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Where would you stash funds that you know you'd need in 1 to 10 years?

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    Where would you stash funds that you know you'd need in 1 to 10 years?

    Where would you stash funds that you know you would be needing, but the need could be anywhere from 1 to 10 years?
    We are selling our house and will need to decide where to stash the proceeds from the sale of our paid-for house.
    We are moving to be near family, but it's not an area where we plan to settle down indefinitely, so for as long as the family needs us there we will be renting.
    We will be buying a house again in the future, but in a different area, and it could be anywhere from 1 to 10 years. Realistically, we are probably not talking about more than 5 years, but you never know.

    #2
    Anything but equities. High yield savings, money market, short term treasuries CD ladders are all good options right now. I am in the same boat as we are selling our current home and may be selling the home we just bought in TX. We will rent in our new location, so want to stash the proceeds from the two sales for a later purchase. Will put them in a MM account initially and then go from there.

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      #3
      1 to 10 years is a pretty wide range in terms of "might need." If it is say $100K, might you need all of it in 1 to 10 years, or maybe just a part of it? If only a part of it, you could put back say $20K in CDs and find something more aggressive for the other $80K.

      One area I am going to explore more this year is investing in viatical settlements. A viatical settlement is essentially the acquiring of beneficiary status of a life insurance policy from a policy holder, in return for usually a one-time, upfront payment. Viatical settlements are a huge benefit to those that are elderly or terminally ill, as it allows them to tap their "death" benefit right not in order to make ends meet. Among all investments, it may be the most socially-conscious I have ever run across.

      There are some strings attached - you have to go through a "certification" before you can participate in these settlements because they involve risks that are different than the typical "bread and butter" CDs and mutual funds. But the returns can be quite good and you truly are lending someone a hand in their greatest time of need.

      Just something else to explore.
      How can you have any pudding if you don't eat your meat?

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        #4
        Ten years is a long time. If you are uncomfortable investing any of it in the stock market, I would choose to chase bank account bonuses, whether it was checking, savings, or up to a 3 year CD (just not all the money in 1 CD). With rates expected to rise a few times this year, it might work out pretty well for you.

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          #5
          We sold our home in June 2015, and have rented since (military...moving around alot). Our cash and more that we are accumulating is in CDs and money market accounts, currently earning 2.15% and 2.35%. It is tempting to put it in the market...where would we be last summer or early fall if we did? But now the market has corrected, so then where would we be if we wanted that money for a new home purchase? Generally if your time horizon is closer to ten years the market makes sense, any less, it's more risky. It's really about your risk tolerance and ability to weather the lows if they were to happen when you need the money.

          One thought is to keep what you expect your next 20% down payment, plus some for closing, would be when you may move again in cash equivalents. At least that way you can make the loan purchase, but then cash out if and when the market is right with the rest to pay down the mortgage. It's a thought I've been having lately.
          Last edited by creditcardfree; 01-04-2019, 10:43 AM.
          My other blog is Your Organized Friend.

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            #6
            Originally posted by scfr View Post
            Realistically, we are probably not talking about more than 5 years, but you never know.
            I think this is really the key point in your post. If most likely you're looking at 5 years or less, I agree with the others. You need to keep that money safe assuming you need all of it at the same time. Money market, CDs, short term bonds, etc.

            If you won't need it all at once, do the above for the portion of it you will need, like a down payment, and you can consider taking on more risk with the rest.

            For money that I don't expect to need for 8-10 years, I'm fine investing in the market. In fact, that's exactly what I currently do as I hope to retire in about 8 years and currently 70% of our portfolio is in equities. Of course, I won't need to access all of our money at once the day after I retire, and as retirement approaches, I'll gradually dial back that stock allocation so it won't still be at 70% by the time I actually stop working.
            Steve

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              #7
              sometimes you never know what comes up and when opportunities will arise. could be next year, could be 10 years from now. if you're viewing it from that standpoint, its' best to have it in "safe assets", not allocated to equities. As we've all seen, the market can be fickle.

              when it comes to making acquisitions, cash talks, funds in mutual funds that have declined 40% walks.

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                #8
                As others have said, 1-10 years is an incredibly broad timeframe... But based on what you've said, I'd probably use 5 years as a rough planning window.

                Personally, I'm one to just hedge my bets and spread the cash around to a few different places. Some of it (say, 30%-50%) in MM/CDs/I-Bonds that are guaranteed not to go down in value. 20-30% in bonds with a duration of around 4-6 years. 20-40% in a basic S&P 500 index fund that will have decent growth 80%-90% in any given year. With that mix, over the course of 5-10 years, you'll have largely protected your basis, but given at least a fair shot at getting some growth. I know I'm more aggressive than some might be though...
                "Praestantia per minutus" ... "Acta non verba"

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                  #9
                  anything more than 5 years i'd invest. 1-2 years in savings account. 3-5 years probably still invest for me personally.
                  LivingAlmostLarge Blog

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