Gyroscopic Investing

I'm selling my place and buying another with a 3 month gap in between - yes I know, bad timing, but I set that in motion before my father's health declined and it was too late to back out.  Anyway, I'm going to have a large slug of cash for 3 months, too much to park in one savings account (over FDIC limit).

i figured I'd put part of it in Fidelity's core account (yielding 0.01%/year), but I wondered if I could buy very short term bonds to make a little extra cash, since it's a guaranteed 3 months before I need to use it.  There are tax free municipals that would mature in about 2 months and yield 0.5%.  It seems like it would be a pretty good return for a few mouse clicks, and bonds that close to maturity seem to be a very safe bet.

Is there anything I'm missing here?  I wouldn't make a habit of it but it's hard to pass up.  Although if I DID want to make a habit of it, that's a pretty darn good rate of return.

I've got some short term cash parked in a Capital One 360 checking account.  It is generating 0.9 %

https://home.capitalone360.com/rates

Must be a pretty good chunk of money if you think a .5% yield for 2 months would even be worth the hassle. So congratulations on making a good profit on the sale of your home.

If I sold mine right now I'd be figuring what PP assets to liquidate to make up the difference on my underwater mortgage.

I suppose I could open a new account temporarily, but that's annoying and would complicate the board package process.

Yes, I made out like a bandit, because NYC real estate is smoking right now. The new place is larger/nicer, and in a less expensive neighborhood close to work & family that hasn't yet been "discovered" the way Williamsburg (e.g.) has been.  Madbean, sorry to hear you are still underwater...at least you've done really well with your savings otherwise. 

I'll probably chicken out on the bond play but it's sorta tempting. Here's an example:  AA bond with 4% coupon, issued 8/2011, matures 8/1/2015, ask price 100.482, no bid price listed, yield 0.586. 

Is your buying price already locked in?  If not, I think the risk is that your new place could increase in price over the next few months.  In that case, maybe you want market exposure until you buy.  A geographically-specific residential REIT perhaps?

Tax-free bonds with a high yield are screaming DANGER!!!
Even if it's 1/2 $million I would pass.

Libertarian666 wrote: Tax-free bonds with a high yield are screaming DANGER!!!
Even if it's 1/2 $million I would pass.

What do you think the danger is? Especially for just 2 months? I am assuming these would be like NYC bonds, not Puerto Rico general obligation munis or something!

Pointedstick wrote: What do you think the danger is? Especially for just 2 months? I am assuming these would be like NYC bonds, not Puerto Rico general obligation munis or something!

NYC could go bankrupt in a surprise move over the next two months?  It went bankrupt before!

MachineGhost wrote: NYC could go bankrupt in a surprise move over the next two months?  It went bankrupt before!

Anything's possible I guess, and I suppose that's the risk you'd be getting compensated for, but that said, it does not strike me as exceptionally likely that NYC will declare municipal bankruptcy in the next two months.

You could just spread it into a few well paying FDIC insured money market accts like Barclays and Ally and not worry about it.

Can I ask you what this undiscovered neighborhood is?

Being in Manhattan, for 2 days I thought you were looking to rent someone's garage space.  I no longer think that.

Have a nice day!

Reub wrote: You could just spread it into a few well paying FDIC insured money market accts like Barclays and Ally and not worry about it.

Can I ask you what this undiscovered neighborhood is?

This is probably the first time I have agreed with Reub, but yes, don't take any risk with that money.