where to temporary hold proceeds from sale of house?

[CloudBee]

We are about to place our 2nd home on the market once we finish the disclosure paperwork and clean out the closets. The house was previously paid off, and we expect to walk away with around $500k. This money will eventually be rolled into a vacation home, but probably not for at least 6 months. (Who knows, maybe we'll be ready this summer - just not very motivated at the moment.) This cash is earmarked for our next RE transaction, so we do not intend to invest. The $ needs to remain liquid.

With the diversification of our current portfolio, we can't deposit more cash into traditional accounts at our current bank.

Should we open up two joint accounts at a 2nd bank, due to the $250k per depositor limits? We have a strong relationship with our local bank branch but I know they will attempt to talk us into investing if I go there with questions.

We're pretty savvy with investments and manage those ourselves - but are feeling stumped on where to store a large chunk of cash for up to a year. We have zero concerns about missing out on interest, and just want the money to be safe.

[mainelyfoolish]

Sounds like opening an account at another bank is the safest way to go. If it’s a joint account, you have $250k insurance per owner, so with two owners you can have $500k in one account covered.

[CloudBee]

Mar 27, 2022 20:04:22 GMT -5 mainelyfoolish said:

Sounds like opening an account at another bank is the safest way to go. If it’s a joint account, you have $250k insurance per owner, so with two owners you can have $500k in one account covered.

Thanks for your reply. I should probably visit a local bank and see if we can open the accounts with a near zero balance now, so they are ready for the deposit the day of closing. 

[minzy]

Are you sure you’re limited to $250k/($500k if two of you) in one account, or that’s just the FDIC insured amount? I think you can go over that. (?)

[niq]

If you don't know the exactly when you'll need the cash, I think I'd put it in Money Market accounts. They're not FDIC insured, but "breaking the buck" is what triggered the 2008 financial crisis and banks and regulators have basically reorganized how they work to prevent breaking the buck again short of, like, World War III (and we'll have bigger problems if World War III starts).

If you know the redemption timing you could do short term CDs but ehhhh.

[CloudBee]

Mar 28, 2022 9:19:34 GMT -5 minzy said:

Are you sure you’re limited to $250k/($500k if two of you) in one account, or that’s just the FDIC insured amount? I think you can go over that. (?)

Yes, I am merely limiting myself based on FDIC insurance. In this climate I don't want to risk not having insurance on $500k.

[CloudBee]

Mar 28, 2022 11:48:42 GMT -5 niq said:

If you don't know the exactly when you'll need the cash, I think I'd put it in Money Market accounts. They're not FDIC insured, but "breaking the buck" is what triggered the 2008 financial crisis and banks and regulators have basically reorganized how they work to prevent breaking the buck again short of, like, World War III (and we'll have bigger problems if World War III starts).

If you know the redemption timing you could do short term CDs but ehhhh.

Of course we would have bigger problems - so I'm trying to be extra safe with the influx of cash reserves. Trying to take control of what I can. Ha!

I was thinking about CDs. Have you ever gone with a 6 month option? Is it a hassle for a short term?

[niq]

Mar 28, 2022 12:54:35 GMT -5 CloudBee said:

Mar 28, 2022 11:48:42 GMT -5 niq said:

If you don't know the exactly when you'll need the cash, I think I'd put it in Money Market accounts. They're not FDIC insured, but "breaking the buck" is what triggered the 2008 financial crisis and banks and regulators have basically reorganized how they work to prevent breaking the buck again short of, like, World War III (and we'll have bigger problems if World War III starts).

If you know the redemption timing you could do short term CDs but ehhhh.

Of course we would have bigger problems - so I'm trying to be extra safe with the influx of cash reserves. Trying to take control of what I can. Ha!

I was thinking about CDs. Have you ever gone with a 6 month option? Is it a hassle for a short term?

We put some of my mom's modest savings into CDs at different maturities, to get a little better return. But that's a very special snowflake situation.

The rates on 6 month CDs is 0.50%-0.60%, doesn't really seem worth it.

Treasuries have higher yield than CDs (6 month T-bills are at 0.94% right now), though IDK how ordinary-ish people invest in them.

[CloudBee]

Treasuries are intriguing. I'm going to hop down that rabbit hole. Thanks for the suggestion, niq .