Simplifying savings

[corn18]

After my heart attacks 13 days ago, I decided to simplify all my investment accounts into one (from 12). Well, that ended up as $159,000 in a checking account. Now that things have settle down, I think that is probably silly, but I do want to keep things simple. This money is all my non retirement savings: EF, car, house repair, college, taxes, discretionary and some unallocated. I don't need any of it until my daughter starts college in fall 2016. None of it is retirement savings.

What would you do with it? Only requirement is simplicity so it can be liquidated easily by my wife in case that heart attack thing decides to kill me.

Thanks as always,

Tom

[rennigade]

Put it in a high yield savings account. Barclays is earning 1% and is easy to use. (I think most online savings account are earning 1% at the moment)

It seems like a lot for an EF although I do not know how much your expenses run. Maybe put $100k in a high yield savings account and throw the rest in some mutual/index funds? Check out vanguards 3 fund portfolio. Pretty hard to go wrong there.

[Petunia 100]

I'd keep some buffer in my checking account, then move the bulk to an online savings account and a taxable investment account. You might consider an ETF focusing on dividends. Good dividend payers tend to be large well-established companies. The stocks are less volatile than the overall market, handy in case you need to sell. Meanwhile, they pay good dividends.

[sblatner]

I use Barclays...had a little bit of trouble setting it up but that was a while ago so hopefully they have upgraded their website. Transfers to and from are easy. I recommend it. You need to pick the US Barclays and not the UK Barclays.

https://www.banking.barclaysus.com/index.html

[feh]

CDs are an option. 3-5 years that can be broken without severe penalties.

[corn18]

CDs are an option. 3-5 years that can be broken without severe penalties.

This is appealing to me. I am considering starting a $100,000 CD ladder with 5 year maturities ($20,000 each ladder). The early withdrawal penalty is 1 year of interest, so if I need it, I can live with that. If conditions change over the next 5 years as I build the ladder, I can make adjustments as necessary.

[feh]

This is appealing to me. I am considering starting a $100,000 CD ladder with 5 year maturities ($20,000 each ladder). The early withdrawal penalty is 1 year of interest, so if I need it, I can live with that. If conditions change over the next 5 years as I build the ladder, I can make adjustments as necessary.

Sounds pretty good. My only comment that any CD that is 24 months or less probably doesn't have any advantage over a money market account.

[bjl584]

Simplest thing to do is to leave it where it is. Or move it to a Money Market account. Interest rates really aren't high enough to do much else conservatively with it.

A CD is an option, but watch for penalties should you need the money.

[corn18]

Simplest thing to do is to leave it where it is. Or move it to a Money Market account. Interest rates really aren't high enough to do much else conservatively with it.

A CD is an option, but watch for penalties should you need the money.

Funny you should mention the minimal impact of the interest rate. I was talking to my wife about this on our walk this morning and I mentioned that it would be better to earn 1.1% on a CD vs .02% on our savings account. She asked how much interest 1.1% was on $20,000 and I thought for a sec and answered $220. Hmmm, she says. And what is the penalty for early withdrawal? One year of interest. So we would be out $220 if we had to withdraw it early? Yup. Once you see the value of the interest, it hardly seems worth a great deal of mental energy deciding between .02% and 1.1%.

I guess if I moved it all to Simplicity and raked in 2%, that would be worth it once the ladder is fully loaded. But that would mean moving the money to a different bank and that kindof kills my requirement for being dirt simple if I die.

It can stay where it is for now. I've already spent more energy typing this post than what it's worth.

Tom

[Petunia 100]

Funny you should mention the minimal impact of the interest rate. I was talking to my wife about this on our walk this morning and I mentioned that it would be better to earn 1.1% on a CD vs .02% on our savings account. She asked how much interest 1.1% was on $20,000 and I thought for a sec and answered $220. Hmmm, she says. And what is the penalty for early withdrawal? One year of interest. So we would be out $220 if we had to withdraw it early? Yup. Once you see the value of the interest, it hardly seems worth a great deal of mental energy deciding between .02% and 1.1%.

I guess if I moved it all to Simplicity and raked in 2%, that would be worth it once the ladder is fully loaded. But that would mean moving the money to a different bank and that kindof kills my requirement for being dirt simple if I die.

It can stay where it is for now. I've already spent more energy typing this post than what it's worth.

Tom

You can get 1.05% at GE Capital on a plain old online savings account. Just sayin'.

[corn18]

You can get 1.05% at GE Capital on a plain old online savings account. Just sayin'.

That's really good. I do want to keep it all at USAA so whatever I do will be through them.

[Nika]

Having several accounts does not necessarily make things less simple. As long as you both know all account details. If you put your wife's name on all investments, that should make things easier for her should anything happen to you.

I watch too much American Greed to EVER have all my investments in one place. I would say no more than 1/5 of family's money with one institution, no matter how long established and reputable. Does not apply to FDIC insured savings accounts, but I would not want to keep much there, losing 4-5% to inflation each year.

[corn18]

losing 4-5% to inflation each year.

Not sure where you got 4-5% inflation. It hasn't been that high since 1991. Runs about 0-3% these days and recently closer to 0%. I understand what you are saying, though.

[Nika]

Not sure where you got 4-5% inflation. It hasn't been that high since 1991. Runs about 0-3% these days and recently closer to 0%. I understand what you are saying, though.

My personal, or actual inflation rate is much higher. It includes FOOD (for our family) that is excluded from the inflation index. There is also very specific inflation that pertains to NYC commute (tolls that are going up, MTA and Metronorth passes that are going up), childcare/tuition costs and some others, NYC housing costs, and other things that may not be same nation-wide, but certainly apply to our family.

[corn18]

My personal, or actual inflation rate is much higher. It includes FOOD (for our family) that is excluded from the inflation index. There is also very specific inflation that pertains to NYC commute (tolls that are going up, MTA and Metronorth passes that are going up), childcare/tuition costs and some others, NYC housing costs, and other things that may not be same nation-wide, but certainly apply to our family.

I agree with all of this. NYC is a very high cost of living area and does seem to have it's own set of financial "norms". I make a lot for my area of Ohio, but I would be considered middle class in NYC. Can you move out of the NYC area?