Short term parking options


#1

I am new to investing and have recently opened IB account. I am not very comfortable with current market valuations and would like to spread my purchase over multiple months to average the buy price.

My idea is to purchase a ETF like VCSH (Vanguard Short-Term Corporate Bond ETF) to park the money. Later sell and purchase ETF like VTI.

I would like to get some feedback if there is any drawback with this strategy? Do I end up paying more misc. charge with this approach?


#2

I don’t know if this makes sense, it doesn’t look like VCSH is making much money lately. I’m keeping cash instead, at least it doesn’t lose value plus I don’t have to pay transaction costs.


#3

Do you keep cash in brokerage account?


#4

Some, yes, but always under the FSCS coverage limit.


#5

what is the timeline? It sounds a lot like market timing to me. Check out rule #5 here:
https://www.bogleheads.org/wiki/Video:Bogleheads®_investment_philosophy

Just a thought: Automize your savings and investing each month so you never see the money and try to “save later”, set up the transfers on an ongoing basis and organize your spending so that you set aside (after saving, investing and bills) a “feel free-to-splurge” money amount. A couple of years later you’ll be very happy you did :slight_smile:

Good luck!


#6

Hey arch, did u end up with any VCSH back in 17?
Kind of looking for somewhere to “park” cash too, and just read this following article & thought I’d add it to this post.


In retrospect, since mid 17, seems price of VCSH is very flat, but pays a dividend of 2.6%, for me after tax that would be about 2% (in USD).
VT would be about flat too in that time, with similar return. For short-term to reduce down-side risk VCSH seems like an option.
IB would pay 1.9% on USD cash balances, but for the first 10’000 always zero, so so not so ideal for amounts <30’000 or so.
Maybe VCSH is an ok option…