when my liquid funds are freed up in about 6 weeks, which is when I satisfy the terms of a Capital One account bonus, I’m definitely going to shift to using the CU as a hub for my paycheck direct deposits and park $10k there.

Topic Author
hihillary
Posts: 22
Joined: Thu Jun 18, 2020 12:06 pm

Re: Where to invest $25k at this moment?

Post by hihillary » Wed Jul 01, 2020 12:21 am

bryansmile wrote:
Tue Jun 30, 2020 5:13 pm
nasa fcu 9 month cd at 1.5%.
Just drop to 0.65%. Sigh

Topic Author
hihillary
Posts: 22
Joined: Thu Jun 18, 2020 12:06 pm

Re: Where to invest $25k at this moment?

Post by hihillary » Wed Jul 01, 2020 4:09 am

SantaClaraSurfer wrote:
Tue Jun 30, 2020 4:57 pm
We use short term state-based Muni Money Funds and intermediate term state-based Muni Bond Funds for money in this category with 1-2 year horizon. (ie. College expenses for our current students.) The returns usually are decently competitive once you factor in taxes, and they have the advantage of quickly rebounding to better rates as the economy changes.
This sounds like a good idea. As the average ER for state-based Muni Bond Funds at fidelity is around 0.45% , which is almost 3 times higher than those 0.15% in Vanguard, I decide to buy the combination of short and intermediate term bond funds in vanguard.

I still have question:
1) I am not located in CA state, am I still qualified to buy an CA muni? For instance, Vanguard California Intermediate-Term Fund (VCAIX) claims that 'The fund is intended for California residents only', but if I report interest income on my state tax return, can I still buy it?
2) I remember the muni bond fond (so do all mutual fond) could be sold at any time, whenever I don't want to hold it anymore like after 6 months or 2 years?

RomeoMustDie
Posts: 165
Joined: Sat Mar 14, 2020 6:07 pm

Re: Where to invest $25k at this moment?

Post by RomeoMustDie » Wed Jul 01, 2020 4:14 am

hihillary wrote:
Tue Jun 30, 2020 4:31 pm
This $25k is pretty much like an emergency fund and won't be used in the next 1-2 years. Having no idea about where to invest those money into during this time.

CD
The 1 year CD rate is 0.7% here and I have deposit anther $10k in it.

Money Market:
VMMXX in vanguard: https://investor.vanguard.com/mutual-fu ... ions/vmmxx
The most recent monthly distributions are: 04/2020: 0.79% -> 05/2020: 0.41% ->..., And I guess it will keep decreasing in the next few months. Not a good place to deposit into for now.

Treasury bill:
https://fixedincome.fidelity.com/ftgw/f ... type|te-mu
In fidelity, with 4 week, 8 week, 13 week, 26 week bills the expected yield are 0.08, 0.09, 0.1 and 0.1. I don't know clearly on how to calculating the t-bills yield but I guess those are low also.

Saving account:
Ally has 1.10% APY, which looks good (at least for now). But I don't have an ally banking account.

I'm wondering if anyone one could shed a light on where those EF money should go, other than those ways I know above. It's very useful to discuss, i think, about how to deal with small amount of money, since most of people have a little bit funding needs to go somewhere all the time.
I think an interesting idea would be to hold it in some ratio like 40/45/10 VTI/BND/GLD in an M1 or International Brokers account so you can keep the money invested but have access to low interest rate margin loans to continue to pay for emergency expenses.

That's what i'm hoping to do soon because I really dislike holding cash now.

Topic Author
hihillary
Posts: 22
Joined: Thu Jun 18, 2020 12:06 pm

Re: Where to invest $25k at this moment?

Post by hihillary » Wed Jul 01, 2020 5:11 am

RomeoMustDie wrote:
Wed Jul 01, 2020 4:14 am
I think an interesting idea would be to hold it in some ratio like 40/45/10 VTI/BND/GLD in an M1 or International Brokers account so you can keep the money invested but have access to low interest rate margin loans to continue to pay for emergency expenses.
That's what i'm hoping to do soon because I really dislike holding cash now.
I don't want to buy ETFs and holding it just for one or two years then sell them out for EF

TimeTheMarket
Posts: 52
Joined: Fri Jan 25, 2019 8:49 am

Re: Where to invest $25k at this moment?

Post by TimeTheMarket » Wed Jul 01, 2020 6:55 am

My answer: it doesn't matter. 2 years at .7% or 1.5% or 1.2% on $25k is noise. Stick it in a HYSA because it's easiest to get in and out.
Username is not serious :)

atdharris
Posts: 434
Joined: Wed Jan 02, 2019 3:18 pm

Re: Where to invest $25k at this moment?

Post by atdharris » Wed Jul 01, 2020 9:30 am

I just bought a no-penalty CD at 0.95%. Low, but I expect HYSA will keep dropping their rates well below 1% as time goes on.

Jack FFR1846
Posts: 12075
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Where to invest $25k at this moment?

Post by Jack FFR1846 » Wed Jul 01, 2020 9:39 am

Ally or Redneck Bank. Both are 1.1% at the moment.
Bogle: Smart Beta is stupid

Topic Author
hihillary
Posts: 22
Joined: Thu Jun 18, 2020 12:06 pm

Re: Where to invest $25k at this moment?

Post by hihillary » Wed Jul 01, 2020 1:03 pm

Jack FFR1846 wrote:
Wed Jul 01, 2020 9:39 am
Ally or Redneck Bank. Both are 1.1% at the moment.
Yes. And it's flexible. But i think it's a good start for me to try mutual fund for the first time at this time.

According to my understanding, I can sell the mutual fund whenever I want (but not as flexible as ETFs). But the price per share is changing all the time. So the risky part is, the reinvest price/selling price could be lower than that when I bought, which is the lose risky same as ETFs/stocks, right?

User avatar
goodenyou
Posts: 2261
Joined: Sun Jan 31, 2010 11:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

Re: Where to invest $25k at this moment?

Post by goodenyou » Wed Jul 01, 2020 1:52 pm

I resisted opening a HYSA for a very long time. Never thought I wanted to add any additional complexity to my portfolio by adding another financial institution to the 6 I already have. But, given the low rates and current climate, I opened up an Ally savings account a week or two ago. I have been funding it over the past 10 days. I finally linked it directly to Vanguard so that it will take less time to clear the transaction. It is slow when I “pull” it from Chase. At least it’s FDIC insured, for whatever that is likely to mean.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.

conservativeinvestor
Posts: 46
Joined: Tue Feb 05, 2019 12:14 pm

Re: Where to invest $25k at this moment?

Post by conservativeinvestor » Wed Jul 01, 2020 1:55 pm

I would look for the highest online savings account rate and or sign up bonus you can get and put it there.

SantaClaraSurfer
Posts: 109
Joined: Tue Feb 19, 2019 11:09 am

Re: Where to invest $25k at this moment?

Post by SantaClaraSurfer » Wed Jul 01, 2020 4:07 pm

hihillary wrote:
Wed Jul 01, 2020 4:09 am
I still have question:
1) I am not located in CA state, am I still qualified to buy an CA muni? For instance, Vanguard California Intermediate-Term Fund (VCAIX) claims that 'The fund is intended for California residents only', but if I report interest income on my state tax return, can I still buy it?
2) I remember the muni bond fond (so do all mutual fond) could be sold at any time, whenever I don't want to hold it anymore like after 6 months or 2 years?
1) Schwab has a good article. I am not an expert since my only experience is with CA and Schwab.

2) I mentioned two investments. CA Muni Money Fund and CA Muni Intermediate Bond Mutual Fund. For us, those are SWKXX and SWCAX at Schwab. Both pay dividends monthly that vary month to month. The rate can improve, and get worse. You can buy and sell both during the trading day. We use the Money Fund for money we intend to use in the short term. We use the Mutual Fund for money we intend to keep invested for over one year (we can still sell at any time.)

The Money Fund is a much more stable investment, with lower returns. The price of one share is always one dollar. The fund invests in very low risk short term loans to CA Muni entities. Right now the dividend is super low, like everything else, but we have little reason to move money that we intend to spend in the very near term.

The Mutual Fund trades as shares that can and do increase and decrease in value, but pays a higher dividend since the fund invests in Intermediate TErm CA Muni Bonds. You can have a capital gain or a capital loss with the sale of a Muni Intermediate Bond Mutual Fund. Click on the link and you will see the variation in share price of SWCAX just over the last six months. That's an additional consideration.

Best of luck.

Topic Author
hihillary
Posts: 22
Joined: Thu Jun 18, 2020 12:06 pm

Re: Where to invest $25k at this moment?

Post by hihillary » Wed Jul 01, 2020 9:02 pm

SantaClaraSurfer wrote:
Wed Jul 01, 2020 4:07 pm

1) Schwab has a good article. I am not an expert since my only experience is with CA and Schwab.

2) I mentioned two investments. CA Muni Money Fund and CA Muni Intermediate Bond Mutual Fund. For us, those are SWKXX and SWCAX at Schwab. Both pay dividends monthly that vary month to month. The rate can improve, and get worse. You can buy and sell both during the trading day. We use the Money Fund for money we intend to use in the short term. We use the Mutual Fund for money we intend to keep invested for over one year (we can still sell at any time.)

The Money Fund is a much more stable investment, with lower returns. The price of one share is always one dollar. The fund invests in very low risk short term loans to CA Muni entities. Right now the dividend is super low, like everything else, but we have little reason to move money that we intend to spend in the very near term.

The Mutual Fund trades as shares that can and do increase and decrease in value, but pays a higher dividend since the fund invests in Intermediate TErm CA Muni Bonds. You can have a capital gain or a capital loss with the sale of a Muni Intermediate Bond Mutual Fund. Click on the link and you will see the variation in share price of SWCAX just over the last six months. That's an additional consideration.

Best of luck.
Thanks for your clear explaination! That's very useful in practice and solved my puzzle! :D

Post Reply