So I thought this had been discussed before but couldn't find the thread on it. My question is, if you a large chunk of money coming in that you wouldn't need immediately, but would in the near future, where would you park it?

The specifics of my situation so you can maybe have a few more of the particulars: We are closing this week on a cash-out refinance which will both lock in a lower interest rate (got it down to 2.5%) and pull out a sizeable piece of our equity (~$120k). The intended purpose for this money is to be used towards a big renovation we are planning. If the schedule stays on the track we are on, first construction payments won't start for roughly 6-7 months, and will be spread over the 6-9 months following that., so lets say I'll need to access all of this money in about a year. I don't want to take on too much risk with the money since the timeframe is short, but I also don't want to park it at 0.05% interest in a savings account since any modest growth could make a material difference when deciding where we have to trim the renovation to stay on budget. So what say you? Where you you park the money in this situation? or am I being a fool to put it in any thing more risky than an FDIC insured account? I'm open to all thoughts and general TexAgs shenanigans.



Also just for some added clarification, even without touching the house, the cash-out keeps our LTV below 75% so I'm not required to complete the remodel on any specific timeline to satisfy loan terms.

75-90% cash in the bank.

Toss the rest into XHB. If it goes up, it'll help pay for the the increase in costs to your project.

If it goes down, you need to fight for better prices on your project.

Time horizon for needing the money is way too short to do anything with IMHO. Your upside is less than 10 grand at best and the downside risk of wrecking your plans isn't worth that extra money.

You're playing with fire here. Do what ORAggieFan said.

Is your refi contingent upon your renovation in any way?

If so, keep it as cash and be diligent.

If not, do whatever you want. It's your money!

There's some 4%, liquid bond funds you can find if you're going to just park $$.

low risk/low reward - VTI or another total market ETF
higher risk/higher reward - look at O/G pipeline stocks paying >6% dividends (but beware sustained price dips could eat away some/all your div payouts in your shortish window)

I know a guy op, just give me half and I'll double your cost basis

Lowest risk: bank money market account earning 0.5% on $120k that's $600 in a year.

Modest risk: Intermediate treasury bonds (ETF: VGIT). In last decade, average annual return is 3.31% with max drawdown of -4.34%. Seems pretty reasonable. This would be my choice.

If your time frame was longer (5 yrs), an "all seasons" risk parity profile would be a possibility.
30% total stock market (VTI)
40% long term treasuries (TLT)
15% intermediate treasuries (VGIT)
7.5% gold (GLDM)
7.5% commodities (PDBC)

Do you have room to buy and store any of your major materials for the remodel.

I know everyone is hoping prices go down. But what if they increase?

If I were trying to make some money short term but reduce risk I might buy MSFT and sell covered calls 6 months out. This will expose me to risk of MSFT stock going down, but the covered calls will help lessen the possible losses, but a major correction could still be painful.

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Thanks for all the replies. I was definitely expecting the "keep it in savings your timeframe is too short" advice, and it is very sound advice. I do realize I'm playing with fire with any place I put it that is less safe than that and so I may not do anything riskier. Also super glad I got the doge coin recommendation, I was hoping to see that one and y'all did not disappoint. I do really like the idea though of putting a small piece in something that should track with the cost of the renovation like XHB, I would maybe also throw something in like WOOD as well, basically a hedge against rising construction prices. I hadn't thought of doing something like that.