What to do with cash??

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bruin36's picture
bruin36
Status: Bronze Member (Offline)
Joined: Oct 4 2008
Posts: 48
What to do with cash??

If the sale of my house goes through, I will have cash. Where do i put it? its in excess of the FDIC guarantee of 100k ( like that guarantee is worth anything)

I am more interested in preserving the equity. Someone suggested a treasury Money Market account that would aledgedly be insured for full value. I would keep the money there until I can figure out what to do with it

Any thoughts?

 Thanks

 

bruin36

ds's picture
ds
Status: Bronze Member (Offline)
Joined: Oct 13 2008
Posts: 43
Re: What to do with cash??

In addition to a Treasury money market account, you could consider:

MERKX Hard Currency Fund
Rydex CurrencyShares.
FDPIX Falling U.S. Dollar ProFunds

I'm not so sure I would put all your cash into US$.

Maybe you want to keep part of your cash in US$, and part in FDPIX so that your position is hedged.

WIth the amount of money you will have, you might also want to diversify globally, so some money in MERKX might help. You might want to look at EverBank like Chris recommends. They have products that offer exposure to a basket of currencies.

Since this is a temporary place to park money, I don't see gold or silver as being wise choices.

There are plenty of other options for full FDIC insurance above $100k (easy to find on Google), but then you have the risk of US$ exposure, so that's why I'm suggesting a diversity of currencies or a hedged US$ position.

 

GreenT's picture
GreenT
Status: Member (Offline)
Joined: Oct 9 2008
Posts: 3
Re: What to do with cash??

Just for the sake of clarification, the FDIC has recently increased the amount insured per account from $100K to $250K.See the official link below :

http://www.fdic.gov/consumers/consumer/information/fdiciorn.html

bruin36's picture
bruin36
Status: Bronze Member (Offline)
Joined: Oct 4 2008
Posts: 48
Re: What to do with cash?? (MODIFIED)

Thanks for the replies, If i sell i could net close to 1.8 million so a bank account is out.

 The real question is deeper than what to do with the money - its should I sell at all. Its a great townhouse in New York City and I have spent the last 12 years completely gut renovating it. The house is really the nicest place that I could ever imagine living and I am very close to my neighbors and really love the neighborhood.

I owe less than 400k on the house at a fixed rate of 5.25%, I have a tenant that pays most of the mortgage and my wife and I get to live in a triplex apartment for about 600$ a month including taxes and utilities.

Am I so stupid to believe that this house will hold its value and that NY real estate will not collapse like the rest of the world?

Where can I go - I love this city and this neighborhood?

 

Bruin36

Pandabonium's picture
Pandabonium
Status: Bronze Member (Offline)
Joined: Aug 30 2008
Posts: 87
Re: What to do with cash?? (MODIFIED)

I was a real estate broker for 30 years.  Doesn't make me smart, but just letting you know so that you know I've got some experience in the field.  My first experience with home ownership was a life lesson.  I bought at a peak in my local market, intending to sell and move up after a few years, but because of the bad timing it took 8 years to just break even.

I am not a financial advisor - nor do I play one on TV :) - these are just some things for you to think about:

There are significant risks that you run in keeping the property, expecially in view of the economic recession (coming depression?) and near future effects of peak oil.  How certain are you that your tenant will be able to pay the rent in future years?  Or that increases in unemployment won't have a depressing effect on home values and rents which might cause a tenant to look elsewhere or put pressure on the price of rent that you now enjoy?   Could you accept/handle the mortage if rents fell significantly?  Are you planning on using the equity of the house in the next 5 to 10 years?  ie are you young enough to wait through a protracted slump? Only you can answer these questions and assess these issues for yourself.

As to what to do with the money if you do sell, I would suggest looking into placing some of it off shore.  Check out a Swiss Annuity and look into the tax and estate planning advantages it might give you while diversifying your assets into another currency (several are available in these plans).  You can get lots of free information by going to Asset Strategies International (a firm which I have dealt with for several years and think highly of).   They are also approved brokers for Perth Mint Certificates.

If you want to stay, you can look into selling the house with a leaseback.  You'd get your equity out and be able to continue to live there as a tenant - rent and lease term negotiable. 

Just remember that if you decide to keep the house it is like buying it right now.  Knowing what you know about present economic conditions, peak oil, the state of American politics, etc. (I'm assuming you've completed the crash course and done other reading) would you buy the house today?

Not offering advice per se, just some points to ponder.   

Best.

 

 

bruin36's picture
bruin36
Status: Bronze Member (Offline)
Joined: Oct 4 2008
Posts: 48
Re: What to do with cash??

Your comments are well taken, It would be a shame to loose this equity,  I also know its "now or never" so to speak, if I dont sell I may never be able to - at least not for any real gains - it would be making a really good trade into a terrible one

 If I do sell i lose a great place to live and have to start over, but I have to get over my attachment to these bricks and mortar

 

thanks

 

Bruin 36

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