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We have 1 million dollars from the sale of a farm, which we want to use to pay down land debt. But we can't make a payment until the anniversary date of July 5. Right now it is in an interest bearing checking account earning 1.7 %.

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    What's your goal? Preserving the $1M, risking it all for a chance to 100x it, or somewhere in between? – Hart CO Mar 16 at 20:07
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    If your banking institution has an "interest bearing checking account earning 1.7 %." that will pay that rate on the entire balance, then what will they pay for a savings account or a CD? – mhoran_psprep Mar 16 at 20:38
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    If it's already parked in an account earning 1.7%, you may discover that a savings account or short term CD (3 or 6 month) will not beat that. At 1.7%, we're talking about $4,250 over 3 months. How much risk are you comfortable taking to improve that? – spuck Mar 16 at 23:20
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    what kind of a bank pays out 1.7% on checking accounts these days? Soprano & Soprano Inc.? – Frank Mar 17 at 12:39
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    Interest rates are so low in this era it's not worth bothering. If you're getting 1.7% that is almost unbeatable, just take it and enjoy. – Fattie Mar 17 at 20:10
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If you need that money for a payment 3 1/2 months away, then you need to be extremely risk averse. Maybe even to the point that you may want to spread that $1mil to several banks to stay under the FDIC limits of $250k/account. You will not get great return, but you will be sure to have it when you want it such a short time away.

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    You and your spouse can each open a savings account and have a joint savings account at the same bank. Put $500k in the joint savings account where you are each covered for $250k, and then $250k in each of the individual savings accounts. Then you're covered by the FDIC assuming your bank is eligible. fdic.gov/deposit/deposits/brochures/… – RWP - Down by the Bay Mar 16 at 21:24
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    Would it be possible to approach managers/presidents of local banks or credit unions who may be hungrier for the business? $1MM isn't huge amounts of money, but is it enough that a bank may want to court a future high-value customer? – spuck Mar 16 at 23:23
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    @spuck + It's such a short term deposit that I'm not sure it has that much utility for the bank. If it was something longer term and they could actually plan to make loans off of that, then maybe? – RWP - Down by the Bay Mar 17 at 13:24
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    @JBentley If we get to the point where FDIC can't cover the accounts at one bank, having accounts at multiple banks isn't likely to help. – chepner Mar 17 at 22:13
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    @WetlabStudent you left out "per ownership category," where joint and single are considered separate categories. if you don't believe me check out the calculator they have on their site: edie.fdic.gov/calculator.html – RWP - Down by the Bay Mar 18 at 0:46
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In addition to R.Hamilton's answer (upvoted), I would add that there is some not insignificant risk at the moment of financial crisis #2 due to the demand and supply shocks, (covid 19 + oil market drops ), overstretched corporate borrowing, and central banks having run out of ammo trying to keep 2007 on ice.

I think it would be very wise to split the money into separate banks for insurance coverage. Maybe look into short term term-deposits.

EDIT: Update. Since the time of posting this answer I would change the opening "not insignificant risk" to "highly probable", if not actually declaring that we are now in fin.crisis#2, opening rounds.

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    The current risks are non-trivial. Industries are shutdown across the globe and it's possible a bank can go down. You want to be covered for sure if you need the money in 3 months. – Nelson Mar 17 at 14:57
  • @Nelson Plus a vaccine is a year off, and we're still waiting for the UK to do something about Covid19. When they start tightening the screws it will be too late, and watching FTSE collapse while Covid deaths jump through the roof won't be fun. – Frank Mar 17 at 14:59
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Unless you want take a more significant risk, that's probably anout the best you can do.

Investing it into the market - bonds or ETFs or even shares - would give you a chance to earn a lot on it, but also to lose a lot on it. With a short time horizon like this, you would not be able to recover losses. If you had ten years, the recommendation would be to buy some ETFs and make 4-10% in average. For not even four months - take the 1.7%.

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    Have you looked at the stock market recently? Now is dedicatedly not the time to invest in stocks :-) – Mawg says reinstate Monica Mar 17 at 9:02
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    @MawgsaysreinstateMonica - <facetiously> It can go nowhere but up! </facetiously> – Jay Lemmon Mar 17 at 9:59
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    @MawgsaysreinstateMonica it’s always the time to invest in stocks if your term is long enough. – Tim Mar 17 at 10:03
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    @MawgsaysreinstateMonica Actually, last week was decidedly not the time to invest in stocks. Now, who knows? Have they gone down all the way they're going to go down yet? Or not? – user253751 Mar 17 at 10:13
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    @alephzero Yeah, unless you need the cash back in four months - now is NOT the time for short term speculation with money that OP cannot afford to lose. – J... Mar 17 at 14:15
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Possibly, invest the funds long-term and re-finance the land debt from a position of better credit standing.

Also, close to 50% of the funds in a brokerage account can be taken out of the account on margin and institutional margin rates can be found. Then an interest-only loan can be developed such that simply future performance of the investment possibly pays off the loan. I called that situation an interest-only loan because the percentage of margin deposit must be maintained while the minimum financial drain is the margin interest.

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Of course, I would always consult a fiduciary investment advisor. I would imagine my investment advisor would recommend investing the money long-term in a diversified allocation portfolio, possible refinance the land debt (when interest rates drop lower, hopefully soon) and service the land debt from the growth/income from the invested money.

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  • This is indeed the best option, the stock market can even already recover at the end of the year, but it shouldn't be a problem if it take significantly longer than that: edition.cnn.com/2020/03/16/investing/… – Count Iblis Mar 18 at 5:45
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    A long term portfolio is not appropriate for a short term time horizon. – Grade 'Eh' Bacon Mar 30 at 16:40
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I had $1M for 3½ months, I would put ~$900k in four 3-month CDs (if you can find them) and use ~$100k as the underwriting for a payday advance company. Getting in contact with the right people will take some work though. This could give $10-15k in gains, even considering the current economic climate.

Others might not like my idea, but you asked for opinions. As always, if you have a financial advisor, use him; if you don't; get (a good) one.

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