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How to invest $25K safely for 6 months but still get good return?

Posted on 7/7/14 at 6:45 pm
Posted by euphemus
Member since Mar 2014
536 posts
Posted on 7/7/14 at 6:45 pm
I am borrowing about $50K from my 401(K) to pay for my MBA. The first semester fees is about $25K. But since I can only have one open loan at any time, I need to borrow as much as I can under one loan. The interest rate for the loan is 4.25%.

My question is - how do I invest the extra $25K that I need for my tuition in January (but am getting now) safely for the next 6 months but still earn a good return? Any suggestions other than CDs?
Posted by Jcorye1
Tom Brady = GoAT
Member since Dec 2007
72616 posts
Posted on 7/7/14 at 6:49 pm to
Short term bonds maybe?

Posted by Tigerpaw123
Louisiana
Member since Mar 2007
17420 posts
Posted on 7/7/14 at 6:51 pm to
Put it in a promotional high interest checking account if you can still find one, nothing safe, short term and has good return
Posted by bayoubengals88
LA
Member since Sep 2007
19770 posts
Posted on 7/7/14 at 7:01 pm to
Likely too risky, but Utilities ETF
Posted by Odinson
Asgard
Member since Apr 2014
2778 posts
Posted on 7/7/14 at 7:09 pm to
You will need that money to be liquid, short term and without any risk. Put it in your checking/saving and collect your .05%
Posted by rintintin
Life is Life
Member since Nov 2008
16367 posts
Posted on 7/7/14 at 7:24 pm to
quote:

invest $25K safely





quote:

6 months





quote:

get good return



Wouldn't we all like to know.
Posted by Ole War Skule
North Shore
Member since Sep 2003
3409 posts
Posted on 7/7/14 at 7:54 pm to
Can't be done. Bank CDs pay 1% or so. Anything more is going to have some risk of principal loss.

There's no free lunch or reward without risk.
Posted by Oenophile Brah
The Edge of Sanity
Member since Jan 2013
7549 posts
Posted on 7/7/14 at 8:02 pm to
Vanguard Wellesley Fund

40/60 stock/bond mix. Nice quarterly dividend.
Posted by Ric Flair
Charlotte
Member since Oct 2005
13756 posts
Posted on 7/7/14 at 8:12 pm to
Anything other than a savings/checking account will be either too high risk, or too much trouble to bother with for the minuscule bump in return.
Posted by marchballer
The Greatest Country on Earth
Member since Aug 2008
4120 posts
Posted on 7/7/14 at 8:22 pm to
open a high-yield savings account or no penalty cd with ally bank.

You will get ~0.85%
Posted by I Love Bama
Alabama
Member since Nov 2007
37880 posts
Posted on 7/8/14 at 12:52 pm to
Plenty of solid bond options that will give you a 5% return tax free.
Posted by foshizzle
Washington DC metro
Member since Mar 2008
40599 posts
Posted on 7/9/14 at 6:13 am to
quote:

safely for the next 6 months but still earn a good return?


As others have noted, you can't really. The problem is that rates generally are so low right now that in order to get that kind of rate you'll have to take some risks, usually in the form of a bond that could go up or down.

quote:

borrowing about $50K from my 401(K)


Why from your 401? That usually isn't a great idea for several reasons, one being that you are borrowing pretax money and repaying post-tax.
Posted by KG6
Member since Aug 2009
10920 posts
Posted on 7/9/14 at 7:16 am to
Kasasa (sp) checking account. 2% on up to 20k with one direct deposit and ten transactions per month. Anything over 20k gets 1% if I'm not mistaken. I've got it through a local bank, but I believe other banks offer the program. When I first started it was 4%! Then down to 3% and now at 2.
Posted by whodatigahbait
Uptown
Member since Oct 2007
1781 posts
Posted on 7/11/14 at 2:49 pm to
the only thing I can think of for your situation is to buy high quality munis that are callable, and are in the call period but haven't been called yet. they trade at par but can have coupons of 3 or 4% and even 5% and trade in small amounts....the risk is that they can get called at any point 90 days out but since they trade at par you wont lose principal but could lost out on transaction costs...our bond desk buys these all the time however, they are hard to find but they do trade, but you have to look for them....
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