Good short to mid-term investments

[thegame26]

My grandmother died last year and her estate finally closed last week. I got a decent size inheritence. So far I've paid off my student loans, my credit cards, and my car loan. I'm going to have approximently $2000-2500 left of 'found' money. What would be a good short to mid-term investment to make?

I consider a short to mid-term as being 6 months - 2 years for the purpose of this question.

Are CD's the only viable opition? I've been looking at a few but even on some of the high yield ones I'd only be looking at $5-20 interest given the amounnt I'd be investing and the period of time I'd be looking. at.

Finally, now that I am essentially debt free I'd like to move out from my parents and get my own house/condo. So any investment I do make likely would be going towards a subsquent down payment towards said house/condo once it pays out.

Thoughts/ideas?

[jq26]

If I was in your situation, I'd fund a Roth IRA with the money and purchase only the safest largest high-dividend paying companies (ex: VZ, ATT, JNJ). Continue aggressively funding the account monthly now that you are debt free. If you are a very conservative person and you want to purchase CDs within the Roth, you can do that too.

You can always withdraw the contributions without penalty at any time. So if you need it for a home, then pull it out when the time comes (leaving just the earnings, if any). If you only need a portion, then take what you need and rebalance your Roth investments to match your new timeline (ie retirement) with post home purchase remaining funds.

Once you have a Roth and you see it growing monthly, you'll likely contribute and watch it grow. Your future self will thank your younger self later. And remember it CAN serve as a very valuable emergency fund as well due to the permissive principal withdrawals without penalty or tax.

Just my two cents...

[Goldbug]

Look at silver, it's going up quickly. Todays spot price is $39/oz, six months ago it was $25/oz or so.

http://www.kitco.com/market/

http://www.kitco.com/charts/popup/ag0365nyb.html

[1time2many]

Look at silver, it's going up quickly. Todays spot price is $39/oz, six months ago it was $25/oz or so.

http://www.kitco.com/market/

http://www.kitco.com/charts/popup/ag0365nyb.html

Exactly........I have been buying the metal for some time now. The Market is getting set to crash, savings pay squat and the dollar is just a piece of cotton.......the shiny Metal for the common buyer is where to hedge your fiat at this time.........Hold Physical Silver!

QE3 to infinity...Hi Ho Silver

Edited April 5, 2011 by 1time2many

[thegame26]

thanks for the responses, I appreciate it.

[jq26]

While I agree, I'm a little leery on buying silver at $40/ounce and gold at $1500. Not to mention bid/ask spreads can be considerable for metals and you need to overcome the transactional costs. For short term money, I'm not a buyer. But not everyone would agree.

[bmc100]

Some of these answers are long-term investments ie stocks, gold and Silver.

For 6-24 months, you might want to look at structured notes. They go in maturities of 6 months to 5 years.

If you do not have a cash reserve, you might want to set that money aside for emergencies.

[1time2many]

While I agree, I'm a little leery on buying silver at $40/ounce and gold at $1500. Not to mention bid/ask spreads can be considerable for metals and you need to overcome the transactional costs. For short term money, I'm not a buyer. But not everyone would agree.

I have been long in this metal since 10 bucks OZ......I have bought at every dip and raise and will continue to do so.......Silvers industrial use has caused 90% of every ounce to be dumped in the landfill......There are 8 OZs of gold to every 1 OZs of silver above ground.

The main factor in my investment is the clowns that have been running this country in the ground, and the PTB doing their best to hold down the PM prices.....Very soon the paper traders will find the COMEX to be as much of a fraud as the banks were in 08........Silver today is not the silver of 1980, there is no bubble this round.........While I would love to see a correction so I can buy the dip once more, It is not happening.......the dollar is on life support, it will soon die as soon as QE 2 ends, the markets will fall, QE 3 begins.........will be an interesting 3rd and 4th quarter.

[jq26]

Excellent buy. I almost bought a ton at $11, but opted to buy a home instead. Oh well...in any case, pushing $43/oz already. It is ridiculous.

I agree with all your points, except the ability to pull of QE3. There is very little appetite at this point for more easing. You've got R Paul houding the Fed, and even if QE3 gets piushed through, we'll have $200 barrels of oil becauise of it. So if no QE3 and the Fed balance sheet shrinks. If QE3 occurs, commodities go parabolic and the price of energy will tank the economy. Both of these lead to heavy dollar strengthening, so that's where I'm placing my bet.

This summer should be interesting. POMO stops Treasury purchases in June. The massive money pump has buoyed the markets significantly, so when the punchbowl is taken away, . But then again, who knows. It seems the powers that be have decided to write the rules as they go along. They're winging it.

[1time2many]

Excellent buy. I almost bought a ton at $11, but opted to buy a home instead. Oh well...in any case, pushing $43/oz already. It is ridiculous.

I agree with all your points, except the ability to pull of QE3. There is very little appetite at this point for more easing. You've got R Paul houding the Fed, and even if QE3 gets piushed through, we'll have $200 barrels of oil becauise of it. So if no QE3 and the Fed balance sheet shrinks. If QE3 occurs, commodities go parabolic and the price of energy will tank the economy. Both of these lead to heavy dollar strengthening, so that's where I'm placing my bet.

This summer should be interesting. POMO stops Treasury purchases in June. The massive money pump has buoyed the markets significantly, so when the punchbowl is taken away, . But then again, who knows. It seems the powers that be have decided to write the rules as they go along. They're winging it.

The Economy is tanking either way, this is just a fact......)*08 was just a warmup........QE stops the market tanks and alot gets lost........QE extends the markets stay in place and inflation zooms.......this scenario just prolongs the agony of the dollar destruction.

Either we have it quick and messy or we have it semi controlled.....I think it will be the latter......Benwa has painted himself and the dollar into a corner he cant get out of.......200 per barrel is just what has been predicted for a while now......Time to load up on some protein as when it happens you will need some 6 months to whether the coming storm.........any recovery will mean the currency will again be a gold standard dollar.

BTW....look at the food reserves based on the JIT delivery system......it could get messy, my only thought on this , I hope I am 100% wrong but I have watched this develop for a long time and the domino's are stacked , its just a matter of time before something tips the lead.

[debtfreein18]

Since you all seem to know what you're talking about....

Most of my 401k is in a bond fund. Assuming the markets crator they way you say they will (I anticipate a pretty big drop but not as bad as you all seem to think) later this year...how will bonds fair, do you think? My 401k investment options are limited, if everything is going to go to hell in a hand basket they way you say, and I have no other real safe harbor, should I just move the bulk of my nest egg to cash (we have a cash option in our 401k plan).

And not to totally hijack the thread...I like the suggestion that the OP should open up a Roth. It can serve as an emergency fund and a savings vehicle for a home downpayment. Just invest on the conservative side since emergency funds should always be in a safe place and your investment goals are so short term.

[1time2many]

Since you all seem to know what you're talking about....

Most of my 401k is in a bond fund. Assuming the markets crator they way you say they will (I anticipate a pretty big drop but not as bad as you all seem to think) later this year...how will bonds fair, do you think? My 401k investment options are limited, if everything is going to go to hell in a hand basket they way you say, and I have no other real safe harbor, should I just move the bulk of my nest egg to cash (we have a cash option in our 401k plan).

And not to totally hijack the thread...I like the suggestion that the OP should open up a Roth. It can serve as an emergency fund and a savings vehicle for a home downpayment. Just invest on the conservative side since emergency funds should always be in a safe place and your investment goals are so short term.

No one can say with certainty how this thing plays out.........just watch the dollar and oil..........try to find a fund to hedge your 401k in case of a sell off, June will reveal what the markets will do if there are no more Bernakebucks flowing, then you must watch the political show on the debt ceiling (already breached)........Things are getting worse in Japan and this is starting a carryover into all markets......these are your 4 black swans for today , there are others but these are the biggest things to do your DD on as they will have the most effect on the markets in the next 5-6 months.

[debtfreein18]

No one can say with certainty how this thing plays out.........just watch the dollar and oil..........try to find a fund to hedge your 401k in case of a sell off, June will reveal what the markets will do if there are no more Bernakebucks flowing, then you must watch the political show on the debt ceiling (already breached)........Things are getting worse in Japan and this is starting a carryover into all markets......these are your 4 black swans for today , there are others but these are the biggest things to do your DD on as they will have the most effect on the markets in the next 5-6 months.

Oh I know there is no crystal ball (if there were we'd all be rich!) it's just I'm not sure which way to jump when the poop hits the fan. And it will, this market is WAY over heated, I can't for the life of me figure out why the Dow has had a 20% run since fall. I thought for sure Japan and then Lybia would knock it down a peg but it just keeps chuging along.

My DH's 401k is much more heavily into stocks (but he has a much smaller amount compared to me as he started his 401k much later than I did) so with me 100% in a bond fund and DH 100% in a stock fund, I figure we're covered either way, plus all my new contributions are going into a stock fund again (if it keeps going up, great, if it drops I'll be picking up stuff on the cheap). But I think we're in for a bumpy ride no matter what.

[1time2many]

Oh I know there is no crystal ball (if there were we'd all be rich!) it's just I'm not sure which way to jump when the poop hits the fan. And it will, this market is WAY over heated, I can't for the life of me figure out why the Dow has had a 20% run since fall. I thought for sure Japan and then Lybia would knock it down a peg but it just keeps chuging along.

My DH's 401k is much more heavily into stocks (but he has a much smaller amount compared to me as he started his 401k much later than I did) so with me 100% in a bond fund and DH 100% in a stock fund, I figure we're covered either way, plus all my new contributions are going into a stock fund again (if it keeps going up, great, if it drops I'll be picking up stuff on the cheap). But I think we're in for a bumpy ride no matter what.

The only reason the market is up being your future tax dollars at work to the tune of BILLIONS per month......debt hedged against debt will only work for a short period....we are long past that point.........also keep in mind that all of Europe is in the same boat, so when this ship sails its really going to get nasty and I would not hold any stock....comodity's will be a better play long term.