What Should I Do With This Money In Savings?

[Kenji4861]

I have about $10,000 I will not use for a LOOOONG time in my savings account. What can I do with it? Stocks? Bonds? Right now I get about 0.02% interest or so... Any advice would be appreciated.

 

[Tallgeese]

I know what I'd do if I had $10K...

Two chicks at once!

 

[Tallgeese]

Seriously, at a minimum put that dough in a money market account that draws a tad more interest than a regular savings account, especially if you think it may take you a little while to decide.

 

[squirrel dog]

Roth ira.

 

[slikmunks]

how old are you...? heh, you could always cash it out in 1's and swim around in your own money... that'd be fun... and then put it back into investments when you're done having fun

 

[Aceshigh]

If you have debts pay them off, it you are debt free, put it in a money market acct and leave it there. Let that be your emergency fund.

 

[snooker]

get a couple 5 year bonds. Cash them in after 5 years and get some more. That will help you not be tempted to take some out here and some out there.

 

[djheater]

Originally posted by: squirrel dog
Roth ira.

Or government bonds for a 4-6(?)% return every 6 mo's

Go here for more info.

If it were me it would go into the downpayment I don't have. Looks like 80-20 is the only way I can go

 

[Rio Rebel]

I opened this thread hoping to see some good advice. No offense to anyone who tried to help, but I don't see any suggestions that look particularly insightful (other than perhaps the Roth, but I think it's safe to assume that's not the advice you were looking for.) Actually, Tallgeese had a good comment - no, not about the two chicks - you can draw considerably more interest without increasing your risk my looking at a money market account.

I don't think you're going to find a lucrative investment right now in the traditional channels. Of course, we never know when the stock market might start a huge upswing, but I think most people who are knowledgable about this subject aren't expecting one for some time. Safer investments are getting such a low return (as you pointed out) that it's almost not worth it. It's just not a good time right now. Maybe most of us should be thankful we're not retiring in the next 5 years.

The best suggestion I can think of is to tie it up in a CD for a year or two to draw better interest, and then re-evaluate. Unless you know some smaller personal investment that could bring a good return, I don't think you're going to get much in today's market (and with this damn war threat, you actually risk things getting even worse.)

Option 2 (my favorite): Add about $5k to $10k more and buy a nice beach house in Brazil. With the dollar so strong and the Brazilian Real so weak, you can get a great little place on the beach for around $15,000. Even if your investment doesn't appreciate that much, imagine the value you get out of it in the meantime!

 

[KGB1]

Two chicks at once!

I'd think you'd need more that 10K to bang two chicks. More like a :inky to mouth::1 Million Dollars

If you dont believe me, watch office space

 

[aircooled]

I'd put it into a retirement fund.

 

[djheater]

Rio, check out the F@twallet bond thread. I think it's a good scheme. requires a little legwork and active monitoring though....

 

[Zombie]

on a related note....I have similar delima. I have about 16k in school loans. I just got out of school a year and half ago and I have been paying them off at couple hundred a month. Now out of that 16k 11k is at 3.5% interest but that is tax deductable the other 5k is higher and I plan on paying it off all at once.

So my question is should I go ahead and payoff the 11k or take my time and build my credit. I don't think it is costing me anything since interest on the loan is tax deductable.

 

[Rio Rebel]

THanks, dj. I actually posted before your post appeared, so I hadn't seen your suggestion.

I think the bottom line is that unless you're willing to run some high risk, your best bet is to get something short-term (like bonds or CD's, although bonds *do* run a slight risk depending on how you stagger them) and wait a little while for a better climate.

I still like my beach house idea, though.

(Actually, my wife and I are seriously considering this. But it helps that we speak Portuguese)

 

[Rio Rebel]

I don't think it is costing me anything since interest on the loan is tax deductable.

You may realize this already and the above is just a mis-statement, but:

If your interest is tax deductible, that just means you're saving X percent of the money you're paying in interest, where X is your tax bracket. If you pay 5,000 in deductible interest, and you're in a 27% tax bracket (which means you're doing well for yourself), you're still paying a total of $5,000 x .73, or $3650 out of pocket even after tax considerations.

Bottom line: "deductible" doesn't mean "free after I pay my taxes". I think a lot of people are misled by this.

(edited to correct my original atrocious math)

 

[Mutilator]

Move it into an ING Direct savings account and change that 0.02% to 2.3%.

 

[KenGr]

This question needs a lot of thought about how bad you need the money, how much risk you are willing to take, how long is long, etc.

Given all that, I would offer two suggestions (both of which you can do together). First put it into something tax free or tax deferred - look into the Roth options. It makes a lot of difference.

Second, dump it all into a stock index fund, either S&P 500 or total market index with Vanguard or Fidelity. Then forget about it for 10 years or so. The market has been drifting down/stagnating for three years now. It would be unprecedented for it not to recover in the next few years.

 

[pandapanda]

Ah, the actual answer hasn't come up yet.

You should send the money to me. I have this high return invest program in Nigeria I can invest it in for you. Just paypal it to me, and I'll take care of the rest.

 

[Rio Rebel]

Second, dump it all into a stock index fund, either S&P 500 or total market index with Vanguard or Fidelity. Then forget about it for 10 years or so. The market has been drifting down/stagnating for three years now. It would be unprecedented for it not to recover in the next few years.

Actually, we've already hit the "unprecedented" level. I fear that we're going to look back and see that the market was severely overvalued when this recession hit, and we will not see the Dow maintain at the 10,000 level again for some time.

That being said, I think you're giving good advice. History bears out your suggestion - it's a pretty safe bet that this is a good plan.

 

[Zombie]

Rio,

Thanks. I didn't really think about the tax bracket. But the thing is that low interest loan is still gonna help me boost my credit rating. That is one of the reasons I am taking my time with the loan. But I think I will pay it all off at the end of this year or before I start my grad school.

Thanks.

btw, I-Bonds sound like really good idea since my money is sitting in a Fleet (Money Market)act. earning a little over 1.25%.

 

[Mrpilot007]

This is a very simple question. Do you have any house payments or other payments that you are paying a high interest on. If you say no that means that you are positive that you are 100% out of debt. Otherwise, lets say you owe on your house and you are paying x % interest. The interest you are making in the savings acount is lower than x. If you make a large payment on your x loan then you are getting the x% return on your money. You can't beat that anywhere right now.

 

[Mrpilot007]

Or for more investing tips go here: Clark Howard's website

 

[Tallgeese]

Originally posted by: KGB

Two chicks at once!

I'd think you'd need more that 10K to bang two chicks. More like a :: Pinky to mouth ::1 Million Dollars!

Not for the kinda chicks who'd double up on a guy like me!

 

[dquan97]

I bonds! 4%
pay with a reward card - additional 1%

 

[dquan97]

Originally posted by: pandapanda
Ah, the actual answer hasn't come up yet.

You should send the money to me. I have this high return invest program in Nigeria I can invest it in for you. Just paypal it to me, and I'll take care of the rest.

can i get in on this too? I have my paypal account ready!