The "I have XX money to invest, where should I put it?" Thread - Page 113

SlickHook · 08-09-2012, 01:24 PM

Thanks for the suggestions tyler.

Not currently maxing an IRA. Any insight on whether I should go traditional or roth?

oofRome · 08-09-2012, 01:33 PM

roth

tyler_cracker · 08-09-2012, 10:00 PM

^

GEAUX UL · 08-12-2012, 01:52 PM

Ok, here's my situation.

I currently have 15k in a money market account for an emergency fund. The idea was to have have my money in a place that's liquid and won't lose money should an emergency arise.

However ow that I have a much bigger amount invested I feel like it's a bit ridiculous to have my $15k only making $60/year in this current economy. Is this a stupid idea? If it's not I'm wondering what the best place to put it would be. Because it's still an emergency fund it needs to be reasonably liquid and low risk. Any ideas?

Josem · 08-12-2012, 02:06 PM

geaux,

i have my 'emergency fund' in seven equally-sized term deposits which each last for seven months so that each month one of them would become available if i needed

wil318466 · 08-12-2012, 02:48 PM

Quote:

Originally Posted by GEAUX UL

Ok, here's my situation.

I currently have 15k in a money market account for an emergency fund. The idea was to have have my money in a place that's liquid and won't lose money should an emergency arise.

However ow that I have a much bigger amount invested I feel like it's a bit ridiculous to have my $15k only making $60/year in this current economy. Is this a stupid idea? If it's not I'm wondering what the best place to put it would be. Because it's still an emergency fund it needs to be reasonably liquid and low risk. Any ideas?

You can't think like this, if this is truly an emergency fund that you need to have available and you don't want to risk. You're talking like it's not really an emergency fund, so no one can tell you what it is, that's up to you.

If you put 15k into a 500 index fund and it lost 15% in the next 3 months, would that bother you? It's very possible, even if you think it's unlikely. If it wouldn't bother you, then invest it, since you have enough of a "cushion" to feel comfortable.

Just remember, in the short term, weird things can happen, and you have to honestly ask yourself if you're ok with the loss. If not, then keep it safe. In the end, what % return do you expect with low risk? 2-4%? That's about 450 bucks a year. Does that outweigh you risk losing, say, 2k?

GEAUX UL · 08-12-2012, 04:19 PM

Quote:

Originally Posted by Josem

geaux,

i have my 'emergency fund' in seven equally-sized term deposits which each last for seven months so that each month one of them would become available if i needed

Just looked up term deposits. That's an interesting idea. How do the interest rates compare to a money market or CD?

Quote:

Originally Posted by wil318466

You can't think like this, if this is truly an emergency fund that you need to have available and you don't want to risk. You're talking like it's not really an emergency fund, so no one can tell you what it is, that's up to you.

If you put 15k into a 500 index fund and it lost 15% in the next 3 months, would that bother you? It's very possible, even if you think it's unlikely. If it wouldn't bother you, then invest it, since you have enough of a "cushion" to feel comfortable.

Just remember, in the short term, weird things can happen, and you have to honestly ask yourself if you're ok with the loss. If not, then keep it safe. In the end, what % return do you expect with low risk? 2-4%? That's about 450 bucks a year. Does that outweigh you risk losing, say, 2k?

Yeah, I would be okay with the loss. Even if another 2008 happened I feel like I have more than enough cushion to withstand a loss and still have enough for an emergency. And being relatively young I'm not at all worried about short-term ups and downs. $450 isn't a lot of money but as you know $15,000 at 4% compounded annually over ~30 years adds up to waaaaay more than .5% compounded annually over ~30 years. I definitely don't want to miss out on that extra money if I can help it.

I guess my question is where can I put my money that's lower risk and lower return than a typical index or mutual fund? My guess would be low-risk bonds but I honestly don't have a clue how bond investing works or if that would be the right place to put this money.

Thanks for the help.

Josem · 08-12-2012, 05:32 PM

Quote:

Originally Posted by GEAUX UL

Just looked up term deposits. That's an interesting idea. How do the interest rates compare to a money market or CD?

I don't know what a CD or money market rate would be. My term deposits are in Australia (in Australian dollars) so they're currently earning between 5.5% and 6.1% or thereabouts. Since I'm now living in the Isle of Man I probably should move them to something over here, but moving the money across for seven months is likely a bit of a hassle.

It is literally zero risk and seems to be a good rate to me.

fees · 08-12-2012, 09:44 PM

Hey,

Can someone recommend some Vanguard ETFs and how to distribute savings across them?

Thanks

Clovis8 · 08-12-2012, 10:37 PM

Quote:

Originally Posted by fees

Hey,

Can someone recommend some Vanguard ETFs and how to distribute savings across them?

Thanks

That's like asking someone to recommend Some good food. We need more information to answer.

tsuchiura · 08-14-2012, 07:13 PM

so I have a roth ira in which I invest in vanguard's target retirement 2055 fund.

http://quote.morningstar.com/fund/f.aspx?t=VFFVX

I'm 21 and my time horizon is about 45-50 years. I'm in college and fortunately have no net expenses (and don't expect any before the contribution deadline in April). I'd like to save for the long term but obviously am hoping to reduce my cost of living in the medium term as well by getting a head start and perhaps reducing my necessary retirement contributions in my 30s and 40s.

I invested $5,000 last year and have found that from day to day the fund tends to generally track the S&P 500. It's not perfect, and I have no idea how closely it tracks over the long term, but at the end of the trading day it's almost always close (if anyone knows anything that's updated during the day that tracks vanguard funds closer, that would be great).

So far I've put in $2,000 this year but got scared when the market started going up (I didn't think that was supposed to happen!); I don't want to buy in at the top of the market, since I doubt it's going to go higher than this in the 8 months until April 15 (and after doing a quick search I saw that Morgan Stanley is predicting that the S&P will close below 1200 this year even without taking the fiscal cliff into consideration).

So I have the money in the bank now to theoretically top out the $5k max contribution now, or I can wait until April (or sometime between). I know that timing the market in 2012 is probably kind of dumb in this spot, but I'd like to do as well as I can and was wondering how much of a dividend payment I'd be missing out on by keeping my $3k in the bank (is there any way to figure this out?) versus the cost of buying into a market that I think is probably overpriced.

Also, in general, if I could manage to save above and beyond $5k a year with the same goals in mind (before I get a real job and a 401k), would I want to consider other funds? Or just keep buying target 2055?

dalerobk2 · 08-14-2012, 08:19 PM

I would just keep buying the 2055 fund. If you're nervous about the market then just dollar cost average $200 every other week or something. Timing the market is a fool's errand.

As for the tracking the S&P 500, the fund is meant to track the larger market along with international and bond markets. That's what it's suppose to do, so it's working great. That's not something to be worried about. It's good, imo.

tyler_cracker · 08-15-2012, 12:10 PM

responding to a few things dale didn't hit:

Quote:

Originally Posted by tsuchiura

I'm 21 and my time horizon is about 45-50 years. I'm in college and fortunately have no net expenses (and don't expect any before the contribution deadline in April). I'd like to save for the long term but obviously am hoping to reduce my cost of living in the medium term as well by getting a head start and perhaps reducing my necessary retirement contributions in my 30s and 40s.

this isn't how it works. your 30s and 40s are your prime earning years; you'll want to be saving more at that time. the good news is you'll also be earning more, so those savings will be a smaller percentage of your income.

Quote:

So far I've put in $2,000 this year but got scared when the market started going up (I didn't think that was supposed to happen!); I don't want to buy in at the top of the market, since I doubt it's going to go higher than this in the 8 months until April 15 (and after doing a quick search I saw that Morgan Stanley is predicting that the S&P will close below 1200 this year even without taking the fiscal cliff into consideration).

dale talked about this but it's worth hitting again: timing the market is for suckers. your investment horizon is 45-50 years. who gives a **** what the market does this week, this month, or even this decade? over the long-term, you'll do fine with a broadly diversified portfolio.

but if you prefer, DCA is a way to smooth out the short-term bumps.

Quote:

Also, in general, if I could manage to save above and beyond $5k a year with the same goals in mind (before I get a real job and a 401k), would I want to consider other funds? Or just keep buying target 2055?

the TR fund is designed to be a "one and done" investment. there's no reason you couldn't use it as your entire investment portfolio for your whole life, as long as your investment goal remains the simple "retire around 2055".

there may come a time where you have multiple investment goals ("i want to retire in 2055, but i want to buy a house in 5 years"), or want to manage your tax burden (more stocks in taxable space, more bonds in tax-advantaged space like an IRA), or want to fine-tune your portfolio ("this TR is too conservative for me. i want a 70/30 stocks/bonds ratio instead"). when that happens, re-evaluate. until then, TR2055 is an excellent choice for someone just getting started on their retirement plan.

gl!

oofRome · 08-15-2012, 03:23 PM

listen to dale and tyler, tsu.

Quasar30 · 08-16-2012, 04:11 PM

Nothing in the OP is really relevant for this except its long-term valueinvesting.

Im thinking about _starting_ to buy banks and have narrowed it down to these atm

Bank of America
Deutsche Bank
Intesa Sanpaolo
BNP Paribas
Societe Generale
Natixis
Banco Santander

and im interested in any input about these banks, not macro, why i should or should not buy any of these.