You have $40K. What's you plan for a short term investment?

You have a max of $40K. You need the funds to be relatively flexible, there could be a sudden urge to buy a special property within the next 5 years or so. It may be used to further education within 5 years or so. While it is not specifically an "emergency" fund, you just never know these days, do you?

1. You can't pay off the house when it's already paid for.
2. You can't pay off debts or the CC when they are already paid for.
2a. 401K and IRA maxed. No room left at the Inn.
3. While I risk the wrath of ARFCOM, I'm not really a gold/silver/precious metal bug.
4. Hookers and blow, while certainly entertaining, are just a bit too much of a short term plan for this exercise.
5. Gunz 'n Ammoz. I could always use more, but I need somewhere to put them. Let's just say not an option at the moment.

I have two plans already worked out. One is a selection of 4-5 boring index funds (Vanguard) that I've spent weeks narrowing down the choices. The other is a slightly more risky plan of 4-5 dividend stocks (mostly REITS, some oil&gas, and a financial group) that I've narrowed down from a good bit of research.

There are a lot of bright people here, I'm trolling to see if there are any ideas I can steal.

Assuming Roth IRA is already maxed out, put first $10k in Ibonds for this year and the rest into a Vanguard long term tax exempt fund. Possibly moving $10k a year into Ibonds depending on the time frame the money will be needed.

I can't only tell you what I would do, I can tell you what I do... do.

I keep all my short term stuff in a bond-focused income fund. I'm not comfortable with the short term risk on equities.

It usually returns 5-6% a year - with no real dips. Over the last 5 years, it has actually outperformed most of my "real" investments - averaging nearly 7%/year.

Dont be like all the morans who claimed they "lost" money when the market took a downturn. If you have a short term time horizon, you need a lower risk portfolio.

Don't you have any concerns about losing principal if yields start going up in the bond markets?

I'm interested in bond funds as well but my concern has always been that if yields go up in the next few years it's going to drive prices down of existing bonds held in these funds.

I don't follow bonds too closely though so I'm in for answers...

The particular fund I am in is managed - quite competently, at that. It isn't a bond fun per se, that's just where they are focused now.

Their goal is conservative returns with low risk of any loss of value.

It has consistently outperformed Barclay's Aggregate Bond Index and Lipper Corporate Debt Funds A Rated Funds Index.

At some point, I have to trust the pros hired to manage it to adjust holdings if they anticipate such a problem, I trust their track record thus far.

I just checked their stats - the fund started in 1974, and has averaged 8.7% returns per year since then. All of this has been consistent - with no "down" years. Quite frankly, I would be tens of thousands wealthier now if ALL of my investments from the beginning had been in this fund! (I made some really bad decisions in the 90s, thanks to not understanding how people made money in commission and thus trusting a shyster at Merrill Lynch.)

I think your choices are very limited.

I wouldn't go in any type of equities. I think the market has some legs left in it yet but as volatile as the world is today all it would take would be US or EU major bank to go under, some islamonazi setting off another bomb, Iran or about a dozen other crack pot regimes to start the next world war and you would take a big haircut. I wouldn't recommend it since you don't have the time to leave those funds in place to reap the rebound.

I wouldn't trust bonds either. I don't know enough about bonds to really qualify that except that there are many cities, states and governments taking bailouts and investors are taking haircuts.

I think cash is King in your case. Not much else is as safe and as liquid as you require.

Or like one of the other posters did, give it to the professionals and trust you pick the right one.

I already hold a couple of High Yield Corporate Bond Funds (PRHYX , Pimco Total Return and VWEHX) and like some others have stated I do worry about what is going to happen when the interest rates start going up. ( and they will, don't know when exactly, don't fight the Fed and all that, but they are going to have to go up sooner rather than later.

Bond Funds worry me more than equities at the moment. Since I'm waiting for the May Sell Off before committing, I figure I'll get them at a discount.

Get some undeveloped or distressed real estate now. Find out where a lot of Hussein voters live and start gobbling!

I'm seriously thinking about voting Hussein for president just so I can take advantage of his irresponsible constituents. Buy low and sell high! Mu ha ha ha ha! The 'gubment is so desperate that you can take over 'gubment-backed houses and evict the Hussein voter living inside! Mu ha ha ha ha!

That's why this is a short term funding question.

If the market continues it's sell off and the current buying trend slows / stops again I may just buy a specific piece of land we are looking at.

I'm danger close to putting a bid in on a Fannie Mae repo we've found.............

Look at NLY or AGNC. These are great dividend payers and you can get your money out at any time as they trade like any other stock. For the immediate future they are safe with respect to an interest rate hike. I`m am comfortable with them AT LEAST `till after the election. I have large positions in both and am retired.

I'd buy several ETF's with nice dividend yields, and then immediately sell covered calls on the positions to generate more revenue.

Then?

Repeat until rich.

Copyright © 1996 - 2013 :: AR15.Com LLC :: All Rights Reserved.
Any use of this content without express written consent is prohibited.