I have recently used personalcapital.com, which suggested me that i have too much money sitting in online savings account (150K) (1.3% yield) and i should consider stock market. I already have a 3-fund portfolio of 40K in vanguard other than this money) but based on this suggestion, i’m planning to put 100K of 150K to Vanguard Wellesley (VWINX). This fund is 60/40 bond/stock, ER is 0.22%, average return is 7%, and it is not very volatile (dropped only 10% in 2008, and performed comparable to vtsax last 10 years overall). Is this a good idea, has anyone used this fund? I’m planning to use this 150K for buying a house in 2-3 years, so low volatility is important, but the returns seem to be high for a fund that is not too volatile. Do you think this is a good short-term investment method, instead of using an online savings account (which returns 1.3% with no risk)?
100k will get you admiral VWIAX which is 0.15 er and they just added a global version
Thanks, this is good to know, i qualify for vwiax. The global one seems to not have enough history to evaluate, but i will keep it in mind.
If you need the money within 2-3 years no, it is not a good idea. You could lose money. If you are okay taking that risk do so with your eyes wide open because the risk is substantial.
If not this fund, then what is a better option? The money is already in savings account at 1.3% yield, and CDs also return less than 2% in 2-3 years.
Savings account or CDs are the best option. Accept that you can't reliably earn more than 2%. There is no free lunch.
150k is way too much cash, I’d suggest about 20k
It is not cash, it is in savings account, which returns 1.3%. The question is: should i keep it there, or move to vwinx or vwiax, given that this is a short-term investment, and i will need the money in 2-3 years to buy a home.
Why not putting it in a relatively stable and high dividend stock like MO or F?
Don't invest all at once..
Are you suggesting setting an auto-deposit to deposit say 10K / month from this 150K? I understand advantages of dollar cost averaging to mitigate risk, but then the 150K will sit in bank account (can’t withdraw from online savings account to vanguard). Do you recommend this ( and what to do with idle cash problem)?
Investing all in stocks at once is a gamble(huge risk/reward).. personally, I feel it's better to let my money sit in bank rather vanishing..
This is exactly what I’m doing, just accept that your returns will be taxed, but still better than cash savings
Is there a no-tax option or fund? I hear about i-bonds which are no-tax, but the returns are much lower.
lol “no tax” option