Where are you storing accumulated capital until next investment

OP

Buford, GA · Member since 2017 · 50 posts · 13 votes

@Steve Bracero First of all thank you for your tIme and response It Is greatly appreciated. I actually just got done reading JL Collins’ Simple Path to wealth which gave me a much clearer understanding overall of index funds. When you say it has been rough for the last 8 weeks it that due to a market drop or other factors that you care to elaborate on?

Mark Petitmermet

Oregon City, OR · Member since 2018 · 22 posts · 11 votes

@Darius Tracy first off, good question. I am following this thread for all the good answers/ideas too. I currently have active cash in a local credit union account (which I plan to use for my first purchase this year), 6 months emergency/extra cash in Vangaurd's money market account. Then more in VTSAX but that is long term easy/no effort growth which I plan on leaving in the market. The local CU account seems wasteful but it is easy to access, so if anybody has different perspectives fire away.

Cody L.

Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes

Money Market accounts with two of my primary local bank lenders. 2% at one. 2.5% at another.

Trevor Ewen

Rental Property Investor · Weehawken, NJ · Member since 2014 · 1k+ posts · 704 votes

@Darius Tracy

Betterment, Wealthfront, and Schwab Intelligent Portfolio are three good ways to put a small 'Goal-Oriented' portfolio on auto-pilot. You definitely want to go low risk. The idea with a short-term portfolio is to think like someone who is retiring in a year or (you're not retiring, but you have the same time horizon to 'use' your money). In that situation you would go heavy on fixed income with a little stock exposure. The robo-advisors make it very easy to select a percentage of each asset, and then they just run the investment itself.

You'd be lucky to make 3% in all honesty. There are few, decent short-term options these days.

Frank S.

Specialist · Chicago, IL · Member since 2015 · 870 posts · 345 votes

Originally posted by @Darius Tracy:

Me and my wife practice many of the principles that we have learned along the way through the help of BP money podcast, countless books, and other resources such as a high savings rate and living a lifestyle well below what we bring in. Unfortunately what has been eating at me lately despite all this is the unbelievably low interest rate that our savings at USAA offers. I am aware of Ally and other high yield savings opportunities and was about to move my funds to one of those as accessibIlty of funds is a great concern to my wIfe but before I do so I was curious as to any other things that anyone might recommend that has been successful at earning a decent yield while accumulating capital until the next investment opportunity. I even entertained putting the money into some Vanguard index funds (VTSAX) as to get paid some dividends. I just don’t like the idea of my money not working for me at any particular point so I am open to hearing any suggestions or points of views on the matter. Thanks

Be careful with the BP podcasts financial advice given. There are tons of dangerous proposals.

Don't invest anything in stocks that you will need in the next 10 years. If so, use low cost broadly diversified index funds that closely track their benchmarks. Vanguard has "target funds". Stocks are a long term investment.

Robo advisors could benefit TLH, but their fees may be higher than Vanguard. I don't use them.

I use high yield savings like First Advantage Bank, Insight, Mango, etc. Those are >4.5%. Google these options, there are many ways to beat inflation.

If you're planning on a purchase in the short term, use online savings accounts. You will land in the 2ish %.

Read Dr. Of Credit blog, among others.

Check the Boggleheads blog.

Hire a fee- only financial advisor, if needed.

Best of luck

Frank

4 Reply

Bill F.

Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes

@Darius Tracy

Putting cash that you want to invest in RE into equities, even an index fund, could lead to you losing capital that you need for your deals.

With any money I'm saving to invest, my first concern is not losing money. Second is getting yield. While you aren't getting the best yield, you can't lose money in a savings account so your only concern is inflation risk, but that only comes into play if you plan on holding the funds for more than a year or two.

If you want to take on a bit more risk, I'd look into a money market like @Cody L. suggested. They are designed for exactly what you want to do: preserve capital and beat inflation.

USAA has a few money market funds.

OP

Buford, GA · Member since 2017 · 50 posts · 13 votes

@Cody L. Thank you I will be looking into what USAA has to offer in money market accounts. My question is for whatever reason funds need to be accessed is that a viable option using money market accounts or is there some type of penalty.

OP

Buford, GA · Member since 2017 · 50 posts · 13 votes

@Trevor Ewen Thank you for your time I will definitely be exploring these options.

OP

Buford, GA · Member since 2017 · 50 posts · 13 votes

@Frank Sanchez Thank you for the information I feel that at this point we are going to go with one of the HYSA options as losing capital would damage our short term goals.

OP

Buford, GA · Member since 2017 · 50 posts · 13 votes

@Bill F. Great point I wanted to get a few different perspectives but the overwhelming majority of what seems like the most sound advice for our situation is a HYSA. Thank you for your time

Frank S.

Specialist · Chicago, IL · Member since 2015 · 870 posts · 345 votes

Originally posted by @Darius Tracy:

@Frank Sanchez Thank you for the information I feel that at this point we are going to go with one of the HYSA options as losing capital would damage our short term goals.

Good call for short term. I've used Savings Direct. Not bad.

FAB gives us 4.5% on the first $10k. Then, it reduces to 2.0% until 50k. One account per SSN between my wife and I. We use cash app to generate the 10 debit transactions. Easy.

Losing money in equities happens to people with an inadequate asset allocation, as they make the mistake to sell during a downturn. It's a long term approach.

Good luck,

Frank

Jesse M.

Investor · Chicago, IL · Member since 2016 · 60 posts · 45 votes

I've been using Treasury Bills for this. Very easy 2%.

Cody L.

Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes

Originally posted by @Darius Tracy:

@Cody L. Thank you I will be looking into what USAA has to offer in money market accounts. My question is for whatever reason funds need to be accessed is that a viable option using money market accounts or is there some type of penalty.

Money Market is almost just like a savings or checking account. Only difference is you are limited to how many transactions you do a month. So you can't use it for high volume stuff. I think it's maybe 5 deposits+withdrawals a month? But it's totally liquid and insured.

Jason Curtis

Rental Property Investor · Member since 2018 · 26 posts · 15 votes

https://www.marcus.com/us/en

I moved all of my capital in 2015 from USAA to Marcus Bank (Goldman Sachs). It was a solid move as USAA pays a pittance in comparison to other options. Marcus is an online only savings account (no atm or checking) that currently offers 2.05% savings. They also offer a higher rate (2.15%), CD with no penalty for early withdrawal. It’s been very rewarding to me and I have done well by letting it compound every month. No issues moving money in or out quickly and they’re always on time with interest payments. Excellent bank, highly recommend.

OP

Buford, GA · Member since 2017 · 50 posts · 13 votes

@Jason Curtis Thank you for your time. Lately I have been getting a lot of mail from Marcus that I had honestly been ignoring because they were trying to get me to get a loan through them but with the information you just gave I will look into a few of their other products. Great info thanks again

Kate J.

Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes

Originally posted by @Frank S.:

Originally posted by @Darius Tracy:

Me and my wife practice many of the principles that we have learned along the way through the help of BP money podcast, countless books, and other resources such as a high savings rate and living a lifestyle well below what we bring in. Unfortunately what has been eating at me lately despite all this is the unbelievably low interest rate that our savings at USAA offers. I am aware of Ally and other high yield savings opportunities and was about to move my funds to one of those as accessibIlty of funds is a great concern to my wIfe but before I do so I was curious as to any other things that anyone might recommend that has been successful at earning a decent yield while accumulating capital until the next investment opportunity. I even entertained putting the money into some Vanguard index funds (VTSAX) as to get paid some dividends. I just don’t like the idea of my money not working for me at any particular point so I am open to hearing any suggestions or points of views on the matter. Thanks

Be careful with the BP podcasts financial advice given. There are tons of dangerous proposals.

Don't invest anything in stocks that you will need in the next 10 years. If so, use low cost broadly diversified index funds that closely track their benchmarks. Vanguard has "target funds". Stocks are a long term investment.

Robo advisors could benefit TLH, but their fees may be higher than Vanguard. I don't use them.

I use high yield savings like First Advantage Bank, Insight, Mango, etc. Those are >4.5%. Google these options, there are many ways to beat inflation.

If you're planning on a purchase in the short term, use online savings accounts. You will land in the 2ish %.

Read Dr. Of Credit blog, among others.

Check the Boggleheads blog.

Hire a fee- only financial advisor, if needed.

Best of luck

Frank

Frank, where did you find 4% for saving account?

First Advantage Bank gives 2 %.

I would love to see 4% on my cash...

Ellis HammondPro Member

Investor · Leawood, KS · Member since 2017 · 178 posts · 108 votes

@Cody L. Who do you recommend locally in SD?

Cody L.

Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes

Originally posted by @Ellis Hammond:

@Cody L. Who do you recommend locally in SD?

Don’t know. I don’t use local banks in SD. I use Wells Fargo for personal use but keep very little in my personal account

Bryan S.

Rental Property Investor · CA · Member since 2018 · 225 posts · 180 votes

@Darius Tracy I have used Ally for an account. I see you mentioned USAA, thanks for your service.

Brian S.

Rental Property Investor · Cleveland, OH · Member since 2016 · 126 posts · 71 votes

@Darius Tracy I use My Savings Direct for my savings which has 2.32% interest rate and an annual percentage yield of

2.35%. I got the idea out of a investing book I was reading and then just did some research on the best high interest savings accounts. They are backed by Emigrant Bank so I felt secure making this change. So far, so good.
Brian

Frank S.

Specialist · Chicago, IL · Member since 2015 · 870 posts · 345 votes

Originally posted by @Kate J.:

Originally posted by @Frank S.:

Originally posted by @Darius Tracy:

Me and my wife practice many of the principles that we have learned along the way through the help of BP money podcast, countless books, and other resources such as a high savings rate and living a lifestyle well below what we bring in. Unfortunately what has been eating at me lately despite all this is the unbelievably low interest rate that our savings at USAA offers. I am aware of Ally and other high yield savings opportunities and was about to move my funds to one of those as accessibIlty of funds is a great concern to my wIfe but before I do so I was curious as to any other things that anyone might recommend that has been successful at earning a decent yield while accumulating capital until the next investment opportunity. I even entertained putting the money into some Vanguard index funds (VTSAX) as to get paid some dividends. I just don’t like the idea of my money not working for me at any particular point so I am open to hearing any suggestions or points of views on the matter. Thanks

Be careful with the BP podcasts financial advice given. There are tons of dangerous proposals.

Don't invest anything in stocks that you will need in the next 10 years. If so, use low cost broadly diversified index funds that closely track their benchmarks. Vanguard has "target funds". Stocks are a long term investment.

Robo advisors could benefit TLH, but their fees may be higher than Vanguard. I don't use them.

I use high yield savings like First Advantage Bank, Insight, Mango, etc. Those are >4.5%. Google these options, there are many ways to beat inflation.

If you're planning on a purchase in the short term, use online savings accounts. You will land in the 2ish %.

Read Dr. Of Credit blog, among others.

Check the Boggleheads blog.

Hire a fee- only financial advisor, if needed.

Best of luck

Frank

Frank, where did you find 4% for saving account?

First Advantage Bank gives 2 %.

I would love to see 4% on my cash...

Research ther Maximum Earnings from First Advantage. Then, prepaid cards savings accounts.

Rob Barry

Rental Property Investor · Ramsey, NJ · Member since 2016 · 72 posts · 55 votes

If you qualify as an accredited investor you’ve got some interesting options. I like P2Bi, where you can lend to small businesses with debt secured against assets and usually 60-day liquidity. I’m averaging 10.36% there. You’ve got to do some diligence on the companies you lend to though. There are also hard money funds like Broadmark that are more hands-off. They also average 10%-11% but come with higher minimums and one-year lockup on new funds added. Of course you could add in the minimum once per quarter for a year if you’re just sitting on way too much capital, and then after a year you’ll have new investable liquidity at the ready each quarter. I’m a big fan of VTSAX too. But generally I think it’s a bad idea to park shorter-term money in equity (as opposed to debt). It can go down, and you’ve lost principal. Or you it could go up, and if you sell too soon you’ve triggered a short term capital gain.

Jim Goebel

Real Estate Investor · Des Moines, IA · Member since 2016 · 922 posts · 533 votes

We have a line of credit (equity financing) that I can draw and not have much cash at any given time.

At any given time we may have 6-15k in accessible cash which honestly in the grand scheme of things I'm not concerned at all about rate of return on that. I just don't want it to go down, so its not in the market.

Michael Bangsal

Self Employed - Cell phone repair · Milpitas, CA · Member since 2014 · 52 posts · 17 votes