Short term investment strategies

[black4vcobra]

Hi all, in the near future I will receive "payment" from my future father-in-law for assuming responsibility for his daughter for the rest of my life. The wedding will not be for 13 months yet so I just wanted to check in to see if anyone had any tips on making a few percent on the money in the next year as there is no sense in leaving it in a checking account earning .05% interest until then. I know that there are expenses that will come up before that but I can cover the smaller stuff with my own savings and utilize the payment for the bill that comes due for food, venue and booze.

I know CD's used to be a good idea but my credit union only offers a miserable .4% APR on 12 month CD's.

Are government backed bond ETF's a good strategy to try to make a few % with minimal risk of loss? I already have a Roth IRA setup with Vanguard so that would be real easy for me to buy some funds from there.

Otherwise, is anyone aware of any high interest checking accounts that are easy to setup? I know there used to be checking accounts that offered a few % but I doubt there are many around yet.

Of course I know that any investments are subject to risk but ideally it wouldn't lose any money and if it did, 5% loss in a year would be the most I could stomach.

Thanks :beer:

 

[jbs$]

Take the money, dump the girl, change your name and run!

 

[jbs$]

Now seriously, the best investment that a young couple can make is a home in a good neighborhood. Good luck to both of you.

 

[black4vcobra]

Take the money, dump the girl, change your name and run!

Now seriously, the best investment that a young couple can make is a home in a good neighborhood. Good luck to both of you.

Hadn't thought of running away with the money but I did think about blowing it all on car mods! Can't happen though as I already have too much invested since we do have a nice house together in a good neighborhood.

I do plan on putting a couple grand towards the mortgage since we are only about $10k away from getting out of PMI. The mortgage rate is 4% so I suppose anything I throw towards the mortgage and then save that amount back up in the next year is a guaranteed 4% rate of return.

 

[Jmurrz]

I usually look at trading stocks. It is a bit more risky but if you can choose well and with a little luck you will yield much more. If you are looking at risk free, with small gains I would look into T-bills. I doubt that US gov. will not be able to pay you back next year. I have not dabbled with much more than that though.

Ideally you should diversify between stocks bonds and cash. That will be the safest route with the best returns. Even if you lose on something you will gain on another. It just depends on your risk propensity and goals for return. If I knew half as much about investing as I do worthless information about cars I would be able to make you a millionaire by then, but unfortunately I am limited.

By the way, Congrats!

 

[Screw-Rice]

Hadn't thought of running away with the money but I did think about blowing it all on car mods! Can't happen though as I already have too much invested since we do have a nice house together in a good neighborhood.

I do plan on putting a couple grand towards the mortgage since we are only about $10k away from getting out of PMI. The mortgage rate is 4% so I suppose anything I throw towards the mortgage and then save that amount back up in the next year is a guaranteed 4% rate of return.

I'd put everything towards getting out of your PMI. Depending on your mortgage and the PMI rate, not having it can be a larger return than any fraction of a percent interest accounts.

 

[weems]

My Ally savings pay 1.00% APY.

 

[black4vcobra]

I usually look at trading stocks. It is a bit more risky but if you can choose well and with a little luck you will yield much more. If you are looking at risk free, with small gains I would look into T-bills. I doubt that US gov. will not be able to pay you back next year. I have not dabbled with much more than that though.

Ideally you should diversify between stocks bonds and cash. That will be the safest route with the best returns. Even if you lose on something you will gain on another. It just depends on your risk propensity and goals for return. If I knew half as much about investing as I do worthless information about cars I would be able to make you a millionaire by then, but unfortunately I am limited.

By the way, Congrats!

Thanks, I know I couldn't find a better woman if I had a chance to redo my 20s! I checked out the T-bill rates and at .5 to .6% interest, it's not real appealing. As far as investing, I don't know a ton either and best case scenario I think that I could make a few bucks over the next year but it might not be worth the trouble and risk.

I'd put everything towards getting out of your PMI. Depending on your mortgage and the PMI rate, not having it can be a larger return than any fraction of a percent interest accounts.

I think this is what I'll do and then save over the next year to replace most of what I put towards the mortgage. PMI is $120 a month so for every year I'm out of that early, it's $1440 more in my pocket.

My Ally savings pay 1.00% APY.

Not going to make me a lot of money in the next year but good to know they exist and I'll have to look at something like that in future. Is Ally a bank or CU?

 

[nxhappy]

stocks that pay dividends

 

[Screw-Rice]

I think this is what I'll do and then save over the next year to replace most of what I put towards the mortgage. PMI is $120 a month so for every year I'm out of that early, it's $1440 more in my pocket.

Good call, since it will be a bigger (immediate) yield than most investments. Take that freed $120 a month and dump it into a 401k, IRA, etc.

 

[nxhappy]

IRA is a great idea

 

[derklug]

I would go with paying down the mortgage, or NASCAR collector plates.

 

[ford fanatic]

Clearly Hookers and Blow...you guys are slipping.

 

[Steve1578]

Invest into a mutual fund if you want to diversify. Don't just start investing in random stocks, even blue chips. A good mutual fund will own position in all those plus others to help hedge against the volatility. I day trade "professionally" and would not recommend any beginners just throwing money into the markets.

There's also "The 3% signal" strategy that invester Jason Kelly speaks of in his same-titled book.
It's a very simple strategy, its objective is to make 3% quarterly in the markets just buying & holding a variation of the Dow. It's very easy to grasp. If you're more hands-on and would rather do your own investing as opposed to just throwing it into an account, I suggest that. Or as others have said, your overall greatest investment will be your home.

 

[NC85]

Clearly Hookers and Blow...you guys are slipping.

I'm with you FF.

 

[CO Mack]

1yr and you can't tolerate more than a 5% loss?

100%, stay in cash.

EDIT- BTW, once you guys are married and it's all behind you, then use it to pay off any consumer debt and then throw it at mortgage for PMI. If she wasn't part of choosing this house, you have a pretty good chance of moving...

 

[MG0h3]

I'd talk to your mortgage lender and confirm PMI comes off automatically. They changed the rules a while back and you pay PMI for 5yrs regardless of the 80/20 rule. I think that only applies to conventional and not FHA. Paying the principal down a lot up front is always good but I'd check regarding the PMI issue.

 

[Screw-Rice]

I'd talk to your mortgage lender and confirm PMI comes off automatically. They changed the rules a while back and you pay PMI for 5yrs regardless of the 80/20 rule. I think that only applies to conventional and not FHA. Paying the principal down a lot up front is always good but I'd check regarding the PMI issue.

Little backwards. FHA is the life of the loan, not only until you hit 78% LTV anymore. Granted there is some variance in their guidelines on that, but it no longer cancels automatically. Of course the obvious solution would be to refi into a conventional.

Conventional has a few different types. You can do PMI until you have 20% equity, or go no PMI and pay just under an extra percent in interest, which tends to be a few bucks less than paying PMI.

 

[Machdup1]

Retire debt and become financially independant from creditors. Leave six months combined salary for the unexpected (i.e. Loss of employment and medical). Continue to pay down debt by paying off the highest interest rate debt, then move on the next highest rate debt. When you get to your mortgage as the last item, make double payments until it is gone.

 

[Never_Enough]

Forget stocks unless you love risk, find a good ETF.