I don't know the first thing about investing. I have a brokerage account with Northwestern Mutual ("haha", I know) worth about $1.4, a whole life policy with $46,500 cash value, house worth $1.4 and owe $475k @ 2.125% on a 15 (13 more, just refinanced). Also have additional cash in the current amount of $177k in a checking account. Two vehicles, both paid, no debt aside from mortgage and monthly credit card charges.

Did ok this year and am taking a distribution of $138,500. Of course my NW rep wants me to give it to him to "dollar cost average" (which I guess just means to slowly bleed it into the market)?

But when I went to BOA to deposit the check, the Merrill guys offered a savings account at 3.95% (variable of course) for deposits of more than $100k.

That sounds pretty attractive to me, but what do y'all think? I'm 45, married, two young kids (7 & 8) who both have $110k in their college plans.

What do you guys think? Too much cash on the sidelines?

ETA: the $138,500 distribution would be in addition to the $177k in cash I already have. So really, +$315k in cash at the moment.

I have upped our cash savings to 1 year of expenses from the normal standard of 3-6 months. It's in a high yield savings account earning around the percentage you've been quoted. Some will say that is too much cash on the sideline, but I don't really care. I want the cash handy and the principal preserved and not in this rollercoaster market.

Having said that, $300K+ cash on the sidelines seems a bit high assuming you could cover at least 1 year of expenses with an amount less than that?

I think $300k in cash is reasonable for your net worth (10%). I would tend to go with the 3.95% for now and invest it when the opportunity strikes you. Hopefully, we will have some opportunities coming up soon.

Troglodyte said:

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I think $300k in cash is reasonable for your net worth (10%). I would tend to go with the 3.95% for now and invest it when the opportunity strikes you. Hopefully, we will have some opportunities coming up soon.

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Thank you, this is very helpful. So is that typically the determination for how much cash is reasonable to park? Roughly 10% of net worth?

The "savings account" they're talking about is actually a brokerage account that also has checking account capabilities. They're talking about Preferred Deposit (actually 3.98% not 3.95%), which is their FDIC insured bank deposit, which is same day liquid. In that account you could also buy ticketed money market funds (some treasury/government funds are over 4.0% today). You could also buy brokered CDs (4.7%ish on 1 years lately). You could buy stocks & ETFs. And, have a checkbook.

So you're saying that this new account can operate concurrently as a checking account and brokerage account? Could I then just move ALL my cash into it and do all my monthly auto pays through it? If so, wouldn't that be the wise thing to do at 3.98%?

I don't know what is "typical" or suggested. I'm just saying that sounds very reasonable (definitely not high). It really probably depends on where things are in your life. If your investments are in the stock market and house, you may not need a lot of liquidity. If you investments are in real estate or a business, you probably need more liquidity. You family situation factors in too. If you are staring at kids going to college, getting married, wedding, etc, you may need some more cash on hand.

Regardless, right now we are staring at a potential recession and good short term rates. So, I would want to be higher than typical liquidity right now.

I can't add much more to the topic unfortunately. Apparently the guy you met with didn't fully explain it.

Brokerage CD's have also been over 4.5%

mosdefn14 said:

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I'd imagine that there exist Aggie FAs who provide comprehensive financial services and can also sell life insurance if you don't like your current NWM guy's advice or offerings

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Just about every licensed FA has an insurance license. they need it to offer variable annuities. But generally they call for the in-house insurance specialist when discussing insurance. A good insurance guy can help a lot, a good investment guy can too, but rarely can they do both at a high level.

Just curious -- why are you taking a distribution if you don't need the money? Is putting that money to work within the business not an option?