What to do with $600k cash now?

NEW -> Contingent Buyer Assistance Program
SoldAndRent;





ingdirect.com currently has a 6-month 5% APY CD. In addition, they are also paying out a 5% APY on checking accounts with a balance of $100k or more.
 
<p>SoldandRent and Waitingtobuylater....</p>

<p>This is what i've done. I have about 750k in mulitple CD accounts and have set up a semi CD ladder (Set up 62kish accounts for monthly cd rollovers). The best being 5.3% and the worst being 4.95%. I went a different way and invested in apartments. BUT my rule of thumb is that I would put a sizeable amount of cash on the house and then relatively stingy with investment properties. I want to use only as much as I can get away with (and still be positive), but most places force you to have a CAP rate of 4-5% with a large amount of operating capital (you don't get nothing for free.... :( ). </p>

<p>As many have mentioned, cash is king now and cash will continue to be king for a LONG time to come. Just save and whent the time comes, swoop down like a blood thirsty vulture and its wounded pray.... </p>

<p>good luck</p>

<p>-bix</p>
 
SoldAndRent, if you have a joint account, the FDIC Insures would be $200k to $250k depending on the bank. Wachovia/World Savings has good advertised CD rates for specific CD length. Wamu has a money market that pays well too. As Raymond stated above, IngDirect has money market at 5%. It went down from 5.3% after the Fed cut the rate. Still a pretty good deal. Just don't put your money in one CD since you would loose the uninsured portion. The Country Wide rate is tempting but they might be going under so I didn't want to mess with them.



Sounds like a number of us on this site is loading our ammunition and waiting for the right time to jump in. I am planning to buy in 2009 unless a really terrific deal comes along. Thanks again everyone for your advices.
 
Just a little story to share:





My coworker had opened a NetBank account back in 1996 and stored extra cash there due to their decent CD rates. He opened 3 separate CDs to hold $300k; thinking that each account was FDIC insured up to $100k!





Anyways, we know what happened to <a href="http://www.ajc.com/business/content/business/stories/2007/09/28/netbank_0929.html">NetBank.</a>: Shutdown by the FDIC last month and my coworker almost had a heat attack at work.
 
waiting2buylater,



As to your second question regarding allocation of funds to purchase primary residence vs rental property, I would use less for DP on your home and more on the rental(s).For instance, use 20% for DP of your home to avoid private mtg insurance or a second. Use 30% for DP on investment property.



You can more easily obtain a higher LTV loan on a primary residence and your home mtg interest is tax deductible. Lenders will want to have a lower LTV on investment propreties. The more you put down, the more likely you will get approval. However, if by that time you have not had recent mortgage history, depending on how tight underwriting gets, you may find difficulty obtaining approval for investment properties without having substantial cash reserves.



Also if you personally 'manage' your investment property and are actively involved (it is local to you and you don't hire a prop mgr) you may be able to write off some of the costs of the ownership. You should consult with a tax professional prior to your purchases to maximize your tax benefits and avoid unforseen liabilities. And remember some parts of tax law change every year, so what is true today may be different in 2008 or 2009.
 
<p>If you are a contrarian like myself, check out PFE stocks. After today's close the dividend yield is closed to 5%, this from a company who up until a few years ago was considered a growth stock. I think Pfizer is caught in a perfect storm with fears of impending Hillary care, loss of patents from some of it's major drugs, and missteps with inhaled insulin. However, the company is strong, has a strong balance sheet and has a strong pipeline. I think with the dividend so high, the downside is pretty low so sit tight earn your dividend until the company turns it around. Good luck.</p>
 
stay away from Pfizer stock. They have nothing in thier pipeline, closed thier research labs in Ann arbor, michigan. Havent made thier own drug inhouse in a while. Theyve been reduced to buying other small companies and trying to sell thier medications in order to create growth. Recently bought the maker of an inhalable insulin med, and fumbled the launch of it, finally decided to scrap it and take a 1 billion dollar loss on it. Even though the dividend is reasonable, the company can choose to decided to cut it at anytime -- just take a look at Ford.
 
<p><em>2) What banks provide high CD rate i.e. 5.5%? </em></p>

<p>Sold, check out <a href="http://www.bankrate.com">www.bankrate.com</a> , click on the CD's and Investments tab, enter city and state and term. It will give you a good idea what area banks are offering for CD rates. CFC seemed to be the only one in the range you were looking for, beating the next closest by a WHOPPING .50 %.... I smell a rat. <em></em></p>

<p>


</p>
 
<p>I'm in the same boat (although not with as much as you bastards!) My plan is simple - keep the money at ING at around 5% until it makes sense to buy. When will it make sense? God only knows, but I think it will be clear at the time. Basically, if I can pay cash or have a very short term mortgage for a house nicer than my rental, it will make sense. Even if values continue dropping, I don't expect to have to sell any time soon. That will give me plenty of years to do some serious retirement saving that I have no doubt will be needed. Can you imagine what the financial future of recent homebuyers will look like? Interest only mortgages, for huge sums of money = financial suicide over 30 years.</p>

<p>Regarding the other question, I wouldn't bother with rental properties and that crap. There's just too much risk (it may pay off, but you're taking an unnecessary risk). You have a chance to make good, and set yourself up for life. Wait until the values drop 30%-40% in the next few years. Don't stretch for the Shady Canyon mansion - keep your standards intact and pay off your home immediately. $600K will buy a nice home + change in a while. Use the extra disposable income (prior rental or interest money) and start building a real retirement savings and/or college funds. That money should be in the lowest risk possible also, since the stock market is a teetering pile of hoaxes right now.</p>
 
<p>YLG--teetering pile of hoaxes--love it. I am presently 3/4s out of the stock mkt. I don't have the nerve to sell short, otherwise I would.</p>

<p>Anybody know if GE is invested in the mtg crap pile? </p>

<p>There is a reason that those institutions are paying more and it's not a good one.</p>

<p>I personally wouldn't risk my money for a lousy half a percent.</p>
 
I'm going to think outside of what everyone is writing here and say Start a business...



Start a small home business, under $50,000



Buy a medium franchise, $100,000-$150,000



Risk is Opportunity - why have someone manage your money; you have enough capital build another source of passive income.
 
<p>If it is your first buisnes,s then it should be start a business for as little as possible (ex. < $100).</p>

<p>There is a learning curve for businesses, just like there is for everything else.</p>

<p>You will mess up the first few times, so don't commit much money - commit time so you can learn.</p>
 
Thanks Blaylock for the input on PFE; I agree PFE has it's problems and there are many people out there with sentiments like yours. That is why the stock is undervalued, and that is why it pays to be a contrarian in the market. I must disagree that they can simply "lower their dividend" at anytime. Technically, you are right but companies don't do this unless they're in dire straits. PFE is far from this. PFE is strapped with cash and their free cash flow to price ratio is so much superior to many of its peers. It is this cash that will allow it time to turn things around. In a nutshell, the risk is already priced iinto the stock, so any evidence of it turning things around will cause the price of the stock to soar. On the other hand, if you jump onto a ship that has high expectations, any missteps will cause the stock to tank. The key is does the company have enough cash to survive until it turns things around and in the case of PFE it's a definite yes. Ford on the other hand is another story.
 
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