House Sold - Where to put Cash

[NumberOne]

I am fairly young (30). My house is sold pending inspection on Monday. This was my first house. Will be moving into my fiancé house that's out of the city thanks to remote work now. I will net roughly $300k from the sell. My question is what should I do with this money while I decide where we want to move to? Time line would be the next 1-2 years and move. We will probably rent her house once we move. I am pretty confident I will get the really conservative answers of keep it in the bank but I rather not just let that money sit and not making anything off of it. Kind of a unique position because I don't have to buy another house right away like most people who sell their primary residence. Throw some ideas at me. Thanks in advance.

[NitroZ7]

If you know you are going to need it in 1-2 years then really the only answer is in something safe and somewhat liquid. You could buy a CD with a 2 year maturity date and get around 3%. Don't put over $250,000.00 in any one CD since that is the limit of the FDIC. At 3% that gives you $7,500.00 a year. If you think you may need the money sooner or don't want it locked up you could get a shorter maturity CD or buy short maturity treasuries. Putting that into equities when you know you may need it in 2 years is very risky.

[Charles Prestridge]

Look at maximizing your Roth IRA contributions for the next several years. Max out your HSA if you qualify for the plan.

[TampaJim]

At this point, I'll agree with NitroZ7 ... put it into safe instruments.
Indexes are usually the answer, the odds are deeply against you now.

And $10k/person into US Savings Bonds, I Series. The annual limit.
On 1/1/2023, drop another $10k/person into the same, it's safe.
Currently, the rate is 9.62%. You'll be at least tracking inflation.

If you really feel itchy all over, rental property near a university.
Buy the least expensive unit in a complex, etc. Do it properly.

Sorry, there really isn't a better answer. Dark clouds incoming.

[boneil]

what Nitro said.
IMO, if there's a possibility of needing the money in 1 year, then it stays cash in the bank.

Now If you're not gonna need all of that money, I would take what you can afford to not need for any length of time, and invest it. roth ira, or individual broker account, start with market ETFs like SPY, QQQ and similar

This year and maybe next year could give us generational buying opportunities.

[NumberOne]

I am fairly young (30). My house is sold pending inspection on Monday. This was my first house. Will be moving into my fiancé house that's out of the city thanks to remote work now. I will net roughly $300k from the sell. My question is what should I do with this money while I decide where we want to move to? Time line would be the next 1-2 years and move. We will probably rent her house once we move. I am pretty confident I will get the really conservative answers of keep it in the bank but I rather not just let that money sit and not making anything off of it. Kind of a unique position because I don't have to buy another house right away like most people who sell their primary residence. Throw some ideas at me. Thanks in advance.

This is what I was thinking was probably the safest route while getting some return. Yeah it needs to be liquid which is the problem. I don't necessarily need all of the money to be liquid so I am mulling options to take $50k or so and invest in this beat up market over the next year. Appreciate the response.

[NumberOne]

what Nitro said.
IMO, if there's a possibility of needing the money in 1 year, then it stays cash in the bank.

Now If you're not gonna need all of that money, I would take what you can afford to not need for any length of time, and invest it. roth ira, or individual broker account, start with market ETFs like SPY, QQQ and similar

This year and maybe next year could give us generational buying opportunities.

This is also a good idea. Although I like the idea of the CDs, keeping the cash in the bank gives me flexibility to fund accounts with savings and leave the "house money" in the bank and gives me a cushion. Its a big decision for me so I will probably take some time with it. Again appreciate the response.

[NumberOne]

At this point, I'll agree with NitroZ7 ... put it into safe instruments.
Indexes are usually the answer, the odds are deeply against you now.

And $10k/person into US Savings Bonds, I Series. The annual limit.
On 1/1/2023, drop another $10k/person into the same, it's safe.
Currently, the rate is 9.62%. You'll be at least tracking inflation.
If you really feel itchy all over, rental property near a university.
Buy the least expensive unit in a complex, etc. Do it properly.

Sorry, there really isn't a better answer. Dark clouds incoming.

The rental property idea is interesting. What's the play here? I have thought about buying land where I would want to eventually build a house. The thinking is buy the land now and wait to build when hopefully we see a considerable drop in material prices. If the real estate market continues to be robust (which I don't think it will be), then I can look at it as an investment to sell. Sort of hedging here.

[TampaJim]

Real estate is nearly always a good buy. Anything close to a university is nearly a slam dunk.
Obviously, the key is buying it correctly AND considering the rental aspects ... 3BD vs 2BD, etc.
I'd be more interested in using a portion of your funds, +20% down to purchase without PMI.
There are ways to generate cash flow in fairly safe ways, especially compared to today's market.

[1BADAIR]

Have any quarter car washes or storage places for sale around there?

[TampaJim]

Have any quarter car washes or storage places for sale around there?

Already did the coin washes, stay away. More broken stuff than you could imagine. Plus the trash is a BAD thing.
We enjoyed having entire vacuum systems stolen, hoses ripped away, spray tools cut, etc. People were horrible.
And just in case that wasn't enough, they'd usually destroy a change machine, or two, every few months as well.

Storage ... seems like private equity has it mostly gathered up. However, the US is about 90% of world capacity.
Cimate controlled smaller spaces seem to be easier. More profit/foot, better tenants, fewer security concerns, etc.

[KP1923]

“Cash is King in a down market.” If inflation is running at 8%+, then any positive ROI has to be above that. Do what allows you to sleep well at night.

[ColoGregS]

I am fairly young (30). My house is sold pending inspection on Monday. This was my first house. Will be moving into my fiancé house that's out of the city thanks to remote work now. I will net roughly $300k from the sell. My question is what should I do with this money while I decide where we want to move to? Time line would be the next 1-2 years and move. We will probably rent her house once we move. I am pretty confident I will get the really conservative answers of keep it in the bank but I rather not just let that money sit and not making anything off of it. Kind of a unique position because I don't have to buy another house right away like most people who sell their primary residence. Throw some ideas at me. Thanks in advance.

It is probably too late now, however look into a 1031 tax exchange for another property. I would look at land, either ag or industrial, Nashville is growing like crazy, so there are opportunities available. Your tax bill is going to be crazy, look into income averaging for previous years tax returns to help with some of the sting.

[idbefishing]

You could set aside enough to buy 100 shares of Amazon and do what Nitro does. Sell cash cover put to generate monthly income.
Put the rest in a short term CD.

NOT FINANCIAL ADVICE!

[RyanJ]

I'd look at just putting it in a money market account since you are pretty sure you will be using to pay for your next home.

[billnorman1]

What ever you do check with your tax accountant. You don't want that money to be caught as income and pay tax on it.