8/26 So what's the best vehicle to keep my money in
that I am not ready to invest for the long term?
money market? brokerage account? CD? savings account?
thanks!
\_ http://www.fool.com
To spare you the trouble of reading, put it into an
index fund (one based on the S&P 500). But I would
read it in its entirety if I were you.
\_ you are kidding right? S&P 500 index fund is a stock fund
and is not appropriate for short term investing.
\_ i keep it in the glove compartment of my ford tempo.
\_ the one that offers the best liquidity for the amount of
C. Brokerage money account -- pretty good option. The Rates
return you desire with the level of risk you can stomach.
\_ I agree. Other choices:
A. CD, can have better return than money market. However,
this is not liquid. If you need the money in a month,
and you can get a one year Cd, you are in trouble.
Rates are fixed for the term.
B. Savings accounts -- no way. They are FDIC insured,
but the yield is way too low.
C. Brokerage money market acct -- pretty good option. The Rates
are around 5.5%-6.5% these days. They are not
FDIC insured, but some may be insured by the SIPC and other
independent companies. Some have limits too, like $100,000
protection. Read your prospectus carefully.
Rates fluctuate.
D. Bonds and Treasury's -- good option. Better than CD's
because you can sell them before maturity. However, this
requires more knowledge than CD's, and if you don't
have a lot of money, this can be a problem. Watch
commission costs in buying bonds through a broker, too.
If held through maturity, you can are guaranteed (Treasury)
getting back what you put in. For corporate bonds,
you may not get back what you put in if it defaults.
Bonds are not recommended for beginners.
E. Bond mutual funds -- like bonds but you don't get your full
money back at the end of the term. (there is no term
for a bond mutual fund). Offers diversification of
bonds, so called expert management, and you can have lower
initial investment. Some have no fee and no load.
They do have a yearly expense fee hidden in the return
of the bond fund. Like bonds (if not held to maturity),
you can lose some money due to normal market conditions.
\_ leave it to the motd to give wishy washy answers. Here's where
you should put your money: the Strong Advantage bond fund.
about 1-year maturity, slightly lower quality than your typical
ultra-short term bond fund, but yielding 7.3%. BEAT THAT!!
\_ Look at REIT's; slightly riskier, but fairly safe as
stocks go. ENN, for example, is yielding over 15%.
There are lots of REIT's with various dividend levels
and risk levels (directly proportional). -tom
\_ I made $50 in Vegas last weekend _after_ paying all my
costs! BEAT THAT!!
\_ done with ultra high risk.
\_ both of those have much more share price volatility than
Strong Advantage (check out its chart, the price volatility
has been virtually nil), though it does have pretty high
yield volatility, but most bond funds do.
\_ http://virtualbank.com offers rates up to 6.5% APY for FDIC insured,
fully liquid accounts. Their website doesn't look good
in Netscape under Unix, though. |
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