The 50 thousand dollar question

[Spiffster]

I have about 70k sitting in my credit union checking account, collecting 0.95%. Obviously this money can do better than <1%. What is my best option that allows this cash to remain somewhat accessible but work harder for me... at MINIMAL RISK. We put enough on the line with our Roth and 401k, which are maxed for both my wife and I. Thanks!

[Naples09]

I have about 70k sitting in my credit union checking account, collecting 0.95%. Obviously this money can do better than <1%. What is my best option that allows this cash to remain somewhat accessible but work harder for me... at MINIMAL RISK. We put enough on the line with our Roth and 401k, which are maxed for both my wife and I. Thanks!

You could ladder some CD's or TIPS.

[Spiffster]

You could ladder some CD's or TIPS.

Thanks for the quick response. Not sure what TIPS are though. Any resource you would suggest for learning the whole CD ladder method? Sounds only vaguely familiar. Thanks again!

[bjl584]

I have about 70k sitting in my credit union checking account, collecting 0.95%. Obviously this money can do better than <1%. What is my best option that allows this cash to remain somewhat accessible but work harder for me... at MINIMAL RISK. We put enough on the line with our Roth and 401k, which are maxed for both my wife and I. Thanks!

What are your plans for the money? That will have a huge impact on what you should do with it.

[Spiffster]

What are your plans for the money? That will have a huge impact on what you should do with it.

Its just extra money, no real plans. We should only need 20k in emergency money. I did have this money in an American Funds account, until I found out how terrible that company is with fees, and just terrible in general. We would like it to make just a little more money for us without big swings.

[Slug]

Look into the Ally 5 year CD. No risk and very small penalty if pulled early. Good customer service.

[jpg7n16]

Its just extra money, no real plans. We should only need 20k in emergency money. I did have this money in an American Funds account, until I found out how terrible that company is with fees, and just terrible in general. We would like it to make just a little more money for us without big swings.

If you have no plans for the money, and won't use it for anything, why are you concerned about the swings of the market?

I would think that if you didn't really need the extra funds, you could just invest it as aggressively as is reasonable for your risk tolerance, leave it alone and let it do its thing.

[EEinNJ]

Good question, and a happy problem to have. If you have any debt, pay that off. Then think about major purchases in the next couple of years. Will you need a new car? How about home repairs or renovations? These are good reasons to keep the money in cash.
With rates as low as they are, I don't think CD's are very attractive. A quick look at bankrate shows rates for CD's are at best, 1.75%, and that's for a 5 yr jumbo (100k). Having your money tied up for 5 years to get maybe an additional $300 bucks/yr after tax doesn't seem worth it to me.

[feh]

If you have no plans for the money, and won't use it for anything, why are you concerned about the swings of the market?

I would think that if you didn't really need the extra funds, you could just invest it as aggressively as is reasonable for your risk tolerance, leave it alone and let it do its thing.

Ditto. If you don't have a need for it in the next few years, it should be invested.

[humandraydel]

At the very least, I would invest it conservatively - 30-40% stocks and the rest short term bonds.

[Spiffster]

Thanks everyone for the great advice! I suppose a conservative mix of stocks and bonds as mentioned is the most effective yet prudent (enough) way to go. I can always keep 20k in cash as planned. No debt here, other than our mortgage (220k @ 3.75%).

[kv968]

Thanks everyone for the great advice! I suppose a conservative mix of stocks and bonds as mentioned is the most effective yet prudent (enough) way to go. I can always keep 20k in cash as planned. No debt here, other than our mortgage (220k @ 3.75%).

Are you paying any PMI on that mortgage? If so, you might want to pay some extra towards principal until you don't have to pay it.

[Bad Saver]

ST Bonds

VCSH - Vanguard Short Term Corporate Bonds

[Petunia 100]

Reported.

[elessar78]

Not sure what TIPS are though.

TIPS is an acronym for Treasury Inflation-Protected Securities. Basically bonds that are indexed to the rate of inflation so, as I understand it, if the maturity value of the bond is, say 3%, and inflation at maturity was calculated at 4% then your redemption value would be principal + 3% + 4% (or principal + 7%).