€140,000 with no mortgage or property: where to put it

€140,000 sitting idle: Treasury bills at 3% or deposits at 3.35%

An individual sells a family home, ends up with €140,000 in cash and rules out from the start what always worked in his family: buying property and renting it out. The hassle of taking out a mortgage, defaults and conflicts with tenants weigh more than the returns. His bank, ING, pays him next to nothing on that balance in the orange account. And he wants, literally, for inflation not to eat away at his capital "so fast". In other words: he is not looking to multiply his money, he is looking not to lose it.

That starting point — risk aversion, desired liquidity, wealth already concentrated in property — shapes everything that trinc. The conversation turns to conservative products with specific names, and along the way paints a fairly honest picture of where risk-free returns stand today.

Spanish Treasury bills and deposits: 3% as the floor

The first concrete answer comes quickly: 12-month Spanish Treasury bills (Letras del Tesoro) at 3%. Simple, with no management fees and reasonable liquidity. The same person adds a warning worth more than the recommendation: he would not invest in fixed income "with the mega-inflation coming", but acknowledges that this already means taking on risk. The sentence sums up the dilemma of anyone looking for a safe haven: anything that is not cash carries risk, and cash carries it too — just disguised as peace of mind.

Interest-bearing deposits come into play when asked whether they are not better in terms of liquidity. The answer is that they pay less: around 2.5% at the big Spanish banks. The alternative is 2-3 year deposits with an APY of 3.25% to 3.35% at institutions like Cetelem or Renault Bank, plus the option of foreign deposits or platforms like Raisin, where a Spanish bank reaches 3.38% over three years.

Here comes one of the most useful practical details of the whole conversation: the modelo 720 (a Spanish tax form for declaring foreign assets). If the deposit is abroad and exceeds the thresholds, it must be declared. The way to avoid this is to check the IBAN: if it starts with ES, there is no obligation, even if the deposit guarantee scheme belongs to another country. Renault Bank operates with a Spanish IBAN and French guarantee; ING, with a Spanish IBAN and Dutch guarantee. The distinction between where the money is and who protects it is cleared up in two messages and dismantles a fairly widespread confusion.

Short-term bond funds and permanent portfolios

For those who do not want to be tied to maturities, the option of a short-term bond fund comes up, with bonds of one to three years, daily liquidity and an average return that sits at 4.2% in one specific case. One point more risk than a deposit, no doubt, but without the rigidity of a fixed term.

With a bit more tolerance for volatility, a permanent portfolio with semi-annual or annual rebalancing is proposed: 25% money market, 25% global bonds, 25% MSCI World and 25% gold. It is the classic recipe for those who do not want to guess which asset will perform best, and it fits the profile described: someone happy to give up part of the return in exchange for sleeping well.

Gold and silver also come up as a hedge in inflationary environments, with the argument that they are "on offer" and tend to perform well when money loses value. That is a thesis, not a fact: nobody in the conversation provides historical data to back it up.

Dividends, index funds and the old tax problem

The most aggressive proposal comes with a dividend portfolio: a 5% dividend yield from the start, with growing dividends that in a decade could be equivalent to 8% or 9% a year on the initial capital, plus capital appreciation. The underlying argument is convenience compared to renting out property: no squatters, no legislation working against you, everything more diversified.

The counterweight is tax and comes with figures: in Spain dividends are taxed under personal income tax (IRPF) and the state takes between 19%, 21% and 23% depending on the bracket. That money no longer goes back to work in the market. The criticism is not of the strategy, but of its efficiency in the Spanish context.

The discussion then turns to the classic index funds versus stock picking debate. One side argues that most individual investors do not beat index funds over the medium and long term, and cites the case of Berkshire Hathaway, which over the last ten years has not outperformed the S&P 500. The other replies that the indices are loaded with overvalued stocks and that there are cheap sectors and countries, with MSCI Europe below MSCI World and the S&P 500, and markets like China or Brazil "in the dumps".

Liquidity, peace of mind and the ghost of 2008

A current of thought emerges that recommends nothing and yet still shapes the decision: holding cash. It is not a comfortable position, it is a bet. And it is reinforced by the experience of someone who remembers the financial crisis: setting money aside in staggered deposits of one, two and five years while paying off the mortgage, just in case. The story of the acquaintance who lost his job along with his vvife and ended up losing his home works as a generational warning.

The practical conclusion to be drawn from all this is not one single answer: it is a split. The €140,000 does not have to go to one place. The conversation offers a menu of returns from 2.5% to 4.2% with different degrees of lock-in, and makes clear that above those figures you enter the territory of real volatility.

And inflation? Nobody in the conversation proves that any of these products beats it on a sustained basis. That is the gap that no recommendation fills, and probably the takeaway the reader should keep: total protection does not exist; the only thing that exists is choosing which risk you tolerate.

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This article does not constitute financial advice. Any investment decision should be made with professional information tailored to your personal situation.