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What to do with all this cash while I'm waiting to buy??

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  • What to do with all this cash while I'm waiting to buy??

    A little background (not all relevant): Early in 5th year of practice, PP diagnostic radiologist, earning 550-700k/yr (depending on presence of on-going pandemic), no debt, maxing out 401k, BD Roth, cash balance plan (~90k).

    My question is this: I’m still renting, primarily b/c i’m debt averse and wanted to save an appropriate downpayment for a house. The housing market is Portland is pretty tight right now and I just can’t find anything that’s super appealing to me so I keep kicking the can down the road. The cash in my checking account just keeps growing and is getting to be more than i'll need for a downpayment (currently at about 200k). I’m still looking for houses but who knows when I’ll actually find something. I’m getting increasing uncomfortable with this significant pile of cash just losing value each year. What can I do with it so that I can at least keep up with inflation but keep it sufficiently liquid that I can slap it down on the table as a downpayment at a moment's notice when the right house does come along?

    Thank you in advance!

  • #2
    You're pretty much looking at a high yield savings account or something similar. I'd be surprised if you could get 1% at this point. If you've met your goal for a down payment then I'd invest the rest.

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    • #3
      HYSA not going to keep up with inflation, and returns are taxable.

      I'm not a bond guy, but how about a tax free bond ETF? Easy in, easy out and very low risk I think. VTEB has a 4.39% 1 year return. Annual inflation rate is about 2% these days.

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      • #4
        Liquidity and safety s/b the priority for funds needed in the short term (in next 5 yrs) and return for investments needed for the long term (5+ yrs). The only way to know which is which is to have a financial plan. You can DIY or hire a fee-only planner, but please don’t skip this step.

        I am not a fan of bond funds. Inflation in the short term is irrelevant. It will have almost no impact (if any) on your long-term net worth and you are only trying to predict what the market will do - same as those who have those funds for sale - and have far more knowledge and resources in this area than do you.

        For now, do nothing until you have gone through some serious introspection and planning with your spouse. Quit swatting at gnats. Not worth your time or money.

        PS - you can always buy high-quality corporate bonds timed to mature at your date of purchase.
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #5
          “What can I do with it so that I can at least keep up with inflation but keep it sufficiently liquid that I can slap it down on the table as a downpayment at a moment's notice when the right house does come along?”
          •Immediately available and keep up with inflation and principal safety. And you are adding to the pile.
          Chasing yield involves accepting some additional risk. With a bigger pot, you could get corporate, muni’s, or even preferred stocks. Higher yields, but you could get clipped on the timing requirement. This might be acceptable because with excess house funds you could handle short term loss. If you want to invest for income, it comes with some risk.

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