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Seeker 10-22-05 06:54 PM

Best Interest on your money
 
Ok, short term - either immediate access, or at MOST 6 months, 1 year or 2 years.

Over $100,000

Where would you put it? What interest would you get?

(Not me, but parents just sold a house and need some place to park the money)

Sonicflood 10-22-05 10:19 PM

How about a 1031 Tax defered exchange? If not, they'll take a tax hit on the gain unless it was their primary residence.

Sonic

Seeker 10-23-05 01:55 PM

It was their primary residence - they no longer can maintain a place of their own. (That's the bad part).

But I want their money to earn the best interest it can to support them - and THEY do not want to tie it up too long (although that's an emotional decision).

Aphex Twin 10-23-05 02:09 PM

I would probably put it in a bank.

Seeker 10-23-05 03:50 PM


Originally Posted by Aphex Twin
I would probably put it in a bank.


Ok - I'll bite. Which bank, what type of account... ;)

Cheddarmuff 10-23-05 03:58 PM

I would consider putting some into varying term CD's (possibly 75% of total) and leave remaining portion in cash. Not sure if they are looking to buy again or just want the money handy. If it is a buy again scenario I would move to shorter term CD's.

I personally like ING, it has good rates and it is easy to open accounts (including multiple CD's, etc.) and transfer money to/from local bank accounts.

Seeker 10-23-05 05:02 PM

I think they 'want' to buy again, but it won't happen. It's one of those things we continually tell ourselves so we can get through the day, if you know what I mean.

Seeker 10-23-05 05:02 PM

We are talking about $600,000 in total.

Aphex Twin 10-23-05 05:14 PM


Originally Posted by Seeker
Ok - I'll bite. Which bank, what type of account... ;)

If you are concerned about liquidity, than divide the money into accounts with ING, Emigrant, or Captial One's savings. They were discussing it here:

http://forum.dvdtalk.com/showthread....light=emigrant

$600,000 at 4% for one year equals about 2,400,000 cents.

ChiTownAbs, Inc 10-23-05 07:23 PM

Hmmm.... with $600k you can easily do a <a hef=http://www.investorwords.com/2710/ladder_strategy.html>ladder</a>. You may want to e-mail matchpenalty for more specific details, but you basically put an equal amount of money in 6 (or even 5) different expiring timeframes.

For example, you could do:

$100k cash at EmigrantDirect
$100k in 3 month Treasury
$100k in 6 month Treasury
$100k in 9 month Treasury
$100k in 12 month Treasury
$100k in 15 month Treasury

Then when the first Treasury expires (and everything moves up 3 months) then you could either keep the cash or invest in another 15 month treasury.

Keep in mind that the money outside the EmigrantDirect account is not FDIC insured but it is invested in Treasury bills which is probably the safest investment in the world. (Well, depends on your definition of safety, but the U.S. government has not missed an interest payment in 229 years.)

<a href=http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml>Daily Treasury Yield Curve Rates</a>

Seeker 10-23-05 07:44 PM


Originally Posted by ChiTownAbs, Inc
Hmmm.... with $600k you can easily do a <a hef=http://www.investorwords.com/2710/ladder_strategy.html>ladder</a>. You may want to e-mail matchpenalty for more specific details, but you basically put an equal amount of money in 6 (or even 5) different expiring timeframes.

For example, you could do:

$100k cash at EmigrantDirect
$100k in 3 month Treasury
$100k in 6 month Treasury
$100k in 9 month Treasury
$100k in 12 month Treasury
$100k in 15 month Treasury

Then when the first Treasury expires (and everything moves up 3 months) then you could either keep the cash or invest in another 15 month treasury.

Keep in mind that the money outside the EmigrantDirect account is not FDIC insured but it is invested in Treasury bills which is probably the safest investment in the world. (Well, depends on your definition of safety, but the U.S. government has not missed an interest payment in 229 years.)

<a href=http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml>Daily Treasury Yield Curve Rates</a>


This is somewhat close to what I am thinking about.

ChiTownAbs, Inc 10-23-05 07:56 PM

I don't think you'll find the 6, 9, or 15 month Treasuries sold by the government, but I think you could find something in the secondary market. match would be a much better at this subject than I.

matchpenalty 10-24-05 04:11 AM

Seeker,

It's a lot more complicated than someone can answer here. It would involve personal income and tax information, where they reside, etc. More likely than not, some tax advantaged vehicle may be preferred. Anywhere from treasuries and agencies to municipals be it in bonds or money funds is where most look with that chunk of change. People look at absolute rate and forget things like tbills are state tax exempt. If they are in a low bracket, then CDs could be an option. Timing of when they may need to access it is also critical. If it's an all or none thing, then it needs to stay liquid.

Feel free to contact me. This is the kind of discussion that needs to be offline.

There are also other options, but that will depend on their age, income needed, appetite for risk, etc.

One other note, when doing a ladder (or similar) timing the maturities can be important if someone's income is changing. You may want to do some tax planning by timing the maturities.

One other thing, if they did use bank accounts, they would have to size them and title them properly as well as set them to distribute interest properly to maximize the FDIC insurance.

ABS, thanks for letting seeker know to contact me. As for the ladder, they could even consider stacking 3 month tbills so they had some maturing every week and the full ladder is the 3 month timeframe. Constructing a ladder to meet their needs is the trick.

In general folks, this is the type of thing that should be discussed with a TRUSTED accountant and a financial planner. NOTE: anything they suggest you investing in - make sure they disclose if they are getting any fees. Personally I prefer a fee for service planner (pay outright for the time) vs. one where they make their fee on what they sell you. It's up to you to ask the right questions. It is your hard earned money. And, fwiw, I am neither a financial planner nor an accountant.

matchpenalty 10-24-05 04:14 AM


Originally Posted by Sonicflood
How about a 1031 Tax defered exchange? If not, they'll take a tax hit on the gain unless it was their primary residence.

Sonic

fyi, for many people, if they have held a property long enough it might not be so bad to take the 'tax hit'... long term cap gains rates are very low.

http://www.keepmedia.com/pubs/Kiplin...0037&oliID=229


the rate goes up in 2009 unless extended....

ChiTownAbs, Inc 10-24-05 08:09 AM


Originally Posted by matchpenalty
In general folks, this is the type of thing that should be discussed with a TRUSTED accountant and a financial planner. NOTE: anything they suggest you investing in - make sure they disclose if they are getting any fees. Personally I prefer a fee for service planner (pay outright for the time) vs. one where they make their fee on what they sell you. It's up to you to ask the right questions. It is your hard earned money. And, fwiw, I am neither a financial planner nor an accountant.

Well said, and I should have added that disclaimer. My parents contacted me last week for financial advice and I flat out told them to seek the advice of a financial planner. I have general knowledge of the products, but I can't tell you the tax implications.

Geofferson 10-24-05 11:21 AM

SuperiorSavings currently offers a 4.50% Money Market account in excess of $25,000. Might be worth checking out.

www.superiorsavings.com

Seeker 10-26-05 02:31 PM


Originally Posted by ChiTownAbs, Inc
Well said, and I should have added that disclaimer. My parents contacted me last week for financial advice and I flat out told them to seek the advice of a financial planner. I have general knowledge of the products, but I can't tell you the tax implications.

Yeah, I wanted to do that, too, but I know they won't see a financial planner unless I drag them into one.

ftcheech 10-27-05 09:44 AM

go to bankrate.com

m_toyman 10-31-05 12:39 AM

With that type of cash you WANT and NEED a PRO... If your parents do not want to go to one... you should...you will then pass on expert advice.(sorry if any of you here are financial planners) If invested properly that can be over 1mil in a few years with good returns and compounding..

Good luck

Seeker 10-31-05 06:30 PM


Originally Posted by m_toyman
With that type of cash you WANT and NEED a PRO... If your parents do not want to go to one... you should...you will then pass on expert advice.(sorry if any of you here are financial planners) If invested properly that can be over 1mil in a few years with good returns and compounding..

Good luck

I agree completely - it's that I'm dealing with my parents who have never trusted the stock market, do not trust investments (other than real estate) and are leaving the real estate market, and about the only thing they'll consider is the 'best FDIC insured interest rate'.

I'm working on them - (my Mom's IRA is actually in an S&P 500 fund which she complains about constantly), but this is a tough road.

xNightfallx 11-01-05 01:56 AM

I'm a total newbie when it comes to this kind of stuff. I'm looking at the CDs from ING. First of all, what is API? Next, lets say I put $2000 into a 12 month cd. How much would I get once the time is up?

I'm pretty much looking for the complete idiots guide to this stuff.

Geofferson 11-01-05 09:46 AM


Originally Posted by xNightfallx
I'm a total newbie when it comes to this kind of stuff. I'm looking at the CDs from ING. First of all, what is API? Next, lets say I put $2000 into a 12 month cd. How much would I get once the time is up?

I'm pretty much looking for the complete idiots guide to this stuff.

Investopedia is a great site for topics such as this. Check out this article for a APR/APY comparison:

http://www.investopedia.com/articles.../04/102904.asp


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