PDA

View Full Version : low risk short term investment advice?


Corbet
11-25-2008, 09:06 AM
advice needed for 6 month low/no risk investment.

Our sale of our Frisco townhome funds today and I need to stick some of the equity into some sort of 6 month investment. obviuosly we want to get the highest yield possible but not at any expense of risk. Just want to make more than simply sticking it into our savings account.

thoughts? I'm more of an expert on spending money than investing it.

wesintl
11-25-2008, 09:17 AM
cd

Red_Chili
11-25-2008, 09:41 AM
X2.
If your need (timing) for access to the cash is in flux, take advantage of the FDIC $250K deposit insurance and divvy it up in savings between a couple banks - or one under your name, one under your wife's name, etc. as needed to make sure it is covered. No risk at all, then.

If airtight risk-free is not really needed, you could just open a money market account. It is a big deal when a MM fund 'breaks the buck', and it happened with one (though the firm backed it due to the 'big deal' effect). Reasonably risk free. I like Fidelity generally due to low cost/high service, I've been pleased with the guy I've worked with. Tax free options, etc. For that matter... CDs too.

Chris
11-25-2008, 11:36 AM
I agree CD's are your best bet even though the rate of return is pretty poor right now. My experience with Fidelity was not like yours Bill, I pulled my retirement from them and after jumping through their hoops and getting it transfered my new investment bank expressed relief we got it out when we did due to concerns of their current condition. I'm sure you've seen the news/layoffs, etc.

nakman
11-25-2008, 12:05 PM
Hey congrats on selling the place, Corbet, that's awesome.

corsair23
11-25-2008, 05:51 PM
Hey congrats on selling the place, Corbet, that's awesome.

x2

6 month CD like others mentioned...Check around for who has the best rate (typically a credit union)...

pmccumber
11-25-2008, 10:06 PM
Treasuries. I understand the guarantee of CDs and the FDIC but if a bank goes under, it will be years before you see the money. Somebody said to divvy it up and that would be the only way to go if you're pushing into any of these products. There are actually commercial banks failing now too so it isn't out of the question.

My grandmother lost 6 figures in the Savings and Loan debacle and subsequently died in '91. It was all insured but her estate was still getting paid in '98.

Treasuries. Backed by the full faith and credit of the United States government. I buy mine through Schwab. I would get 3 month now and get another 3 month when they mature to minimize any principal loss if interest rates rise and they very well could.

Paul

pmccumber
11-25-2008, 10:07 PM
BTW, if you do CDs, Schwab also has access to hundreds of different banks.

pmccumber
11-25-2008, 10:25 PM
if a bank goes under, it will be years before you see the money

That probably is an overstatement. But rest assured, if a bank does go under, access to the money will not be a seamless, unnoticed transaction. In the case of my grandmother, and I know cuz I managed the estate, the government assessed that they only had to cover a portion of the assets and through a process of liquidation trickled the assets back to grammy. It sucked.

Treasuries. CDs are often as vulnerable as commerical paper and as someone else alluded to, Money Markets even went below a $1 recently as by definition they are almost solely commercial paper. Money Markets I would view as very dangerous right now.

Red_Chili
11-26-2008, 07:27 AM
US Bank is in solid condition, they never sucked at the subprime teat.

RE: Fidelity, most houses are doing layoffs. For the most part, back office & overhead. Check Morningstar for summaries. I'm not worried at all. The fund managers are untouched except for perhaps Pimco, where the new CEO is changing strategies (to match Fidelity's FWIW), so they let the quants go.

I suppose one's experience at any of these places is only as good as the guy/gal you are working with, and I have been extremely fortunate. The guy (an investment savvy CFP - those are rarer than you might think) has saved me a TON of money lost, including money not at Fidelity. For free. Can't believe it. Let me know if you want his name.

Chris
11-26-2008, 07:44 AM
I suppose one's experience at any of these places is only as good as the guy/gal you are working with, and I have been extremely fortunate. The guy (an investment savvy CFP - those are rarer than you might think) has saved me a TON of money lost, including money not at Fidelity. For free. Can't believe it. Let me know if you want his name.

True, but with the turnover at Fidelity it's hard to find anyone good. We requested a meeting with their most senior guy in the metro area. Exchanged a few messages by phone and when set up meeting date found out he was gone. The guy who replaced him gave us some advice which we followed and lost $40K in less than a month. I suppose you get what you pay for.

I'm not interested in changing anyone's opinion.

I will just add that old tried and true response to "For free. Can't believe it." which you're all familiar with: If it sounds too good to be true, it probably is. :D

nakman
11-26-2008, 03:51 PM
Can one of your financial wizzes whip out some quick math here? What's the rate on a 6 month CD, anyway? Say for simple math you put $10K into a 6 month CD, what would you have in 6 months?

Uncle Ben
11-26-2008, 04:04 PM
Can one of your financial wizzes whip out some quick math here? What's the rate on a 6 month CD, anyway? Say for simple math you put $10K into a 6 month CD, what would you have in 6 months?

At what interest rate?

CBone
11-26-2008, 04:18 PM
If you placed $10,000 in a CD at a rate of 3% annual, you would earn $150 at the end of your 6 month CD.

You can check out CD rates around the state or around the country at bankrate.com. You may also look into an online account, such as INGDirect.com. They are FDIC insured and are just like your neighborhood bank, except everything is done online. They typically offer higher yielding savings accounts and CDs than a brick and mortar bank because they have less overhead.

JadeRunner
11-26-2008, 09:33 PM
We have been happy with INGDirect.com for our liquid savings. It's a variable rate which is down to 2.75% now and of course FDIC insured.

nakman
11-26-2008, 09:37 PM
If you placed $10,000 in a CD at a rate of 3% annual, you would earn $150 at the end of your 6 month CD.
.

Ok thanks Carlton, and 3% is pretty typical for a CD, eh? So $150, then you give 40% of that back in income tax.. so $90 right?

Red_Chili
11-28-2008, 07:49 AM
I will just add that old tried and true response to "For free. Can't believe it." which you're all familiar with: If it sounds too good to be true, it probably is. :D
Silly me. That $100K the Fidelity guy saved me, that I didn't lose in my retirement account because of his advice, that isn't even Fidelity managed, must have been an illusion.
:lmao:
The guy has continued to be a source of good advice, and I don't have to pay hourly. In all fairness the first guy I talked to at F I would never have gone back to see. Had the same experience at Merrill, but he cost more. Almost went with a friend's advisor who definitely is NOT free, but didn't - and my friend is now not only upside down, but pays a healthy fee to boot. I did that experiment previously with someone else - and unfortunately had the same experience. So I would not say you get what you pay for in investments, IMHO at least.

I think they ought to get paid for a percentage of capital appreciation/income generated. Except they would fold every business cycle. Sure would be a motivator though.

Chris
11-28-2008, 08:05 AM
Silly me. That $100K the Fidelity guy saved me, that I didn't lose in my retirement account because of his advice, that isn't even Fidelity managed, must have been an illusion.


Good for you, much better performance than I had with them. It took me 3 months to get my retirement funds out of Fidelity after my "guy" helped me loose 40K in 30 days. I didn't pay any management fees either.

My account is still open since they left 23 in one of my accounts. Maybe I should get the name of your guy and see what he can do for me. :D

CBone
11-28-2008, 02:59 PM
Tim, yep, after all that work, you may come out with ~$90 post-tax for your 6 month CD of $10K. And yes, 3% seems to be an average going rate these days. Not much, but in today's market, you're not losing anything, which is great.