Short term investment

[JRB]

Hi,

I have about 45K I want to invest but may need in the next 1-3 years. Currently it is in a money market account at Chasrles Schwab. Any suggestions?

 

[azanon]

Sounds like you have it in a great spot already, given your timeframe.

 

[retire@40]

A one year CD may work well for you. I think Corus Bank is offering one above 4%. But check your local banks too.

 

[azanon]

I bought cd's one time in my life, over a decade ago when i came into a lot of money and only knew jack and s*&& about investing. I split it up in a 1, 2 and 5 year cd.

It drove me crazy for the next 5 years knowing i couldnt touch those monies until they matured without paying a penality; whether i really needed it or not. Just knowing your options are gone after buying one bothered me to no end.

Your experience may vary.

 

[brewer12345]

Depends.  How likely are you to need it in the next few years?  What's you tolerance for possible losses over that time period?

 

[JRB]

Depends.  How likely are you to need it in the next few years?  What's you tolerance for possible losses over that time period?

I think I will need the money in the next year or two. Preservation of principal is a must.

 

[prbob]

You could put up to 30K in I-Bonds which is paying close to 4.8%. The only drawback is that you cannot withdraw for one year and if you withdraw between years 2-5, you will lose one quarter's worth of interest.

 

[brewer12345]

If I were you, I would probably just put the money in a money market or savings account, since you need preservation of principal. I am largely happy with Schwab, but their money market rates suck. Try INGDirect or Emigrant Direct for better rates. Pretty much anything else you invest in puts your principal at risk over such a short time frame.

 

[JRB]

It looks like I can get a 1 year 3.7% CD at Charles Schwab. That might be the way to go.

 

[Mr._johngalt]

It looks like I can get a 1 year 3.7% CD at Charles Schwab.  That might be the way to go.

I'm still getting 3.25% locally on a totally liquid account.
I've tried to beat it (even today). Couldn't do it.

JG

 

[MJ]

It looks like I can get a 1 year 3.7% CD at Charles Schwab. That might be the way to go.

1 yr CD 4.26% APY minimum $10k. That .56% more.

http://www.corusbank.com/

 

[soupcxan]

Vanguard tax-exempt MM still paying +2.6%...equivalent yield of 3.6% in the 28% bracket.

 

[Spanky]

ETrade offers 2.65% (money mkt) and gives you a $200 cash bonus - $125 for opening an account and $75 for direct deposit.

 

[Mr._johngalt]

ETrade offers 2.65% (money mkt) and gives you a $200 cash bonus - $125  for opening an account and $75 for direct deposit. 

The rate is not that great, but that bonus is huge. Must be some
strong "give back" language if you decide to close the account.

JG

 

[BUM]

It is surprising how many depositers jump into a 90 day 4% CD and leave it there...
The bank then automatically renews it at the regular crappy rate until you do something.

Maximizing rates is alot of work but if capital preservation is the key then you must do the work... or at least pay attention to the term dates.

 

[brewer12345]

It looks like I can get a 1 year 3.7% CD at Charles Schwab.  That might be the way to go.

That's not terrible. You could do bettter, but it might not be worth the aggravation.

Its a dirty little secret in the industry, but you have to be careful buying CDs at brokerages because the bank setting the rates often just sticks a lousy rate out there because they know they might be the only ones offering a CD for a given maturity that week. Since there is no competition in that maturity bucket, they can offer below-market rates and still attract some money from people asleep at the switch.

 

[TromboneAl]

The tax exempt money market at Vanguard currently yields 2.64% and has an expense ratio of only .13%. In the 15% tax bracket, that's equivalent to 3.11%.

You'd effectively make $1,395 in interest in one year, compared with $1665 with a 3.7% CD, but you'd have immediate access to your money.

P.S. Correctness of above calculations not guaranteed (or likely).

 

[Mr._johngalt]

That's not terrible.  You could do bettter, but it might not be worth the aggravation.

Its a dirty little secret in the industry, but you have to be careful buying CDs at brokerages because the bank setting the rates often just sticks a lousy rate out there because they know they might be the only ones offering a CD for a given maturity that week.  Since there is no competition in that maturity bucket, they can offer below-market rates and still attract some money from people asleep at the switch.

True!

 

[Mr._johngalt]

The tax exempt money market at Vanguard currently yields 2.64% and has an expense ratio of only .13%.   In the 15% tax bracket, that's equivalent to 3.11%.

You'd effectively make $1,395 in interest in one year, compared with $1665 with a 3.7% CD, but you'd have immediate access to your money.

P.S. Correctness of above calculations not guaranteed (or likely).

I'm getting 3.25% with no expense ratio and no taxes, 100% liquid.
These calculations are guaranteed

JG

 

[charlie]

JRB,

If you buy I-bonds currently at 4.8% you can hold one year and
still get 3.6% ...... even better if you hold 3 years and no penalty
after 5 years. They are tax free if used for educational purposes,
tax is deferred until you sell, you can't lose principal, yada, yada.
You got to love em!

Cheers,

Charlie

 

[MJ]

It is surprising how many depositers jump into a 90 day 4% CD and leave it there...

BUM,

Who is offering a 90 day CD @ 4%. I wouldn't mind some of that.