Where to hold $250k-300k?

[Anonymous]

Helping an elderly relative on a fixed income ($3,500/SS) sell their condo and move into assisted living.

Where should we wire the settlement money (roughly $350k), recognizing he will need some for the first year of rent? I’m thinking it makes sense to hold $250k-300k in something that generates interest?

[Anonymous]

Half in mattress and half in a pickle jar buried in the back yard under the oak tree.

[Anonymous]

I do like the pickle jar idea.

But probably just put it in a high yield savings account if you want immediate access- tons of them are over 4.25% right now.

If you want a higher return, but still no substantive risk, go for a money market fund like VUSXX. It's at 5.28% right now, and since 80% is in treasuries, it's 80% state tax free (but still have to pay federal tax on the interest, of course).

[Anonymous]

High yield savings account or CD ladder is fine. Will he need to pay some for capital gains tax?

[Anonymous]

I'd lock half in a CD since interest rates are going down soon and half in a HYSA.

[Anonymous]

Saving accounts pay more than CDs. Why bother with CDs until needed. There are also dividend stocks that pay 9%, but I'd go with Hysa for him.

[Anonymous]

high yield savings account. Getting about 5% at Fidelity right now

[Anonymous]

Anonymous wrote:Helping an elderly relative on a fixed income ($3,500/SS) sell their condo and move into assisted living.

Where should we wire the settlement money (roughly $350k), recognizing he will need some for the first year of rent? I’m thinking it makes sense to hold $250k-300k in something that generates interest?

4 week t-bill ladder.

[Anonymous]

Vanguard Cash Plus Account

4.7% APR yield in the cash sweep account with up to $1.25M in FDIC insurance

https://investor.vanguard.com/accounts-plans/vanguard-cash-plus-account

It's built for this particular purpose.

If your elder if fine foregoing the FDIC insurance, they can also invest in one of five money market funds (VUSXX has a return of 5.28% invested in US Treasury's...it's basically money-good and almost zero risk)

This is honestly the best product for an elderly person to use. Set it and forget it. No need to worry about maturing CDs or bond ladders. No need to go shopping around and chasing yield.

[Anonymous]

Anonymous wrote:Saving accounts pay more than CDs. Why bother with CDs until needed. There are also dividend stocks that pay 9%, but I'd go with Hysa for him.

Because the CD locks in the rate longer. And by the time you "need" one because hysa rates dropped, you would not be able to get one as good as what you can get now.

[Anonymous]

Another vote for HYSA.

[Anonymous]

Anonymous wrote:Saving accounts pay more than CDs. Why bother with CDs until needed. There are also dividend stocks that pay 9%, but I'd go with Hysa for him.

My CDs pay higher than any Savings accounts/MM currently. Lock in 50% in CD for 15-18Months+. Rest in MM/HYSA

[Anonymous]

Anonymous wrote:

Anonymous wrote:Saving accounts pay more than CDs. Why bother with CDs until needed. There are also dividend stocks that pay 9%, but I'd go with Hysa for him.

Because the CD locks in the rate longer. And by the time you "need" one because hysa rates dropped, you would not be able to get one as good as what you can get now.

An elderly person may need to liquidate it quickly if there is a major health event or need to move into assisted living.

Many assisted living communities require a large upfront payment. I would put at most 33% of the balance in a CD for 18+ months. Money market funds and HYSAs are paying good rates and will be for the foreseeable future. Even if the Fed starts cutting rates, I don't see money market funds like VUSXX dropping below 3.5% yield for quite a while (3+ years).