$60,000 what do you do with it?
 

You've got $60,000 in cash sitting in the bank getting less than 1% APR.

You'll need that money in a couple of years for a large purchase think house downpayment or college, so you can't use it to pay down any debt. (No, you can't toss a big giant party with hookers and drugs either WK.)

My idea is to put the money into a Vanguard fund tracking the S&P 500, which historically has been a good steady rise. Yes, there is some risk, but I feel the growth is worth the risk.

What are you thoughts on what to do with that money?

fidelity has been very good to us...

American Funds.

But first get a good experienced broker who knows those funds extremely well and he'll make it diverse and as safe as you need it to be. I did this with approximately that amount and now I earn between $1K-$2K each month in interest. It sure beats just earning interest in a plain old Bank (sorry to my Bank buddies, but it's true).

Make sure you sent up an IRA for yourself, as well.

When looking for an investor, interview the ones recommended by your wealthy (yet honest & not neuvo riche) friends. Ask every question you can think of and have the person show you all the Annual Reports at the very least. They will ask you if you need to be aggressive - or not, then you have to decide if you want to retire someday and when and where.

PS - I've lost $80K before to someone who drove the Jag and was recommended to me by a person who was a salesman buddy (!!!) and this investor dude lived in a huge house in Dallas, - except, on credit, of course...plus he was never available for meetings. Geez, I wish that someone had told me to do my homework back then.

Hope this info helps someone else out there. Good luck. Be cautious and trust your gut. If it sounds too good it's probably bullshit.

If you're gonna need the money in a couple of years, don't invest it.

Take up whatever tax efficient short term (3-12 month) cash investments there are up to your limit, and repeat, put up with 1% return in the meantime.

60K isn't 60K if you need it soon.

It depends on what you need the money for. If you're going to use it for tuition, then start a 529 for yourself and enjoy the tax-free growth. If you're going to use it for a downpayment, then you may need it more liquid.

If there's a very set time that you'll need the money, you may want to try some short term municipal bonds. They're tax-free growth and guaranteed return, especially if you're dealing with a government entity with a good rating.

Honestly, $60k isn't a great starting point. It's on the small side for any meaningful growth unless you're planning on adding to it down the road. But that's not what this thread is about.

I'd rather pay off my debt first.

I truly envy those who do not have that consideration. To me, the question posed in the OP is moot because all I can think of is paying off my debt.

Buy guns. Lots of guns. Guns are the only toy that appreciates.

Invest in mutual funds. Check out Marketwatch.com; it has been by far the most useful tool (coupled with google.com/finance) that i've ever used pick out a mutual fund to meet your needs, there will be reading, lots of reading, involved. Once you find what you need, set up a brokerage account with your bank or ETrades (take advantage of the free trades while you can) and pour it all into something that wont explode creamy white failure all over your face.

Just be careful with mutual funds, because there are penalties (often severe) if you need the money sooner than you agreed upon. I'm not so sure about them as short-term investments.

If it's short term, and you definitely need the money (i.e. you are going to use it in two years), this means you need to protect your principle (low risk) and have access to it soon (short term).

This leaves options such as T-bills, bonds, GICs, money-market products, etc. The drawback on these, of course, is high inflation will wipe out any gains.

But at least you know you'll get your money back.

If I know that I need the money for something important---and soon---that is the bottom line: low risk.

Growth funds tend to need longer cycles than two years to make them worthwhile. In two years' time, you could end up with less than what you started with.

Seek the advice of an investment counselor.

This is probably somewhat old-fashioned, but assuming I knew the exact time-frame when the money was needed, I would place it in a low-risk CD. It would likely allow just enough interest to cover inflation, maybe a little more. I wouldn't be tempted to pull the money out early and I wouldn't have to worry about losing a penny.

See, that's the thing, gg. When you need the money, it's different from money you don't necessarily need. You should keep the two separate when investing it. Don't gamble with the downpayment on your home, especially if you have a plan in two years' time.

This is why many retail investors have balanced portfolios geared towards their risk tolerance. The proportion of stocks to bonds, for example, is weighted in favour of that tolerance. If you don't mind the risk, you can have more stocks than bonds. You can even have growth stocks over value stocks if you have a particularly high risk tolerance.

The further you are away from retirement, usually the easier it is to have this kind of tolerance for stocks that may or may not perform for you. If things go wrong, at least you have the time to make corrections and learn from it. If you retire in less than five years (or if you need the money for a down payment in two), these aren't the kind of risks you should be taking.

On the other side of things, there is the risk of not having the portfolio performance you need to meet your goals. This is why having a bond- or fixed-income-heavy portfolio doesn't make a lot of sense when you're young and have a lot of time. Inflation will erode too much of your gains and you won't likely meet your goals.

The whole strategy is about balancing risk vs. reward. It depends on your time frame mostly. Stocks tend to give you the highest overall growth, but that's usually over the long term. Price volatility needs longer cycles to make it worthwhile.

Two years isn't a lot of time. Not with money that's already slotted for a specific use when the time is up.

---------- Post added at 09:50 AM ---------- Previous post was at 09:38 AM ----------

EDIT: I should also add that I wouldn't be comfortable with products tracking the S&P 500 at this time unless I was looking at the longer view. There is too much uncertainty and potential volatility currently, that I wouldn't be surprised to see most of the recent gains of the past year or two wiped out again.

First, I'd find a better bank. My bank pays 2% on my checking account. 1% on savings is lame.

Then I'd forget about whatever big investment it's being saved for and think retirement. If you're in your 30's and can sit on it for another 30. Roll it into some muni's and you can retire in your 60's with about $2 million. Keep the $2 mil invested earning around 6% and live off of the $120,000/yr interest.

At the very least, I would want to try to keep that $60K to invest for retirement, so I'd invest in a solid muni and delay my school/house plans for 6 or 7 years. At which point the $60K should be $120K. Then keep the original $60k invested and use what's needed for school or a home.

Find a good Broker and he/she will show you the way. Edward Jones is a great company with an outstanding track record. I've had poor experiences with some of the other large brokers.


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This. If you'll have a NEED for the money in the (relatively) short term, your first priority should be to avoid risk. Second should be liquidity. I call it "maintaining a strong cash position."

I'm with Snowy. I'd do that also. I would always (and did) pay off debt first. The only exception would be if I had a plan at work that offered a really good match. Any employer match is, of course, an instant 100% return on the amount matched.:) Otherwise, paying off $10k of high interest debt could return much more than investing $60k in something safe and liquid. And you would still have $50k to hoard.

Other toys appreciate, if (big if) you buy at the right price. I'm thinking of sports memorabilia and collectible musical instruments, specifically, but those kind of things tend to be illiquid because of the limited market.
American Funds is a great family, but a lot of brokers are nothing more than salesmen. They don't have much of their own skin in the game. I wouldn't trust the advice of someone who shows off a lot of flashy depreciating high status assets. It just shows their bad judgement. Warren Buffett, who could afford anything, drives a ten year old car. What does that tell you?
Good advice, Baraka. I wouldn't count on growth in the next couple of years, at least not in the USA.

Some banks, usually in small towns in the midwest and south, offer what they call rewards checking. They take a lot of micromanaging because the require you to do one direct deposit, one electronic bill pay, and use their debit card a dozen or so times. Rates are between 3 and 5% and deposits are limited to something under $25,000 and if you miss jumping through one of the required hoops the rate for that month drops precipitously.:sad: But deposits are FDIC insured and 100% liquid.:) I have an account in Cedar Rapids, Iowa, that pays 4% on balances up to $25k. IF I remember to use the card. The other stuff is automated.

Lindy

I'd invest in goods, but that's because I don't trust banks or the market. I'm thinking about getting an old car and fixing it up, for example. Maybe an old Jag.

invest in land while the getting is cheap. land is the one tradable commodity that they aren't making any more of.

Chinese Yuan: CURRENCY:CNYUSD quotes & news - Google Finance

Invest in the Yuan. The dollar is going to hell in a hand-basket and China is looking as good as ever.

Seriously, I have no idea what I'm talking about, but it seems like it could work.

Could you be a little more specific about location, or should he just throw a dart at a map?
First, land is not a commodity, and commodities, by definition, are things that are traded in large quantities. Wheat, for example, is a commodity. Other than that, there are many things to invest in that they aren't making any more of. Stradivarius violins, or Model T Fords, or autographed pictures of Elvis, as examples.

Buying Yuan is not investing. It is currency speculation.:shakehead: Better "bets" would be the Pound Sterling, or Japanese Yen, which is artificially depressed because of the tsunami.

Lindy

i'm not going to do the buying for you, go see a real estate service about where land is cheap

people don't buy land in massive quantities? also, how many people do you see growing crops or building houses on collector's items? land has practical value to it.

You can't guarantee to liquidate land at a specific time.

for some reason the title to this thread reminded me of that old 100 grand commercial
"what would you do with 100 grand?"
"I'd eat it!"

Put a down payment on a 300000 house and rent it out for 2k a month

You could buy a bit of farm land in europe, then get paid to let it lie fallow. Friends husband bought a house in Bosnia just after war there finished - he is fixing it up and will probably live in it when he is not traveling, and let it when he is.
Cheapest property prices are in war zones. Of course its a gamble. Take cyprus - after the turks invaded, half the island was lost to those with homes there. Seems there are car show rooms (perfect for willtravel) with the cars still on display, just sitting there for all these years. Con point - people who bought holiday homes on the turkish side of the island are being chased as the proper owners didnt agree to selling.
Another down side I suppose - a lady local to us has a holiday home there and has come back with typhoid - well we all know what shes been eating dont we.

Does anyone here think gold is a good investment?

Although it's so high now, I can't buy into at this time - but it feels like it will keep going up in price.

I'd sooner invest in silver rather than gold.

The older people I know have mostly sold their gold already - when price went up, they decided to cash in and enjoy the money. There are ... um .... social groups of people who prefer gold and wear it because you can hide it from the tax man.

gold has been struggling lately though right? i stopped day trading when my free trades ran out but i would check marketwatch.com for history and news for pretty much everything. 60 grand in gold? i'd rather buy 60 grand in land if anyone was selling, but probably not gold