Investing "tax" money?

[TT5]

My tax bill (due April 2015) will be about $150,000. My advisors tell me to put that money aside in a high-yield CD or savings account. The best rate on a 1-year CD 1.05%. I know this is the safe thing to do and I am not looking to risk this particular money but I hate not investing it in something other than CDs.

Thoughts?

[andyross]

What is a tax-deferred investment?

With a tax-deferred investment, you pay federal income taxes when you take money out of the investment rather than at the time the money is invested. Any earnings your contributions produce while invested are also tax deferred.

Some investments also allow you to invest pre-tax dollars, so neither the contribution nor its potential earnings are taxed until they are withdrawn.
How does a tax-deferred investment work?

First, because your money is reinvested and no money is taken out for taxes, you have potentially more money to compound and grow. That means when you withdraw the funds, your investment may be larger than a similar investment that is subject to capital gains tax each year.

Second, if you're investing for retirement, you may be in a lower tax bracket when you withdraw the money than you are now.

Because tax-deferred investments are generally designed to help you invest for specific long-term goals (such as retirement or a child’s education), there are restrictions on when the money can be withdrawn without penalty. Early withdrawals may be subject to sales charges and fees. Withdrawals prior to age 59½ may be subject to a 10% income tax penalty.

[Retired To Win]

My tax bill (due April 2015) will be about $150,000. My advisors tell me to put that money aside in a high-yield CD or savings account. The best rate on a 1-year CD 1.05%. I know this is the safe thing to do and I am not looking to risk this particular money but I hate not investing it in something other than CDs.

Thoughts?

You answered your own question when you said "I am not looking to risk this particular money."

Get the CDs and get over it.

Good luck!

[TT5]

You answered your own question when you said "I am not looking to risk this particular money."

Get the CDs and get over it.

Good luck!

You are right. I guess a part of me wants to take some risk but I need that money for Uncle Sam. Besides, there is other money I can play with.

[snafu]

why does it need to be 100% CDs or 100% equity? Depending on your Risk tolerance, you can chose any combination you want. With the plan to ease Quantitative Easing the government has already signalled it's plan to slowly, carefully increase interest rates. That does not bode well for CDs, worse for Bonds or Bond Funds.

[TT5]

why does it need to be 100% CDs or 100% equity? Depending on your Risk tolerance, you can chose any combination you want. With the plan to ease Quantitative Easing the government has already signalled it's plan to slowly, carefully increase interest rates. That does not bode well for CDs, worse for Bonds or Bond Funds.

How would you recommend investing approximately $150,000 that you know you have to pay Uncle Same April 15, 2015?