Best place for mid-term investments?

[jdbst56]

Outside of CDs, money market/savings accounts, and bonds, are there any other good places for mid to long term investments? I have about 30k currently earning 1.2% in an online savings account. I really don't have a specific target for it as I already have an emergency fund of 12 months of expenses saved. I look at this money as more of a secondary emergency fund or a house/car type fund. Time horizon would be 5-7 years on it. I've seen mention of mutual funds such as PRPFX being used in taxible accounts. Would it be worth my while to even explore such options or just keep it where it's at earning 1.2%? I know that it always comes down to the benefit vs the risk of losing money so maybe the risk isn't worth a few % gain. Thoughts?

[JBinKC]

There really is no simple answer here at this point I think you are on the right track by preserving capital and keeping interest bearing assets for now but this money should be very liquid which would lower your return.


Economically, I can compare our position now being the most comparable to Japan's economy after their real estate bubble in 1990 but our currency has much weaker underlying fundamentals (trade deficits) and debt service is getting at risky percentage levels of GDP but our general economy has better parameters for future growth (Immigration and population growth) so the duration of the turmoil should be shorter provided our currency can remain intact.


Personally, I still think it is too early to start averaging down on stocks. I would probably start to nibble again when the PE of the S&P is either on the lower end of its historical average during a depression (10 or lower) {we are at 13 1/2 now} or wait for evidence of another money printing frenzy by central banks to start taking positions.


Right now the banks (as well as the fed) are going through the painful process of deleveraging their balance sheets and government policy and public sentiment has shifted towards reduced spending couple this with a weak/shrinking economy you are going to have deflation and potential default longer term hence the horrible tape.

[jpg7n16]

Outside of CDs, money market/savings accounts, and bonds, are there any other good places for mid to long term investments? I have about 30k currently earning 1.2% in an online savings account. I really don't have a specific target for it as I already have an emergency fund of 12 months of expenses saved. I look at this money as more of a secondary emergency fund or a house/car type fund. Time horizon would be 5-7 years on it. I've seen mention of mutual funds such as PRPFX being used in taxible accounts. Would it be worth my while to even explore such options or just keep it where it's at earning 1.2%? I know that it always comes down to the benefit vs the risk of losing money so maybe the risk isn't worth a few % gain. Thoughts?

That's just a fund that has a good deal of money in money market accounts and bonds.

Permanent Portfolio Report (PRPFX) | Asset Allocation Summary

I think since it won't end your world if you lost 5-10% and you've got 5-7 years, it's fine to take some risk - and that's a very conservative fund. If you like the fund, I see no problem investing in it given your situation.

[snafu]

5-7 yr. time frame is considered adequate for investing rather than speculating. If you can't tolerate the idea of seeing capital going down on paper...you are stuck with CDs, Bonds, Saving A/C & 1.2%. Fact is you are losing buying power as day-to-day costs are increasing.

Over the long term you are more likely to increase the value of your $30K by Dollar Cost Averaging [DCA] in an Index Mutual Fund. Talk to an agent at Vanguard and ask them to run the figures for you to examine. Look at where you'd stand if you choose to invest $ 1,000. per month, each and every month from July '08 to June 30 2010. On days when CNN announces doom & gloom...don't look at your investment,turn a blind eye. Personally, I add a 2nd purchase when ever the market loses more than 125 points on a particular day. I view it as 'buying on sale.'

When you are comfortable with international investments, look at Exchange Traded Funds [ETF]

[Hector]

5-7 yr. time frame is considered adequate for investing rather than speculating. If you can't tolerate the idea of seeing capital going down on paper...you are stuck with CDs, Bonds, Saving A/C & 1.2%. Fact is you are losing buying power as day-to-day costs are increasing.

Over the long term you are more likely to increase the value of your $30K by Dollar Cost Averaging [DCA] in an Index Mutual Fund. Talk to an agent at Vanguard and ask them to run the figures for you to examine. Look at where you'd stand if you choose to invest $ 1,000. per month, each and every month from July '08 to June 30 2010. On days when CNN announces doom & gloom...don't look at your investment,turn a blind eye. Personally, I add a 2nd purchase when ever the market loses more than 125 points on a particular day. I view it as 'buying on sale.'

When you are comfortable with international investments, look at Exchange Traded Funds [ETF]

5-y years is adequate for investing, really? I dont think its adequate for buy and hold strategy if you are jumping into stock market.

[jIM_Ohio]

That's just a fund that has a good deal of money in money market accounts and bonds.

Permanent Portfolio Report (PRPFX) | Asset Allocation Summary

I think since it won't end your world if you lost 5-10% and you've got 5-7 years, it's fine to take some risk - and that's a very conservative fund. If you like the fund, I see no problem investing in it given your situation.

Are swiss francs considered cash?

Based on prospectus, the fund usually allocates
25% to gold
5% to silver
25% to bonds
25% to stocks
20% to swiss francs and foreign currencies

Same page, on yahoo

PRPFX: Holdings for PERMANENT PT - Yahoo! Finance

OVERALL PORTFOLIO COMPOSITION (%)
Cash: 18.92
Stocks: 29.73
Bonds: 26.43
Other: 24.92

I believe the cash is swiss francs, but not positive.
I own this fund in a taxable account. Good, solid fund.

[jdbst56]

Thanks Jim. Are there any other funds besides PRPFX that you would recommend that are stable and fairly good at preserving capital? I was also considering Vanguard Wellesley (VWINX), but I suppose it's higher risk with greater equity exposure. Also I assume any fund paying larger dividends will have tax implications when used in a taxable account?

[jpg7n16]

Are swiss francs considered cash?

To Swiss people they are

[jpg7n16]

Thanks Jim. Are there any other funds besides PRPFX that you would recommend that are stable and fairly good at preserving capital? I was also considering Vanguard Wellesley (VWINX), but I suppose it's higher risk with greater equity exposure. Also I assume any fund paying larger dividends will have tax implications when used in a taxable account?

Check out:
FBIDX Fidelity US Bond Index, mutual funds, quote, price - Morningstar and
VBIIX Vanguard Interm-Term Bond Index, mutual funds, quote, price - Morningstar

100% true statement -> I wish I had to pay 15 million in cap gains tax this year. I really wish I did.

If you get more income, you'll get more tax yeah... but if you get more income it may be worth it.

So take any interest payments from bonds and multiply by (1 - tax rate) so for you (1-.25). If after tax, you still make more, it's worth it.



FYI - since long term capital tax rates are 15%, if I paid 15million in cap gains tax, that means I would have made $100 million. Yeah I'd could go for that.

[WhiteRabbit]

I prefer invest in gold useing epayment systems which have bank licence

[jIM_Ohio]

Thanks Jim. Are there any other funds besides PRPFX that you would recommend that are stable and fairly good at preserving capital? I was also considering Vanguard Wellesley (VWINX), but I suppose it's higher risk with greater equity exposure. Also I assume any fund paying larger dividends will have tax implications when used in a taxable account?

Sure there are more tax implications with dividends...
if you find a fund which suits your risk profile better than PRPFX then choose that fund. PRPFX fits what I want, so I don't need to look too much further.

I know Alpine family has something close, but its not the same strategy as Permanent Portfolio.

[WhiteRabbit]

Sure there are more tax implications with dividends...
if you find a fund which suits your risk profile better than PRPFX then choose that fund. PRPFX fits what I want, so I don't need to look too much further.

I know Alpine family has something close, but its not the same strategy as Permanent Portfolio.

What do you think about safety of gbullion.com?

[Ashleywatson]

Mutual fund, shares ,you can give It as loan also and can earn interest till the time you can.
Reply With Quote,The stock looks very expensive in terms of valuations looking at P/E Ratio and earnings.You can take tips from internet.

[gambler2075]

5-y years is adequate for investing, really? I dont think its adequate for buy and hold strategy if you are jumping into stock market.

Hehe, this is part of the reason I joined this forum as a trader... I did it so I could start to be a bit more patient in my swing trades... Personally, when I am holding a position in a stock for more than 2 weeks I start to get antsy... and ready to deploy my money into other areas. I think what you consider an 'adequate' timeframe depends on what you are buying. For alot of biotech stocks, 1 year is an eternity and I would consider 'long term' to be between 1 month and 3 months.

The other thing I like to point out to my investing friends is that, if your timeframe is on the order of 'years' then there is really no way for you to develop a large enough sample size of trades/investments to know that your investing strategy is a winning one. You would be dead before you accumulated that sample size

However, as a trader, if you hold stocks for, say, 2 weeks or less, and you have made thousands of trades, then you definitely have a large enough sample size to know if you have a winning strategy.

g

[snafu]

Participants on this forum are a varied bunch at different stages of life, with different education, backgrounds and value systems. We see different solutions to financial issues, problems/ challenges presented by posters and feel safe offering suggestions to strangers with goodwill in our heart and no personal agenda