If you're betting on a crash soon, why not just hedge your existing positions on long dated PUT options? That's what they are for , insurance.

As far as OP is concerned, there's not much point into cashing everything if the timescale is greater than 5+ years for needing any of it. Trying to time the market is just a fools game, consistent investments in the indexes always works out in your favor long term.

Regarding interest rates, .35% is pretty poor, just off the top of my head Marcus is over 1%.

If you bet on a huge crash then your PUTs will lose the value anyway. So what if they give you 50% profit when the inflation is 1000%.

I’d buy gold or crypto instead.

Stock market can keep going up due to inflation even if everything is crap and politically manipulated.

Gold is a real indicator and crypto is icing on a cake

A huge crash will net you much more than 50% profit, you can pull that any day of the week for the last 4 months with the market volatility.

With PUTs the maximum you can earn is 99.999%

With inflation you can lose much more.

What? That’s completely false. The last S&P dump in May net me roughly $1550 per $150 SPY contract.

There are tons of high-yield savings accounts paying much more than 0.35%.

Telling people to increase their indebtedness to buy index funds right now is pretty dubious advice.

I think it’s reasonable to take out a long term loan given current rates.

Surely, there is some percentage where it makes sense. If the loan percentage were -1%, it would obviously be a good idea, right?

Assuming 2% inflation, sitting in cash is like taking out a loan you don’t need out at ~2%, and stuffing the money in a mattress. That’s clearly a bad idea, right?

Current rates are 3%, and the market returns about 7% in the long term. (4-5% inflation-adjusted).

Historically, the only way to get burned reinvesting a loan at these rates was buying at the peak prior to the Great Depression. The market will go up or down over the next year, so averaging the purchase over that time eliminates the timing risk.

I can’t come up with a more risk averse strategy than this that also has positive real returns in expectation. Any suggestions?

(Edit: minor clarification)

I haven’t done a ton of research, but I know for certain that Ally Bank and Discover Bank offer better rates than 0.35% in their savings accounts.

You are trying to time the market. If your goal isn’t to cash out within a year, don’t look at the prices, just buy S&P index fund like VTI and a bonds fund in some proportion. Rule of thumb is 100 - your age is the percentage that goes into stock fund, your age is percentage that goes into bonds.

The strategy I described is sometimes called “time cost averaging”

It is a form of timing the market. The idea is to buy at about the average price over some time period to avoid getting bitten by volatility.

For reasons not involving investments, I had to have a large cash position until we were well into the recovery from the last crash.

Buying index funds at all time highs during the biggest economic downturn of our lifetimes is a bit much to stomach, so I’m spreading the purchase out over time.

One other thing, I recommended a robo over a manually rebalanced vti/bond split because they include some money in foreign indexes (increasing diversification), and auto-rebalance. Some also do fancy stuff like tax loss harvesting.

All of that complexity supposedly beats simple manual approaches by a percentage point or two (after tax).

Also, most robos are idiot proof.

From what I understand, the global economy has become so intertwined that 90% of the time domestic and foreign markets will mirror each other anyways. The example I was given is that the Taiwanese life insurance industry is larger than the US mortgage industry and how they both affect global markets. I personally like a mix of S&P500, treasury bonds index, small cap domestic, and a foreign stocks index. And a good robo that gives me that mix with a 0.07% fee or whatever like VTI does could be great. But if the fees are higher than that, I’ll balance it myself.

The Vanguard Federal Money Market Fund (Settlement fund) has a variable rate but produced 1.1% in the last year and 4% since inception.

In addition when you park your money there you can easily invest it at any time. In general going straight up Vanguard with minimal oversight is much better deal than Wealthfront.

I believe the poster has $450K in cash, in addition to the real-estate holdings, and that is already more money than they know what to do with. I don't know if it makes sense to mortgage "the base" to add more cash to that pile.

I moved my cash from Wealthfront to Marcus, I think their rate is 1.05% right now?

It was way higher before. I got a 1 year cd at 2.25% with Marcus that is expiring next month. Those were the days.