bobmsmythe

Hey Hal, good to hear from you. The man himself.

Well, it depends on what you mean by "low risk." U.S. bonds are extremely low risk, but they don't pay very well. They can generally be considered as a "benchmark," though. I-Bonds are paying 2.19% right now, and are completely safe. But that's not exactly making much. Corporate bonds will pay more. Unfortunately, if you want to do bonds, you really need to have quite a bit to put up. Unless, of course, you invest in a mutual fund that buys bonds. Really, your best bet is probably to put money into a no-load mutual fund, something that doesn't charge you to invest. A lot of times with folks who are just starting out, I'll recommend that they put 50-60% of their money into an S&P index fund, maybe 15-20% into a small- or mid-cap fund, and then some into a mixed-bond fund. That spreads risk around and minimizes your payment load. If this sounds kind of hazy, it's because I don't know exactly how much we're talking about, and how much risk you're willing to take on. I will say that the S&P 500 has consistently beaten almost every investment, hands down, over the long term, returning on an annualized basis over 10% since 1975. The only investment class open to the average Joe that's done better has been property, and then only if you know where to buy. That's not something I handle. Personally, if you've seen the cost of real estate in NYC, you'll know why I rent.

Ultimately, too, you need to consider whether you'll need immediate access to your cash at any point. If you're looking to buy anything big, like a house or a car, in the next 12 months, and might need some cash, you'd do well to look at something that can be liquidated without much trouble, and to keep some in free cash.

Bob