Best short-term investment ideas?

[PierceFerdy]

Hey everyone,

After dispensing advice for a while i think it's finally time i asked for a little 'saving advice' myself (pun intended...).

Anyways, i recently sold the family home - that's a whole bucket of emotions i'll save for a rainy day - but long story short i now have some spare cash left over to invest in...something.

That said, i'm not looking at investing for long. Maybe 12-18 months at most. i'm interested in stuff that's relatively safe but could be convinced otherwise, though to be fair i'm not sure what a good return would be over that timeframe. i've been reading far too much advice recently e.g this kinda stuff and either a high-interest savings account or fixed-term deposit seem like my only (our should I say, best) options here.

They also seem...kinda predictable if not also a little boring if i'm completely hoinest. Are there any others that i should be considering? any options outside the box? Peer-2-Peer is one I'd considered as those lenders have some short-term 12-18 month options, but i'm weary about returns.

Anyways, any advice is appreciated. Looking to make a big 'ol list of my options shortly and finally pull the financial trigger, so to speak.

[kork13]

It's boring, I know... But if you're looking at needing the money in the next 12-18 months, I'd recommend a CD. Ally is offering 12-18 mo CDs with rates between 2.25-2.5%. That's probably the best you could really hope for right now while keeping your risk level in check.

Are there other options with which you could earn a better rate of return? Yes. But to do so, you would take on significantly more risk.

For the sake of argument, I'll give some of those options...
1) S&P 500 index mutual fund. Averages around 8-10% annually, but as a stock fund, the risks are significantly higher than many other options.
2) Bond funds, such as short-term bonds, Muni bonds, or GNMA bonds, earning 2.5-3.5% yield... But the asset values are dropping right now due to the rising interest rate environment we're currently in.
3) Gold/precious metals, earning... Well, nothing really (beyond value fluctuations), and they're exceptionally speculative... These are far off the deep end as far as risk goes.
4) P2P lending is a crap shoot. You're lending money to unknown strangers with very little information, and almost zero protection if they decide not to repay you. Bad idea, bub.

My best advice: Don't get fancy. If you know you'll need this money in the next year or two, it belongs in 1 of 2 places: savings account or a CD. You'll eke out an extra ½% or so in a CD, but you'll be penalized for early withdrawal. Those are your best choices... Take your pick.

[disneysteve]

i now have some spare cash left over to invest in...something.

That said, i'm not looking at investing for long. Maybe 12-18 months at most.

What is this money for? How much risk are you willing to take with it? Would you be okay if a year from now you had lost 5 or 10 or 20% of it? If you're willing to take some risk, there are plenty of things you could do with it with the potential for higher gains but also the potential for higher losses.

If this is money that you have a defined purpose for and need to maintain the principal, your choices are much more limited, as already stated.

[Fishindude77]

+1 For buy a CD.

[scfr]

Seems to me the first thing is to figure out your time frame. Then look at CDs. DepositAccounts.com is a good place to look. Union Bank of California is currently offering an 18-month CD at 2.75% APY which is not too shabby. But the penalty for early withdrawal is steep (6 months worth of interest lost if you cash it out early). So figure out how long you can lock the money away before you do anything.

They also seem...kinda predictable if not also a little boring if i'm completely hoinest.

This is an interesting statement. It sounds like you are really itching to do something a bit more "exciting" with the money even though your rational side knows that's not the sensible thing to do.

One option is to lock away enough so that your initial principal would be "secured" and then do whatever risky/exciting thing(s) you want to do with the rest. For example, if we are talking about $100K, you could put $96K in a Union Bank 18-month CD, and then use the remaining $4K to "play the market." At the end of the 18 months, your CD would be worth the $100K (Okay, about $40 short, but close enough for this example). And yes, you would have "lost ground" to inflation with that $100K, not to mention the fact that the interest income will be taxed so you will have lost a bit to Uncle Sam, but you'd still have very nearly $100K at the end.

And your $4K "fun in the market money" would be worth ... who knows? Maybe you lost it all ... maybe you discovered the next bitcoin and made a mini-fortune ... maybe you lost 50% ... maybe you made 8% ... who knows?

Personally, I'd lock it all away in a CD and be done with it. But if the idea of putting all the money away in a CD really doesn't interest you, what I'm suggesting might be one way to scratch your investing itch without exposing those funds to too much risk.

[TexasHusker]

It would be unwise to invest in anything with a 2 year or less time frame. "Park" the money in a safe place would be the best bet.

[Drake3287]

Just 2 days ago I reinvested $100,000. in a 18 month CD paying 2.70% from Luther Burbank Savings. Been a long time since we've seen a rate that high. Hopefully things will continue up.

[disneysteve]

Just 2 days ago I reinvested $100,000. in a 18 month CD paying 2.70% from Luther Burbank Savings. Been a long time since we've seen a rate that high. Hopefully things will continue up.

Yep. Rising interest rates are bad for borrowers but good for savers. I've watched the rate on our HELOC climb 2 or 3 times since we took it out last fall. Fortunately, we paid it off earlier this month so we're done with that. We have no other variable rate debt. But I've also watched the rate on our online savings climb as well which is a much nicer thing.

[corn18]

Yep. Rising interest rates are bad for borrowers but good for savers. I've watched the rate on our HELOC climb 2 or 3 times since we took it out last fall. Fortunately, we paid it off earlier this month so we're done with that. We have no other variable rate debt. But I've also watched the rate on our online savings climb as well which is a much nicer thing.

Our HELOC has gone from 4.2% to 7%. Glad we don't need it.

My money market fund in my brokerage account has gone from 0.2% to 1.46%. That I like since I have my EF and college money in there.

[disneysteve]

Our HELOC has gone from 4.2% to 7%. Glad we don't need it.

Wow! Over what period of time? Rates haven't gone up that much. Ours went from 3.something to 4.something in the past year.

[Ariana33]

So from my research, it's always best to have a diversified investment portfolio. That can include investing in gold/silver/precious metals, as well as stocks, IRAs, etc.

[james.hendrickson]

So from my research, it's always best to have a diversified investment portfolio. That can include investing in gold/silver/precious metals, as well as stocks, IRAs, etc.

The correlation between precious metals and stocks/bonds isn't clear to me. So, I don't know how much additional protection you get by owning metals.

[sitihanter2]

Here are the best short-term investments in October:
Savings accounts
Short-term corporate bond funds
Short-term US government bond funds
Money market accounts
Certificates of deposit
Cash management accounts


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