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Started By
Message
I have about $37K to invest in
Posted on 1/26/10 at 12:10 pm
Posted on 1/26/10 at 12:10 pm
Currently have it in a online savings account with Bank of America. I don't want to gamble this money, just guarantee myself interest.
Do you have any suggestions on where to put it? I was thinking a cd or money market account, but don't think that will pay much either. I am guessing I am getting about 1 to 2%. Last month my interest payment was $15 on a $37K balance. That sucks.
Do you have any suggestions on where to put it? I was thinking a cd or money market account, but don't think that will pay much either. I am guessing I am getting about 1 to 2%. Last month my interest payment was $15 on a $37K balance. That sucks.
12
Posted on 1/26/10 at 12:15 pm to Weaver
just one possible option, stick it in C shares of the PIMCO Total Return bond fund.
Posted on 1/26/10 at 12:15 pm to Weaver
quote:
I don't want to gamble this money, just guarantee myself interest.
I would put it in TIPS, but money market accounts or treasury notes are the other two options for virtually zero risk.
If you are in the top bracket, consider municipal bonds, but realize that they carry some risk.
Basically, you are asking for something for nothing. If you want a decent return, you have to be willing to take on some level of risk. However, the things I suggested will return better than what you are currently doing.
Posted on 1/26/10 at 12:20 pm to TheHiddenFlask
quote:
TIPS
What is that?
I may inquire about money market with Bank of America. I would like to have the flexability of getting the money soon if I need it. This is my emergency fund. I have another account locally that has $5k, but that would be a backup if I could not get the funds sooner than a few days. Don't know much about Treasury Notes.
Thanks for the advice
Posted on 1/26/10 at 12:21 pm to Weaver
I don't know anything about your area but have you thought about buying a small house or townhouse with that money and renting it out? I bought a townhouse in foreclosure for in my area for 38k and put 5k in it. It rents for $550 a month. A lot better return than you are getting and is extremely safe....
Posted on 1/26/10 at 12:21 pm to JPLSU1981
quote:
PIMCO Total Return bond fund.
I think I have A shares of this in my Roth and Beneficiary IRA my Mom gave to us.
I also think I have some invested in my 401K.
Thanks for the advice
Posted on 1/26/10 at 12:22 pm to I Love Bama
Na. Don't want to deal with renting and such. My brother had a rental in Austin and it was a pain. Just looking for something better than 1% guaranteed. I am not asking for 5%, but something better than 1%.
Posted on 1/26/10 at 12:31 pm to Weaver
quote:
I don't want to gamble this money, just guarantee myself interest.
This one statement pretty much limits you to CD's and /or money markets. Somewhere less that 2% is the going rate. Since you are adverse to "gambling" with it, go with the flow and be happy with 2% or less.
Not sage advice, but your risk tolerance is what it is!
Posted on 1/26/10 at 12:32 pm to Weaver
If you own a house with an outstanding mortgage and your goal is the best zero-risk return, then you should pay your mortgage down $37k. It is like getting CD with the same rate as your mortgage rate minus your tax bracket. For example:
Mortgate rate: 6.5%
Tax Bracket: 24%
Your Return: 4.94% ((1-.24)x6.5)
I have no idea if the above tax and mortgage rates are realistic. I'm sure I'll be flamed if I'm wrong. You will lose liquidity doing this, but it doesn't sound like that is much of an issue. For that matter, you could take out a home equity loan if you had to.
Mortgate rate: 6.5%
Tax Bracket: 24%
Your Return: 4.94% ((1-.24)x6.5)
I have no idea if the above tax and mortgage rates are realistic. I'm sure I'll be flamed if I'm wrong. You will lose liquidity doing this, but it doesn't sound like that is much of an issue. For that matter, you could take out a home equity loan if you had to.
Posted on 1/26/10 at 12:38 pm to Weaver
quote:
TIPS
quote:
What is that?
It stands for Treasury Inflation Protected Securities.
Here's an explanation:
quote:
A special type of Treasury note or bond that offers protection from inflation. Like other Treasuries, an inflation-indexed security pays interest every six months and pays the principal when the security matures. The difference is that the coupon payments and underlying principal are automatically increased to compensate for inflation as measured by the consumer price index (CPI).
Basically it's a bond that is linked directly to the rate of inflation.
Posted on 1/26/10 at 1:10 pm to Parliament
I understand your premise, but don't want to do that either. I am comfortable with the mortgage and if I lost my job, I could pay it off, but like the tax advantages. I understand you pay a lot in interest, but would rather hold on to my money.
I will either go with cd or money market.
I will either go with cd or money market.
Posted on 1/26/10 at 1:12 pm to Count Chocula
Count, I agree, but wanted to ask the question to the Money Board. I didn't know about TIPS, so I learned something new today.
Posted on 1/26/10 at 1:19 pm to Weaver
quote:
I will either go with cd or money market.
Do the math with your interest rate and tax bracket. CD and MMA rates are so low right now you could easily give up the tax advantage and still be dollars ahead. For that matter, depending on the size of your mortgage, you will still have interest to deduct. (Assuming $37k isn't enough to pay off your loan.)
Posted on 1/26/10 at 1:23 pm to Parliament
I understand what you are saying, paying a loan for $37000 is the same as getting a cd with the mortgage rate. Just the money is going the other way. I just don't prefer to do that. It is my emergency fund. Which is why I don't want to gamble with it. I just wasn't sure if there was something else I could do with it than a cd, online savings account or money market account.
Posted on 1/26/10 at 1:31 pm to Weaver
quote:Word of caution:
TIPS
The principal is paid upon maturity, but prior to maturity, should you need to cash out, your payment could be slightly more, or less, than your original deposit due to interest rate movements / fluctuations. This is not the case upon maturity however...
Posted on 1/26/10 at 1:34 pm to Weaver
quote:
It is my emergency fund.
So you have 42,000 dollars in cash as an emergency fund?
That's a bit insane as it is 3 to 4 times as much as would be recommended for someone making 60,000 dollars a year.
Posted on 1/26/10 at 1:37 pm to Weaver
I've earned 12% in my annuity for the past 4 months. I'm guaranteed 5%, which I know doesn't set the world on fire, but it is guaranteed. Anything above that is gravy. It's nice to have that as a fallback from any other investing I do.
Rentals give you an excellent return, but they are immense headaches, especially if you manage them yourself. They are not always a constant cash producer either. You have to keep those bad boys occupied or you eat any cost associated with the property (taxes, utilities, repairs, etc.)
Rentals give you an excellent return, but they are immense headaches, especially if you manage them yourself. They are not always a constant cash producer either. You have to keep those bad boys occupied or you eat any cost associated with the property (taxes, utilities, repairs, etc.)
Posted on 1/26/10 at 1:46 pm to TheHiddenFlask
quote:
That's a bit insane
Well, the saints are going to the superbowl, so I guess the insanity has passed down to me.
What this is are funds my Mom gave to me. I don't really save any money each year between my insurance and mortgage going up each year and putting money into my 401K/Roth IRA. I just wanted to leave this liquid, but would like to get something out of it. All I have is my mortgage payment, health insurance, life insurance and cell phone bill, along with my cable, internet and phone. GF pays the utilities. No credit card debt. I am not upside down on the house and would make about 30K if I had to sell and pay the note.
This post was edited on 1/26/10 at 1:49 pm
Posted on 1/26/10 at 1:48 pm to notslim99
quote:Variable Annuity...Subject to market risk unless in the fixed acct
I've earned 12% in my annuity for the past 4 months
quote:Usually only if you "annuitise" at some point down the road...
I'm guaranteed 5%
taxes and 10% penalty on gain if surrendered prior to 59 1/2.
But for the right folks, could a great investment!
Posted on 1/26/10 at 1:58 pm to Weaver
quote:
I just wasn't sure if there was something else I could do with it than a cd, online savings account or money market account.
Then your best bet is a Vanguard Prim MMA. It is the safest of their three MMA's, and it's 100% liquid.
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