I'm new to this forum, although I read other forums on TexAgs regularly. I'm in my upper 70's, and my wife is a couple of years younger. We are moving from Texas to Colorado this fall and plan to put our home on the market shortly thereafter. We plan to rent in Colorado for a year or so and hope the real estate market stabilizes before trying to buy another home.

My question is where is the best place to stash the money we get from the sale of our home until we're ready to buy? Safety is probably our highest priority along with liquidity and best return on our money. Any thoughts would be appreciated.

Stive said:

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So roughly one year between sale of old and purchase of new? Probably cash or at most a 12 month CD for whatever cash you're planning on applying to the new purchase. The return, minus taxes, is likely to be next to nothing wherever you put it that's "safe". When you weigh that tiny gain (if any) compared to the possibility of losing a portion of the money it's probably not worth your while.

Keep it liquid, keep it safe and you probably won't regret not making much of anything when you wake up 8-12 months from now and make a down payment.

Good luck with the move.

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Agree with this. Aren't very many options that will ensure principal protection. You could siphon off $20K to I Bonds to earn a little on that if you are really wanting to make every cent you can, but not much to do here.

Actually, I'm hoping for the bubble to burst sometime after we sell down here and buy up there.

I bonds perhaps?

I did this in 2013, cleared about $150K and didn't want to pay off the new home for about 2 years. The market was fluctuating a bit and a few blue chips were on sale so I bought 5-6 stocks in the $20-30K range and let them sit. Doubled my money in about 18 months plus had some good dividend income on the side. There's not a stock on the market the isn't on sale today, we may not be at the bottom but then again we may well be. I can't imagine a buyer today not making money in 2 years. Sell stops will protect your downside.

Trench,

Good luck on your future plans!

I'm in a somewhat similar situation. I recently received an equity payout that I'll need to tap in about a year. I've opted to invest the funds in the stock market. I went exclusively into the Midstream plays as well as oil. They include....

Exxon/Mobil
Enterprise Products Partners
Magellan Midstream Partners
MPLX LP

It's certainly riskier than a CD, but the Midstreams pay 8% or so in dividends and I've done rather well in the Oil plays this year.

Thanks to all for the advice. I appreciate it. You've given me a lot to think about.

I'm in a similar spot. Appreciate the thread and feedback.

b0ridi said:

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Red said:

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You can also put $10K per person ($20K per couple) per Year into Treasury inflation protected securities that are paying close to 9.75% coupons right now. Between those two things - you'll be well prepared for everything.

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I-bonds, not TIPS, are paying 9.7% right now. But the money can't be withdrawn for the first 12 months (in reality, closer to 11 months since you can buy the I-bond the last business day of a month and get full credit for that month)

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Where's the best place to buy I-bonds? I don't know much about them but would like to earn 9% on anything...

E said:

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b0ridi said:

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Red said:

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You can also put $10K per person ($20K per couple) per Year into Treasury inflation protected securities that are paying close to 9.75% coupons right now. Between those two things - you'll be well prepared for everything.

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I-bonds, not TIPS, are paying 9.7% right now. But the money can't be withdrawn for the first 12 months (in reality, closer to 11 months since you can buy the I-bond the last business day of a month and get full credit for that month)

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Where's the best place to buy I-bonds? I don't know much about them but would like to earn 9% on anything...

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https://texags.com/forums/57/topics/3284662

Trench55 said:

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Thanks to all for the advice. I appreciate it. You've given me a lot to think about.

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I would think about ignoring those that recommend putting your money into stocks. If principal preservation is your #1 goal here then that would be extremely stupid to do. I don't care what the market is doing and if someone thinks they will make more money that way.

ToddyHill said:

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Trench,

Good luck on your future plans!

I'm in a somewhat similar situation. I recently received an equity payout that I'll need to tap in about a year. I've opted to invest the funds in the stock market. I went exclusively into the Midstream plays as well as oil. They include....

Exxon/Mobil
Enterprise Products Partners
Magellan Midstream Partners
MPLX LP

It's certainly riskier than a CD, but the Midstreams pay 8% or so in dividends and I've done rather well in the Oil plays this year.

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I'd add RRC and VLO to those if you want to diversify slightly into natural gas and refined products, but stay in the same general trend. I got lucky on the timing and bought both 3 months ago.

Yeah, I'm not intending to give the OP any advice. I was only commenting on the stocks mentioned in the post I replied to. But by "got lucky" I mean they're up about 40%. For a year hold I still think they're good investments. But there is an argument that oil is overbought right now and could crater.

Edit: accidentally hit wrong emoji. Thumbs Up was intended.

~90% Cash; ~10% NAIL

If you lose the 10%, then it's probable that your house will also cost less.

On the other hand, if homebuilding soars, then the huge growth in NAIL will help offset rising home prices.

The Pilot said:

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Good luck with the Colorado market stabilizing. We bought in CO less than 2 years ago. I hinted to my wife that maybe we should hold out, I'm glad she pushed buying.

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Same convo happened between my wife and I in early 2020. Bought home and moved in 1-week before SHTF.

Put it in HMBL, lol

Take the sum of money, and divide it into thirds. Take one third of the money and buy 13 week T-bills (yielding 1.36% as of close on Friday [more now]).

https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_bill_rates&field_tdr_date_value_month=202206

Next month do the same with another third, and the same one month later with the last third. As each 13 week T-bill reaches maturity, decide whether you want to roll it over or cash out depending on how close you are to making an offer on a property. Worst case scenario: within 90 days of deciding to make an an offer, you'll have the full amount of cash (with a bit of interest) for your offer. It's a 3 month bond ladder.

Or keep it in cash. Those are the only options I'd entertain based on the scenario you describe.

Go find a HYSA and park it for now; I use Amex which is paying .75 this week but I think that Citi is paying 1.01 (just know because I have a credit card with them, others may be higher than that, my rate has been going up weekly the past month).

$30,000 Millionaire said:

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What kind of f'in question is this. Cash.

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This. There is some terrible advice in here.

OP, also I would move now if you are planning on getting something nicer with a mortgage.

If you are paying cash, just hang onto it.


The dirty secrets that are going to upset people in the next few years:

A. Stocks are going to drop lower and it will be difficult to recover with high-interest rates to combat inflation. Could easily see a depression in Biden's remaining years and into whoever the next guy is in 2024. If it takes recovery to 2026 you're talking about 4 years of sputtering economic activity.

B. For homes, interest rates are about to be the highest I have had in my lifetime (born 1990) and will hover in between 8.5/9-14/15%, especially if China stays unproductive and our foreign investments (that help curb our risk from our financial institutions) start to dwindle with the world wide hangover from Covid and commodities scarcity start to destroy our normal commerce.

C. Rates should continue to rise, but if Brandon and Powell get really crazy and start forgiving student loans or going against the Keynesian playbook and lowering rates again: home prices will again skyrocket. If they stick to the playbook cash offers will rule, but at the same inflated prices they are at now.

There will be pain. I went to cash in 50 % of my portfolio a few months ago.and wish I would have done more. It may be years before a real bottom is reached. Those trading and on margin are hurting big time.

This was totally predictable. Energy is the driver of the economy. Having adequate supply would have helped us come out of the pandemic. The spending and the border is is causing a lot of spending and wasted effort. The dems do not care for those on government payroll will still get their bonus and annual raises.

The middle class is screwed again.