46F, small business owner. Business generates just enough for me to live comfortably but I'm thinking of taking a looooong break from it so I might wind it down in a year. My current situation:
$265,000 in an investment account, invested in some stocks
$120,000 in a solo 401K, invested in some stocks
$15,000 in IRA
$11,000.00 in HSA
$135,000 in Fidelity CMA, $50,000.00 is FDLXX and the rest is all on NVDA
$260,000 in a CD that is maturing soon
I have about $300,000.00 in equity in my home and also some cryptocurrency
Question – I'm not sure what to do with the CD funds that are maturing in a few months. Should I park it in a HYSA or find another CD? I don't like doing CD ladders so most likely I would just put the whole amount in 1 CD if the interest rate is pretty good. I don't have any plans to use this money for at least the next 5 years. Ideally I would like to invest it so I'm getting more than 4-5% return on it.
Any advice is welcomed!
what should I do, CD maturing in 3 months
byu/anan1016 inpersonalfinance
Posted by anan1016
5 Comments
Why the hell do you have so much in a CD??? What rate were you getting?
How much you have in each account doesn’t really matter. What matters is are you being efficient with your priorities and fund choices. And are you reaching the goals you’re aiming to achieve with these investments.
>in some stocks
Want to be more specific?
Your HYSA should be around 6 months of expenses (more if you want less risk). You have a Fidelity CMA, so you don’t really also need a HYSA.
Then you have your Solo 401k… are you maxing it? You have the employer portion too you can use.
HSA, are you maxing this next?
IRA… what? Traditional, Roth? Are you maxing it?
If your’e maxing all these, then the rest goes to the brokerage.
You don’t need CDs. They’re mostly useless. If you don’t need the cash for 5 years, it should be invested. Not CDs.
Get out of crypto, its seriously just gambling at this point.
Same thing for NVDA, its been high yeah, but the second it corrects you’re screwed.
Follow the 3-fund portfolio. You want total market index funds.
I’d do like 50-70% in something like VTI. The remainder in bonds (like BND?) and that should return like 3-5%. And then maybe <10% in the more “risky” stuff you’re doing (like NVDA stocks, crypto)
My coworker is into income investing. So you can find those stocks with 7-20% dividends and start seeing if you can get income that way! You mentioned taking a long break – so getting into a situation where you can live off dividends might not be too far off from you if you moved some stuff around. With your current investable assets, you might be able to conservatively do $35-40k annually with what you have now (egs like JEPI/JEPQ with a little bit of VTI.)
This is a pretty clear cut answer. You don’t have any plans for the money for at least 5 years and you want a better return than an HYSA or a CD would provide. You’ve literally answered the two questions that people ask to determine whether to invest money with the exact answers that are typically given. Invest it.
Get out of the CD. There’s no reason to have them since you can get the same returns in a regular HYSA or money market fund without the money being locked up for a fixed amount of time.
Don’t invest in “some stocks”; that’s WAY too risky. Invest in total market funds like VT, VTI, VOO, VXUS.
“all the rest on NVDA”, also WAY too risky. You’ve been lucky so far with it, but an index fund is more diversified and the top ones already have a lot of NVDA in them.
At 46 assuming you want to retire relatively soon, I would focus more on tax advantaged retirement accounts.
I’m not saying sell, but you should definitely be maxing out every tax advantaged account you have given how much you have in an emergency fund.
Depending on where you live, something like SGOV might be better than CDs since you don’t pay state income tax. I haven’t checked in years, but treasury bills had better returns than HYSA and CDs.