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A question only a PP novice could ask

Posted: Fri Jun 28, 2019 6:42 pm
by Maddy
Could I trouble you'all with a quick question? If you had a modest nestegg to invest, but also wanted to use those funds as "bridge money" to facilitate the transition from an ultra-high-maintenance property to something a bit more manageable, would you go ahead and invest in the PP, knowing that you might, at any time, need to cash out the majority of it if the perfect property came up? I'm guessing it could be another year or two before I might find a suitable property (a/k/a the "geriatric homestead"), and that it could be anywhere from 6 months to a year before my old property sells and the funds go back in the PP for the long term. The money is currently parked in Vanguard's Treasury Money Market Fund. Any advice would be both valued and appreciated.

Re: A question only a PP novice could ask

Posted: Fri Jun 28, 2019 7:07 pm
by Kriegsspiel
Personally I wouldn't bother with a PP for that short of a time frame, I'd put it in Treasury bills or a CD or something like that. That's what I did when I was about to buy a house.

Re: A question only a PP novice could ask

Posted: Fri Jun 28, 2019 7:09 pm
by jhogue
Funds you need for 6 months to 1 year should be safe and liquid. Keep it in your Vanguard Treasury money market fund.

Re: A question only a PP novice could ask

Posted: Fri Jun 28, 2019 7:43 pm
by dualstow
Thirded. Treasury money market yield must be on its way down, and I still think it’s the best place for short term cash. Gold, stocks...you don’t want to have to mess with those in just six months, or even twelve.

And good luck by the way!

Re: A question only a PP novice could ask

Posted: Fri Jun 28, 2019 7:47 pm
by Kbg
+1

Re: A question only a PP novice could ask

Posted: Fri Jun 28, 2019 7:58 pm
by Maddy
Well, then, that's just what I'll do! Thank you so much.

Re: A question only a PP novice could ask

Posted: Tue Jul 16, 2019 7:05 pm
by KevinW
jhogue wrote:
Fri Jun 28, 2019 7:09 pm
Funds you need for 6 months to 1 year should be safe and liquid. Keep it in your Vanguard Treasury money market fund.
+1

Re: A question only a PP novice could ask

Posted: Wed Jul 17, 2019 8:49 am
by sophie
Yup. Keep in the treasury MM, that's the perfect place for it. I think the rule of thumb is not to invest if you plan to spend the money within 5 years, but for the PP I'd consider a time horizon closer to 3 years due to its stability - as long as you're prepared for potential tax and fee consequences when you cash out.

Good luck with your property acquisition!

Re: A question only a PP novice could ask

Posted: Wed Jul 17, 2019 8:59 am
by Kbg
Tangent comment. A gentlemen I very much respect on another board who was a former hedge fund manager is very negative on bonds as an asset class primarily because in a lot of the world they return very little or you lose money holding them. Additionally, he has mentioned there are serious structural issues with bond ETFs. (Note: He is not a doom and gloomer at all by temperament.) His recommendation is to not hold commercial bond ETFs at all and he recommends holding treasuries vs treasury ETFs due to potential misdirected blow back of a negative bond event should occur.

He's a die hard value investor and actually thinks bonds of any kind, currently, are not a good investment.

Re: A question only a PP novice could ask

Posted: Wed Jul 17, 2019 10:20 am
by ochotona
Kbg wrote:
Wed Jul 17, 2019 8:59 am
(Note: He is not a doom and gloomer at all by temperament.)
He's a die hard value investor and actually thinks bonds of any kind, currently, are not a good investment.
If someone opines "bonds of any kind are not a good investment" completely out of the context of the needs of the individual investor, that puts them squarely in the tinfoil hat brigade. How could you lump 30-day T-Bills and Junk Bonds and Emerging Market Bonds, and MUNIs together and just call them all "BAD"? C'mon.

Re: A question only a PP novice could ask

Posted: Wed Jul 17, 2019 10:58 am
by Kriegsspiel
ochotona wrote:
Wed Jul 17, 2019 10:20 am
Kbg wrote:
Wed Jul 17, 2019 8:59 am
(Note: He is not a doom and gloomer at all by temperament.)
He's a die hard value investor and actually thinks bonds of any kind, currently, are not a good investment.
If someone opines "bonds of any kind are not a good investment" completely out of the context of the needs of the individual investor, that puts them squarely in the tinfoil hat brigade. How could you lump 30-day T-Bills and Junk Bonds and Emerging Market Bonds, and MUNIs together and just call them all "BAD"? C'mon.
Yea, it depends on the context. But if he was talking about "a lot of the world" then maybe that's what he meant.

Re: A question only a PP novice could ask

Posted: Wed Jul 17, 2019 11:28 am
by pmward
Kbg wrote:
Wed Jul 17, 2019 8:59 am
Tangent comment. A gentlemen I very much respect on another board who was a former hedge fund manager is very negative on bonds as an asset class primarily because in a lot of the world they return very little or you lose money holding them. Additionally, he has mentioned there are serious structural issues with bond ETFs. (Note: He is not a doom and gloomer at all by temperament.) His recommendation is to not hold commercial bond ETFs at all and he recommends holding treasuries vs treasury ETFs due to potential misdirected blow back of a negative bond event should occur.

He's a die hard value investor and actually thinks bonds of any kind, currently, are not a good investment.
To be fair, how does one "value" a bond in this day in age with such large, drastic, and never before seen central bank intervention? I'm using the assumption here that most "value" investors I know of look at things in a traditional sense. And there is no traditional precedent for what is going on in the world right now. So I personally would not put any weight into his views of whether or not bonds are a good investment at this point in time. Because, to be fair, nobody knows whether or not bonds are a good investment at this point in time. I mean, there are now junk bonds in the world that are negative yielding. Common sense left the building long ago. And current hedge fund managers these days in aggregate are about as bullish on bonds as they can get, so his qualifications don't uniquely qualify his view.

His structural concerns on ETF's might be something worth considering though, as he probably does have more knowledge than any of us on that matter. Is he concerned about something like another "breaking the buck" kind of debacle in bond ETF's? Where the ETF's drop more than the underlying because of mass hysterical selling? Does his concerns also stand for mutual funds or just ETF's?