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Short term investment
Old 05-12-2005, 10:00 AM   #1
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Short term investment

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?
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Re: Short term investment
Old 05-12-2005, 10:11 AM   #2
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Re: Short term investment

Sounds like you have it in a great spot already, given your timeframe.
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Re: Short term investment
Old 05-12-2005, 01:44 PM   #3
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Re: Short term investment

A one year CD may work well for you. I think Corus Bank is offering one above 4%. But check your local banks too.
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Re: Short term investment
Old 05-12-2005, 03:17 PM   #4
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Re: Short term investment

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.
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Re: Short term investment
Old 05-12-2005, 03:17 PM   #5
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Re: Short term investment

Depends. *How likely are you to need it in the next few years? *What's you tolerance for possible losses over that time period?
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Re: Short term investment
Old 05-12-2005, 03:21 PM   #6
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Re: Short term investment

Quote:
Originally Posted by 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?
I think I will need the money in the next year or two. Preservation of principal is a must.
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Re: Short term investment
Old 05-12-2005, 03:39 PM   #7
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Re: Short term investment

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.

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Re: Short term investment
Old 05-12-2005, 03:58 PM   #8
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Re: Short term investment

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.
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Re: Short term investment
Old 05-12-2005, 04:46 PM   #9
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Re: Short term investment

It looks like I can get a 1 year 3.7% CD at Charles Schwab. That might be the way to go.
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Re: Short term investment
Old 05-12-2005, 05:26 PM   #10
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Re: Short term investment

Quote:
Originally Posted by JRB
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
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Re: Short term investment
Old 05-12-2005, 07:25 PM   #11
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Re: Short term investment

Quote:
Originally Posted by JRB
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/
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Re: Short term investment
Old 05-12-2005, 07:28 PM   #12
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Re: Short term investment

Vanguard tax-exempt MM still paying +2.6%...equivalent yield of 3.6% in the 28% bracket.
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Re: Short term investment
Old 05-12-2005, 11:06 PM   #13
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Re: Short term investment

ETrade offers 2.65% (money mkt) and gives you a $200 cash bonus - $125 for opening an account and $75 for direct deposit.
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Re: Short term investment
Old 05-13-2005, 03:48 AM   #14
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Re: Short term investment

Quote:
Originally Posted by Spanky
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
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Re: Short term investment
Old 05-13-2005, 06:08 AM   #15
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Re: Short term investment

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.
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Re: Short term investment
Old 05-13-2005, 06:38 AM   #16
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Re: Short term investment

Quote:
Originally Posted by JRB
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.
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Re: Short term investment
Old 05-13-2005, 10:59 AM   #17
 
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Re: Short term investment

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).

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Re: Short term investment
Old 05-13-2005, 10:59 AM   #18
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Re: Short term investment

Quote:
Originally Posted by brewer12345
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!
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Re: Short term investment
Old 05-13-2005, 11:01 AM   #19
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Re: Short term investment

Quote:
Originally Posted by 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).

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

JG
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Re: Short term investment
Old 05-13-2005, 11:37 AM   #20
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Re: Short term investment

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
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