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Ask Money

How to invest $100,000 in savings?

Marketplace Staff Oct 5, 2013


We currently have over $140,000 sitting in our (very low) interest-bearing checking account: .85% if we keep it over $100k, .80% for 50-99K. I know I should do something with at least $40K of this money. Plus we may sell property we own soon and will then have an additional $130,000 to invest. I know this is a good situation to be in, but I’m paralyzed by not knowing what to do with it. We just paid off our mortgage and we do have healthy 401K & 403B accounts and we’re in our early 50’s. I believe we’re maxed out (or close to it) on our 403b contributions. My only investment experience to date is within our retirement accounts and bank savings/checking accounts. Our income is close to $200K so I know I need to consider tax consequences of any investments. I’ve considered CDs, but the rates aren’t much higher than my checking account. What to do?


Carmen Wong Ulrich Oct 5, 2013 Former Host
You guys are in a fantastic situation though from where you’re sitting, it probably feels nerve-racking.  And surely you’re annoyed with these measly savings rates our cash gets to not enjoy.  Think about what the money is actually for.  Even though you’re in your 50’s and doing well financially, what would happen if one or both of you were laid off?  How much would you need every month to keep on top of bills, etc.?  Crunch that number and if you also have children at home, I’d feel much more comfortable if you’d keep at least 1 year’s worth of living expenses in cash–it’ll be there should you need it and you won’t be risking more than a point or so of potential inflation losses.  Why is it ok to lose cash?  Consider it the price for a form of ‘insurance’.  It’s the cost of doing business–keeping your cash protected from risk and there when you need it.  I’d certainly rather lose 1% a year to inflation than dozens more should you put it in the market and need it at the wrong time or, pay upwards of 15% interest on the credit cards you’d need to use to pay the bills.  

But!  You also have another six-figure chunk of funds to do something with, once you sell, and that should be tax-sheltered how you can.  I’m not sure of everything you’re holding in terms of retirement accounts but you mention several so you’ll be limited as to how much more you can sock away in a traditional IRA.  Contributions limits and other need-to-know-tidbits are here.  At your level, you’ll definitely be heading into non-tax-sheltered territory so it’s worth seeking out a fee-based certified financial planner (look around here), even an hourly planner who you don’t have to turn your money over to, instead they give you advice and you take your own action.  

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