What should I do with this 100k sitting in my savings?

Question

Hey Biggerpockets family!

My name is Austin, and I’m super excited to be here! I’ve been passionate about real estate, stocks, investing, and business for as long as I can remember, and I’ve been self-educating in real estate for a while now. To be honest, it’s a bit funny—I've spent so much time learning, I should have already done a deal by now! But there's a reason I haven’t pulled the trigger yet: I’m currently incarcerated, with about six years left to go before my release.

Despite that, I’ve been following Biggerpockets for years, Youtubing, reading books etc. I truly believe that the knowledge I’ve gained here will play a huge part in turning my life around when I get out. The goal is real estate, and I’m determined to use my time to prepare for that future.

One of the things I’ve been struggling with is what to do with my finances in the meantime. I inherited roughly $160K from my beloved mother in January 2023, and I’ve put about $56K of that into the stock market that same year—mostly in index funds like VOO and QQQ, along with a few individual stocks like NVDA before the split. Since I got in during the bear market, I'm happy with my stock portfolio's 37% gain, despite market uncertainty. However, I still have $100K in a savings account earning just 2.25% APY.

Recently, I’ve been thinking a lot about inflation, opportunity cost, and time value of money (TVM). I’m not sure if I should move the savings into a CD, put it into an index fund, or explore something like private lending or gator lending. My ultimate goal is to use this money as seed capital for my real estate ventures when I get home, so it’s important that this capital stays safe as possible until then. That’s why I’ve kept it in the savings account, but I’m open to suggestions.

I’ve been wrestling with this dilemma for a while, and finally, I’ve found the courage to reach out to you all—the best forum on the planet! I can’t wait to network and learn from everyone here.

Thank you for your time, and I look forward to connecting with you all soon!

Ps. I’ll be looking to invest in the Philadelphia metro area, Wilmington, DE, and Tulsa Ok.

Best,

Austin

Daniel Murphy · Answer

Ah, I totally missed in your first paragraph the details of your current situation.  I'm sorry to hear, but I'm doubly impressed by your desire and commitment to all of this!

I'll be honest, I don't fully know if there are any restrictions for your investments or taxes given your situation.  It's worth looking into further.  But, assuming you are (and will be) in this low tax bracket for the next 6 years, that actually provides you with a handful of opportunities.

I would continue to learn about the tax loss harvesting and other tax situations, but moreso for future knowledge. For your current situation, if you are in a low enough tax bracket to utilize all of the low tax incentives.
Honestly, if your timeframe is 4-6 years, I would not look at CD's. I think it's too conservative for your timeframe. I think you could easily invest that money in the market and see some gains in that timeframe. Then like you said, sell prior to your tax situation changing.

I admire your desire to learn all of this. I also acknowledge that our prison system doesn't really set you up for rehabilitation or success.

Your situation & questions are a bit more complicated and nuanced than a forum post can cover. Feel free to message me. I'll give you my contact info and we can keep in touch as much as you're able.
I'd be happy to help however I can. I'd love to see you walk out in 6 years with your head held high. Making your family and the person who left you this inheritance proud...

Austin Duncan · Answer

hey @Daniel Murphy,

First off, thank you for recognizing the work I’ve put in over the years—it really means a lot to me, especially coming from someone with your background as a Financial Advisor. I truly admire professionals in that field, as well as Asset Managers, so I really appreciate your thoughtful response!

To answer your questions, my release date is in the summer of 2031 (roughly 6 years from now). I’m 33 years old, and as you might expect, I currently have no income due to my incarceration, which is part of the challenge. I’m not sure what opportunities are available to me for generating even a modest cash flow for my expenses, while also letting this $100k appreciate until I get out.

You mentioned a CD, and I do think it sounds more appealing than the 2.25% APY my savings is offering, so I’m definitely considering it. In terms of my timeline, I’m focusing on the next 4 years for a couple of reasons: 1) I want to be as liquid as possible when I get home, and 2) since I’m not earning income, I’m looking to take advantage of the low tax bracket while I’m incarcerated. As far as I know, the lowest tax bracket for long-term capital gains is up to $48,350, and since I’m well below that threshold, I plan to sell my investments a year or so before I am released and pay 0% in long-term capital taxes.

I also wanted to mention that I fully understand the strategy you suggested about selling stocks at a loss to offset gains. I believe that’s called tax-loss harvesting. It’s a smart way to capture those paper losses and use them to reduce taxable gains, which is definitely something I’ll keep in mind as I look to manage my portfolio.

And, yes, I’m mentally okay with seeing the $100k drop to $90k if that happens, knowing I have a long time horizon (given my age). I really believe in the long-term potential of low-cost S&P ETFs like VOO, so I’m not too worried about short-term fluctuations.

lol....Nothing you said sounded like gobbledygook, though—honestly, I love this stuff, so I’m just soaking it all in! I’d love to hear any more thoughts you might have, and again, I really appreciate the advice. Looking forward to hearing from you!

Best,
Austin

Wale Lawal · Answer

@Austin Duncan

That BiggerPockets Episode #469 I was featured on is very old.

A lot has changed for me since then.

I have grown and learned a lot more, but I appreciate the warm compliment.

Yes, I work very hard to help people around me.

Send me a direct message and I will see how I can further help you achieve your real estate investing goals.

All the best.

Austin Duncan · Answer

Hey Ying Tang,

Thanks for the response, I really appreciate the insights! I do have a couple of questions regarding your suggestion:

Why would I pay for the flexibility of Robinhood’s 4% APR, especially when my savings account is already earning 2.25% APY without any fees or potential losses (since it’s not tied to the stock market)? The 4% APR seems nice, but I’m curious if it’s worth the tradeoff compared to a simple CD, which I believe might offer similar safety, plus no risk of fluctuating market performance.

Also, I’d love to hear more about your friend's experience helping incarcerated individuals acquire properties. What kind of team and paperwork were involved? How did they manage to handle the "boots on the ground" part, considering the logistical challenges? I’m very interested in learning more about how that process worked!

Thanks again, and I look forward to hearing more from you.

Best,
Austin

Wale Lawal · Answer

@Austin Duncan

You're in a great position with your financial discipline and long-term vision. Since your priority is capital preservation for future real estate investments, keeping your funds liquid but earning better returns is key. You might consider a laddered CD strategy, a high-yield money market account, or short-term Treasury bonds (T-bills) for stability while still outpacing inflation. Private lending or REITs could offer higher returns but come with added risk. Since you have time before investing in real estate, focus on networking, market research, and building relationships in Philly, Wilmington, and Tulsa so you're ready to act when the time comes.

Good luck!

Jeremy H. · Answer

Let me first say - good job on your research while incarcerated. Sounds like you've used your time wisely in a way that will benefit you when you are released.

Let me ask a question - what have you done to prepare for retirement? I like RE and think there can be successful investments, but you need time (a long time) and money when it comes to RE. Do not let yourself get sold the dream that you will retire on cashflow (this is highly unlikely). 160k is great - but at the same time it's not going to get you THAT far (You've invested ~60k, so you have about 100k left). This is a few down payments and some reserve capital.

Do you have any sort of IRA? Roth? HSA? Do you have kids? What's your age?

I think you need recurring income - what I would honestly do, if I was you, is start a trades business. Use your cash to start the business - plumbing, electrician, lawn/landscaping - something in the blue collar trades that is specialized, that you can grow, and even better if it has a recurring revenue. From here you can hire others relatively easily and grow your business. Eventually you may sell it or become a sort of contractor w/ laborers.

I personally would do RE on the side - buy at a discount, rehab, then either rent or sell. And use this as secondary income.

Not sure what your support system is like on the outside but consider a house hack, live in flip or starting with an affordable starting home.

Read about taxes - I think you can save yourself a lot of $ w/ a business.

Denise Supplee · Answer

Hello @Austin Duncan,

I would urge you not to put all of your eggs in one basket. Diversify! That provides some extra security. You can invest in real estate syndications as well. I cofounded and run an investment club where we invest in a deal per month. Minimum investment is only $5K. And we have invested in large apartment communities, trailer parks, a vacation resort, and even an industrial steel company. Anyway, I wish you much success and am excited to see how you do!

Ying Tang · Answer

Hi Austin! You can put the money in Robinhood account for 4% apr, which is more flexible than CD, but you need to resist the urge to invest the money into stock market from time to time...

Even incarcerated, you can still purchase properties, if you want to. My friend has helped several people incarcerated purchase house in Phoenix.

Daniel Murphy · Answer

That's a great situation to be in! Sorry for your loss by the way... I lost my dad a year ago and went through a similar situation.

I think first, it's always best to define your goal & timeline as best as possible.  You said you want to use this for seed money "when you get home".  When is that?  And how old are you? What is your income currently?  If you want safety of principal, it's hard to push yourself past a CD or high yield savings.  All other things can sound sexy, but risk your principal in one way or another.  If your timeline is short, like a year or two this is what I would do. CD or high yield savings.   Yes, you may "lose" to inflation but you're keeping your money safe and you'll have peace of mind.  Based on your post, you seem cautious and thoughtful so my guess is that you may feel more upset with yourself if this money decreased in value, over any "lost" money to inflation.  Hopefully that makes sense... Next, if your timeline is a little longer (2+ years), you could invest your funds into something diversified like others have suggested.  Diversified low cost ETF's.  If this decreased in value, you could try to also factor in your other investments mentally.  As in, If your $100k went down to $90k, mentally try to factor in the gains in the other investments you stated.  How we think about money is important... Depending on your age & income, you may be in a low enough tax bracket to "realize" (sell) some of the investment portfolio and pay little to no taxes on it.  Think of it this way... If this $100k decreased in value by 10%, but you had the opportunity to sell some of your investments & pay 0% taxes as opposed to 15% taxes, it can mentally "offset" the 10% loss.  I fully realize that all of what I said may sound like gobbledygook! ha! Reach out if you want any clarification or have any questions.  It's awesome to see people who put their inheritances to good use and who are so diligent in wanting to do the right thing...

Alan Asriants · Answer

There's a lot of options you have and no answer is particularly right or wrong. It's all about what is right for you in your situation.

If you believe you can repurpose that capital and make more money on it, then do so and then set aside a portion of it for RE investing. With the real estate market the way it is right now if you were to take that hundred thousand dollars and put it into a property you pretty much will have it locked in there for a considerable amount of time until you can see real growth through appreciation.

I keep hearing that Lending money is a great way to make money. We are in a pretty high interest rate market, so the margins are even better for people who lend money. Of course they're a caveats and you want to make sure that you do it the right way and speak with a mentor.

When you are ready to deploy your savings into a long-term rental asset, make sure that you're buying in the right area, an area you know best, and the right kind of property. When you're finally ready to make the step, remember that most of your wealth will be built through equity, not cash flow. So don't chase cash flow in cheap markets. Instead try to find a middle ground where you are in an area that appreciates well historically and can cover your expenses + a little bonus.

I always recommend A-B class properties in neighborhoods you know best.

Good luck!

What should I do with this 100k sitting in my savings?

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