120k in cash

[Anonymous]

Need advice on investing. DH and I come from dirt poor families and have managed to save 120k over the course of our 20s and early 30s. It is sitting in the bank currently and we would like to invest it in something that yields more than the pittance banks are currently paying. At the same time, we hope to buy a house in the next two years. (We live in a ridiculously expensive area, so we still don't have enough for a downpayment on anything that can fit our family of 4).

We know little about savings and investments. We know enough not to put this in the stock market because this is all we have in the world, apart from retirement savings. I was thinking that a mutual fund makes sense, but are some riskier or better than others? I have heard of Vanguard, but there are multiple Vanguard funds. Are there low risk options other than mutual funds that still generate a decent return? Or should we keep it in cash.

TIA.

[Anonymous]

If you need it in two years i would not put it at risk.

Look into i-bonds, but otherwise leave in cash and suck it up with the crap yield. If you truly don't need access to it try to find a CD for a marginally higher yield.

[Anonymous]

pp here. Check this out. The 360 account at Capital One pays a nice bonus.

https://www.nerdwallet.com/blog/banking/nerdwallets-top-high-yield-online-savings-accounts/

[Anonymous]

Anonymous wrote:Need advice on investing. DH and I come from dirt poor families and have managed to save 120k over the course of our 20s and early 30s. It is sitting in the bank currently and we would like to invest it in something that yields more than the pittance banks are currently paying. At the same time, we hope to buy a house in the next two years. (We live in a ridiculously expensive area, so we still don't have enough for a downpayment on anything that can fit our family of 4).

We know little about savings and investments. We know enough not to put this in the stock market because this is all we have in the world, apart from retirement savings. I was thinking that a mutual fund makes sense, but are some riskier or better than others? I have heard of Vanguard, but there are multiple Vanguard funds. Are there low risk options other than mutual funds that still generate a decent return? Or should we keep it in cash.

TIA.

If you don't need the money anytime soon and if you don't want to actively manage, I'd say look into some sort of Index funds - put it in and let it sit. But, in your case, I'd not put that money in stocks. Try Ally bank - at least their rate is close to 1 % for savings and slightly lower for checking. I know it's nothing but sure better than local banks.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Need advice on investing. DH and I come from dirt poor families and have managed to save 120k over the course of our 20s and early 30s. It is sitting in the bank currently and we would like to invest it in something that yields more than the pittance banks are currently paying. At the same time, we hope to buy a house in the next two years. (We live in a ridiculously expensive area, so we still don't have enough for a downpayment on anything that can fit our family of 4).

We know little about savings and investments. We know enough not to put this in the stock market because this is all we have in the world, apart from retirement savings. I was thinking that a mutual fund makes sense, but are some riskier or better than others? I have heard of Vanguard, but there are multiple Vanguard funds. Are there low risk options other than mutual funds that still generate a decent return? Or should we keep it in cash.

TIA.

If you don't need the money anytime soon and if you don't want to actively manage, I'd say look into some sort of Index funds - put it in and let it sit. But, in your case, I'd not put that money in stocks. Try Ally bank - at least their rate is close to 1 % for savings and slightly lower for checking. I know it's nothing but sure better than local banks.

Would you mind explaining what an index fund is and how to choose a good one?

[Anonymous]

Anonymous wrote:pp here. Check this out. The 360 account at Capital One pays a nice bonus.

https://www.nerdwallet.com/blog/banking/nerdwallets-top-high-yield-online-savings-accounts/

There are other on line banks that have higher rates than CO. Look into Goldman Sachs Bank and Ally Bank. Both are insured by FDIC upto S250k.

[Anonymous]

Anonymous wrote:If you need it in two years i would not put it at risk.

Look into i-bonds, but otherwise leave in cash and suck it up with the crap yield. If you truly don't need access to it try to find a CD for a marginally higher yield.

I am really not conversant in these terms. What are i-bonds?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Need advice on investing. DH and I come from dirt poor families and have managed to save 120k over the course of our 20s and early 30s. It is sitting in the bank currently and we would like to invest it in something that yields more than the pittance banks are currently paying. At the same time, we hope to buy a house in the next two years. (We live in a ridiculously expensive area, so we still don't have enough for a downpayment on anything that can fit our family of 4).

We know little about savings and investments. We know enough not to put this in the stock market because this is all we have in the world, apart from retirement savings. I was thinking that a mutual fund makes sense, but are some riskier or better than others? I have heard of Vanguard, but there are multiple Vanguard funds. Are there low risk options other than mutual funds that still generate a decent return? Or should we keep it in cash.

TIA.

If you don't need the money anytime soon and if you don't want to actively manage, I'd say look into some sort of Index funds - put it in and let it sit. But, in your case, I'd not put that money in stocks. Try Ally bank - at least their rate is close to 1 % for savings and slightly lower for checking. I know it's nothing but sure better than local banks.

Would you mind explaining what an index fund is and how to choose a good one?

http://www.investopedia.com/terms/i/indexfund.asp

check this out. simple definition... keep in mind, index funds have lower risks than typical stocks, risk is still there. not a good idea to "play" with money you know you will absolutely need.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you need it in two years i would not put it at risk.

Look into i-bonds, but otherwise leave in cash and suck it up with the crap yield. If you truly don't need access to it try to find a CD for a marginally higher yield.

I am really not conversant in these terms. What are i-bonds?

inflation-indexed bonds.

https://en.wikipedia.org/wiki/Inflation-indexed_bond

Yields are pretty low, near savings, so maybe not worth the hassle but you can buy direct from the Treasury Department. https://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm

I would also suggest you try to find a fee-based financial planner to make some recommendations (don't use one that works on commission).

[Anonymous]

Since you say you don't know the terms...

Besides i-bonds, CD refers to Certificate of Deposit. These are issued by banks and basically pay a slightly higher rate of interest in exchange for you committing to keep the money on deposit for some defined period of time (typically a year). Yield refers to your Return on Investment (ROI).

[Anonymous]

One other thing -- if you consult a fee-based planner, ask about municipal bonds. They're generally tax-free and have a higher yield than passbook savings/checking accounts. Depending on the term, they're ranging in yeild between 1.6 and 2.5% for AAA-rated ("safe" bonds)

[Anonymous]

Start reading about personal finance and investing. Get out a basic book. You say you don't want to put it in the market. This makes sense because you plan to use it in two years and anything can happen in two years.

But you are interested in mutual funds. Guess what, most mutual funds are baskets of stocks. Otherwise they are bond funds. But anyway don't rush into anything until you educate yourself.

[Anonymous]

Mutual funds are the stock market. If you're buying in the next 2 years, I'd find the best yield savings/money market account and just park it there. I know it feels like an insane amount of money to just let sit, but it isn't that far out of line.

We come from a very similar background and leave around $70K in savings all the time (now that our house is paid off) between emergency fund, car repair/replacement, home improvement, and vacation savings. Let me tell you, it lets us sleep very well at night and isn't compromising our long-term investments. If a crisis strikes, I don't want my safety blanket dropping in value at the same time (which is very possible with the market volatility - you need to be prepared to let the money sit 5+ years to recover).

[Anonymous]

You have 120k

Take 3-6 months of expense and (that's your emergency fund) and then add the money you need in less than 5 years

Put that in a municipal bond fund

If there is anything that is leftover put around 1k a month into a broad based fund

Something like this

https://investor.vanguard.com/mutual-funds/lifestrategy/#/

The reason you only put 1k a month is dollar cost averaging (look that up :-p). You don.'t want to invest all your money when the market is really high and then have it tank on you

Good Luck

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you need it in two years i would not put it at risk.

Look into i-bonds, but otherwise leave in cash and suck it up with the crap yield. If you truly don't need access to it try to find a CD for a marginally higher yield.

I am really not conversant in these terms. What are i-bonds?

I-bonds is issued by U.S government. It has two parts to it, interest rate and inflation rate. Interest rate is locked when you buy it and it usually is very low. Inflation is changed based on inflation each year. For the past few year, there is no inflation, so you got nothing from inflation portion. Since you are going to use the funds in two years, I would put it into two year CD.