Money Parking place

[Yorkie]

I have a friend who has just come into quite a bit of money ($500K+) and wants to to park this money somewhere that will not be particularly risky but will beat inflation for 3-4 years. He is going to be buying a house after his contract finishes in 2024 and wants to use the money for the house. Any advice? Tabs can sit this one out as my friend will not be persuaded that apocalypse will be upon us anytime soon.

[pwd72s]

It's damned difficult to find a guaranteed return these days. Not risky and beat inflation? Good luck! Let me know if he finds something.

One choice might be TIPS...(Treasury inflation protected Bonds) They pay zilch, but interest earned is exempt from State income tax, which might be a benefit in California.
Warning..no protection against deflation here...which is also possible in this crazy economy.

[stevej37]

Anything from a bank or CU will bring less than 1% interest.

[Zeke]

He should diversify now and diversify then, not pouring all of his cash into real estate. Especially if the current tax laws remain unchanged and he makes good money.

[Vipergrün]

Digital currency

[stevej37]

^^^ Yep

[KFC911]

Well .... if he finds that place.... let us know . As my bonds and CDs have matured over the past couple of years.... they just collect dust as cash (were generating prolly 4-5%), with even more maturing as time rolls on.

Oh well....

[john70t]

Originally Posted by Vipergrün

Digital currency

Bitcoin mining uses the electricity of several small nations.
(Greta hasn't complained once)

[porsche4life]

He needs to talk to a financial advisor, not a bunch of yokels on the internet.

[stevej37]

^^^ this

[KFC911]

Originally Posted by porsche4life

He needs to talk to a financial advisor, not a bunch of yokels on the internet.

They don't have a magic wand .... what he is seeking is just not currently available and will cost him over 5K per year easy.

[Tidybuoy]

If it were my money, I'd open a brokerage account (like TD Ameritrade) and then purchase a vanguard EFT that follows the S&P 500 - or a couple of EFT's. But that is if it were my money to spend.

[bleucamaro]

Originally Posted by Tidybuoy

If it were my money, I'd open a brokerage account (like TF Ameritrade) and then purchase a vanguard EFT that follows the S&P 500 - or a couple of EFT's. But that is if it were my money to spend.

I did exactly this. . . but with much less starting pool.

[KFC911]

Originally Posted by Tidybuoy

If it were my money, I'd open a brokerage account (like TF Ameritrade) and then purchase a vanguard EFT that follows the S&P 500 - or a couple of EFT's. But that is if it were my money to spend.

That is not what he is seeking or asked for. I've been on the equity sidelines as of late but that's not a bad strategy for equities. For $500K, he will find nothing by FA that earns him didly outside of equities either.

But that has risks ... with a 2-3 year timeframe... he doesn't want that exposure.

[MikeSid]

I'll second (or third) Tidybuoy.

Eliminate all debt. Open Vanguard account. Buy 2100 units of VTI.

or...1700 units of VTI and a mint low mileage 996 GT3.

And, no, I'm not joking about the GT3.

[KFC911]

I was there when equities fell 25% in one day back in '87, another 40% drop as the tech bubble burst, and another 40% drop (for me) during the '07-08 recession, but have done well riding those out "all in". Equities have substantial short term risks, always have, always will.... they are a long term "safe play" if you are a youngin imo. Just don't kid yourself .... "eyes wide open".

[Googam]

The Vanguard ETF is solid advice. Look at what's been happening in the world lately & look @ their performance over the last several years. This is a very popular market. Sure.......there's always some risk, but much less than just diving into the market. Banks, bonds.........might as well put your money under your mattress.

[MikeSid]

Those 20 year events are certainly possible. And maybe we're due for a correction. Who knows?

The original question is really unanswerable. It is just not possible to beat inflation without some risk.

If the OPs friend wanted to minimize risk even more, he could keep some cash on the sidelines and invest it upon any drop to dollar cost average. Or he could incrementally move from equities to cash as his home buying event nears. But all of that is managing the assets, and not "parking" money somewhere. I think VTI is a close as we can get to the spirt of what was asked.

Or... it's the GT3 and a heated garage.

[McLovin]

Well, obviously there is nothing out there with truly zero risk that is going to earn more than inflation.
3-4 years isn’t really “short term,” I think I’d just put it in a Vanguard SP500 index fund and let it sit.
Yes, it may go down in the short term (like in the next 6 months).
But all in all, it’s likely to be higher 3-4 years from now than it is today.
One thing all the political parties have in common is doing everything possible to prop up the stock market.

[masraum]

Originally Posted by Tidybuoy

If it were my money, I'd open a brokerage account (like TF Ameritrade) and then purchase a vanguard EFT that follows the S&P 500 - or a couple of EFT's. But that is if it were my money to spend.

You're 95% right.

Open an account with Vanguard and then buy Vanguard ETFs for free.

And yes, index tracking funds.

Not only that, but this place has lists of which Vanguard funds to use.

https://paulmerriman.com/vanguard-tax-deferred-etf-portfolios/

The only difference between "tax deferred" and "taxable" in the case of the recommendations above is that the "tax-deferred" accounts include REIT investing and you don't want that in the taxable accounts.