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Best place to keep cash for upcoming house downpayment

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  • Best place to keep cash for upcoming house downpayment

    I am ~2 years out of residency and looking for the best place to store my cash reserves for an upcoming house downpayment. I will likely be storing between 200-300k and will need access to the money in about 8-15 months so it cannot be risky. Currently all of my money is at Ally Bank in a checking and Savings Account. The Savings Account has been great and convenient as I usually have no more than 20-30k in there at a time and am getting 1.8%. However, with a larger balance and dropping interest rates, I'm wondering if that is still the best place. The rest of my assets are at Vanguard. Here are some additional relevant notes about my current financial situation.

    -Federal Tax Bracket: will likely be in the top tax bracket (or close to it). I am also an independent contractor so I also pay both halves of SS/Medicare taxes.

    -State Tax: Pennsylvania is a flat 3.07%

    Some of the options I considered for the 200-300k.

    1) Keep it in Ally Savings. It's convenient, worked well so far and still yields a reasonable rate.

    2) VUSXX: currently 1.91%. Does anyone know if this is exempt from state taxes as I read that somewhere since it is a treasury fund? Also, do you have to maintain the 50k minimum or can you invest more and then if I withdraw money below 50k I'll be able to maintain.

    3) VMSXX: currently 1.34%. But my understanding is that this is exempt from Federal taxes.

    4) VPTXX: currently 1.29% but it looks like it is exempt from both federal and state taxes since I reside in Pennsylvania.

    5) Somewhere else I'm missing? Maybe a CD somewhere

     

    I was leaning towards VUSXX but would be open to other people's suggestions. Just want to make sure I'm not overthinking things and making them more complicated than they need to be.

     

  • #2
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    • #3
      Keep it with Ally or else you are going to spend a significant amount of time chasing hundredths of a percentage point.

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      • #4
        If you are looking to purchase soon, keep it in your checking or savings account.  I am a lender, and guidelines stipulate that we DO NOT have to source/document any funds that have been present in your account for 60+ days.  If you are going to move funds during the transaction you will have to provide documentation of everything.

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