Where are your funds kept prior to an investment?

Question

A common way to kick-start a real estate investment is to wire the funds to wherever they need to be.  Maybe it's $25k, or $50k, or $100k.  It's money that you have in an account that is then transferred to somewhere else.

My question is: where do you keep that money prior to the time it needs to be wired?

In my case, the money tends to be either in very liquid form in simple savings accounts (up to maybe $50k for a few months) or it's in the stock market and I simply sell some shares in advance of the cash demand; transfer that to a bank account; and transfer it from there.

It seems like there should be a better way of handling these funds in the short term.

So yeah... you have a funding call in two weeks (or three months) -- where is that money now?

Account Closed · Answer

HELOC for me.

Jacob Rosenkranz · Answer

Hi Henry,

Are your portfolio backed lines of credit through the institution that you invest with? Or is this a separate product you can get from a bank as well?

Karoline Kaon · Answer

I keep my cash in a checking account. But I like the idea of HELOC! Thanks for starting this thread!

Mitchlyn D. · Answer

@Kurt Granroth

I keep about 82% in the business checking account and invest 18% in either Tesla or Apple on a monthly basis.

Jon Kelly · Answer

@Kurt Granroth checking account in my business operating account.

I'm sure you can find alternative options to earn 0.5% on your money while it "sits," but for me it's not worth the trouble. I'm trying to find good deals as quickly as possible so large sums of money sit for 2-4 months at most. It's not worth transferring funds or the potential negative downside of stocks to earn an extra $500...

If you believe in real estate then go all in on real estate. If you believe in stocks then go all in on the stock market. Don't mix business with pleasure : )

Henry Lazerow · Answer

I keep my funds in stocks with a pretty simple ratio...

10% QQQ

45% VOO

45% SCHD

The risks are of course if you have to pull capital out while the markets down. If you have $50k and need to pull $50k this is an issue but if you have a few hundred thousand need to pull $50k out when its down from ATH it's not as big of a deal on total portfolio performance. I also have HELOCS and portfolio backed lines of credits so if market was 50% down in a rare stockmarket crash I could pull cash out without actually selling any stocks.

Jacob Rosenkranz · Answer

I am currently setting aside cash in a savings account, with the rest of the required capital likely coming in the form of a margin loan from my taxable brokerage account so that I don't have to sell the stocks. What are you currently doing? I see this was posted several years ago.