So my parent just sold a house and has around 1-1.2m sitting in the bank. They are really adamant about buying another house as soon as possible which I’m personally not a fan of since they constantly struggled financially until they sold the house and I would rather they just rent an apartment or something while their money works for them.
They’re in their early 50’s and don’t have a retirement fund like a 401k or IRA so this is all they have. Leaving it in the market would be too risky so while I was looking around for options I found something like treasury funds (TTTXX) that flat out gives something like 5.2%~ interest while also being exempt from state tax. Is this too good to be true? What’s the point of HYSA’s or CD’s when these rates are the same if not better while also being exempted from state taxes? To my understanding, the only cons/risks are that the rates may change and that they aren’t FDIC insured but afaik that’s not a concern at all. The benefit of being able to take it out whenever they want seems like a huge convenience compared to CD’s, as far as I’m aware this treasury fund pays the interest monthly or was i weekly? While CD’s have long maturation dates of 9-12+ months.
Another big downside of this is that they’re not extremely strong in navigating complicated websites so they would need me to sell the treasury, then transfer it from the brokerage to the bank whereas a savings account is simple and they can just withdraw or transfer money easily themselves without needing me.
Is this the best thing to do with their money? They want to buy another house in Cali near the bay but those are absurdly expensive and will basically cost them all the money they have (they have little to no income) and their reasoning is the house’s value will keep going up but my concern is the house won’t put money in their hand while if they rent at an apartment they have a lot of easily accessible money also earning real money they can interact with in the form of interest compared to theoretical home value that wont actually put money in their pocket until they sell the house. They feel averse to renting because they believe it’s just wasting money when they could just buy a house and own it.
I also keep reading opinions online that the housing market crash everyone is waiting for isn’t going to happen and house values will keep going up infinitely especially in this area (The Bay). Personally I would want them to hold off in the event of that happening as I’m extremely uneasy about them wanting to buy another home right after selling their home, especially since it will cost them everything in the current housing market. Any advice or recommendations? Thanks 🙏
Submitted June 07, 2024 at 01:07AM by pettnpa7 https://ift.tt/TQ1j0kN
