Short Term investing

[mrblunt]

I have paid off all of my credit card debt, finally, and have a little money I'd like to put away for a rainy day. I'm looking at probably only 12 months that I'd like to make it unavailable. We aren't talking Oprah money, around 5k. With some moves I've recently made I'm probably looking at owing on my taxes next year so I'd like for this investment to be fairly low risk like a CD or something similar. Does anyone know of a fund, cd...whatever...that I can make a little bit of a return on? Like hopefully at least a few percentage points if those exist today. Facebook IPO??

 

I know nothing about stocks, bonds...etc and with my schedule right now I haven't had adequate time to really sit down and do heavy research on this. I prefer to work with a reputable company not some fly-by-night shop. Any positive experience's you've had would be greatly appreciated.

[Furloaf]

A money-market or CD are the only options I'd recommend. Money-markets now are about 1.0% to 2.0% at the highest and CDs about the same for just a 1-year term. If you don't already have a safety/emergency fund then put the money into a money-market so that it is more liquid.

 

Stay away from stocks with such a low amount of discretionary savings.

[zeitgeist57]

Shop the community banks (Heartland, Delaware, Insight, etc...) and local Credit Unions (KEMBA, Telhio, etc...) to see what they are offering on the 6month side. Working for a big bank, I can tell you NO ONE is offering more than 1% for a year CD or Money-Market account on the secondary market...anything gov't(FDIC, SIPC) insured.

[Furloaf]

Yeah I didn't mention that I use credit unions. Also I just looked around and it looks like anything higher than 1.25% is pretty hard to find.

[zeitgeist57]

The only other (riskier) investment you could look into is a government or corporate bond on the secondary market, but those can be confusing, and some of them do not have a guarantee of repayment.

 

If you want to look into that, I can give you a contact in Grove City to talk to.

[mrblunt]

I appreciate the knowledge guys.

 

My best bet may be to find one of those open a savings acct get 150 bucks deals because 2 percent of this money is only going to yield me like 75 bucks over 12 months anyhow. If I can open an account, get the 150 bucks then move it to a money market account I may be able to maximize this profit.

[Trouble Maker]

We have a similar chunk of money and were tired of seeing it lose money versus inflation sitting in a traditional bank savings account. So we went and saw an investment guy and he pointed us towards mutual funds. Keep in mind that, AFAIK, that's where they make the most money so that's part of it. We've still been very happy with his advice and how are funds have done. Granted, we got them when everything in that sector was down (Oct 11'). These funds ARE NOT guaranteed, so I wouldn't do this if it's your only savings. The upside is that over the long run, they should make a lot more than a CD or savings, even with conservative funds. Another rub is the funds are stuck for a year or you take a 1% hit. For us, these were long term savings so that was a non-issue. They've also made so much more than a CD or savings that we'd still come out ahead in the unlikely event we needed to pull them out before the 1 year mark.

 

Some napkin type calcs, and I think we've made about 9-10% since we put this money in there. That's with 75% in conservative funds and 25% in moderate funds, nothing crazy.

Fund symbols

Conservative: PBDCX

Moderate: PFNCX

 

Our investment guy is with AXA if you are interested.

 

Another option is some of the 'online banks'. We have some short term savings in ING. ING and Ally are at about 0.8% right now. Probably much better than you can do in traditional banks savings, especially at that monetary amount. Damn near what it sounds like banks are doing for CD's and your money will be 100% liquid.