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I've got 10K to invest, but in what?

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  • #1

    I've got 10K to invest, but in what?

    So...

    I decided to remove myself from the housing marked. I only have a year and a half left where I am and I will probably get a posting overseas for a year before my next shore tour so it really didn't make sense to buy. Plus I bet the market will be even better 2-3 years from now.

    This does, however, leave me with all the money I had saved up for a down payment sitting around doing nothing. I want to pull out and invest around 10K, but in what? I am thinking more short term, as I want to have access to it to buy a house when I get back state side but 3 years is a long time and I am sure there are more productive uses for that money than a savings account.

    I had thought about silver or gold, but looking at the prices I think I might have missed that boat. Anyway, what do you guys suggest/had good experiance with?

    EDIT: And if a mod could correct the title...
    Last edited by Patroklos; March 4, 2008, 11:53.
    "The DPRK is still in a state of war with the U.S. It's called a black out." - Che explaining why orbital nightime pictures of NK show few lights. Seriously.
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  • #2
    My wife and I are dealing with a similar question. I hope you don't mind me piggy-backing here...

    Our investment time-horizon is what I'd call medium term (10-15 years) on this money. We put a bunch into the market last fall, which anyone who can read a graph will tell you, looks pretty dumb right now. I keep telling myself it will come back in time, but ouch. Anyway... yeah, what to do?

    The initial plan, last fall, was to invest our money mostly in stock funds (some bonds), with 2/3 of it going into index funds and 1/3 going into managed funds. The 2/3 is already in, leaving the 1/3 (waiting until '08 was something a Smith Barney guy advised us to do b/c of some tax implications wrt managed funds). I have a preference for the index funds over managed funds, since I instinctually hate load fees, so I'm reconsidering that. I think the 70/30 domestic/international split is fine (or is it 80/20? Bah).

    The main thing we're trying to figure out now is whether to put the money in now (now = before we leave on vacation 3/22) or wait a bit. My concern is that the market may not be anywhere near bottom. My other concern is that... it is!

    -Arrian
    grog want tank...Grog Want Tank... GROG WANT TANK!

    The trick isn't to break some eggs to make an omelette, it's convincing the eggs to break themselves in order to aspire to omelettehood.

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    • #3
      Stay away from the Croatian stock market. My $0.02.

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      • #4
        Your time horizon determines the amount of risk you should take. A 2-3 year horizon dictates that you take almost no risk. A simple money market may do you well. Look for the lowest expense ratio. Vanguard probably has a money market fund with a low expense ratio.

        Edit: Here's a suitable fund from Vanguard.

        VMMXX-Vanguard Cash Reserves Federal Money Market Fund | Vanguard
        https://personal.vanguard.com/us/FundsSnapshot?FundId=0030&FundIntExt=INT
        I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

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        • #5
          Do not put 10K

          Either put a significant sum or none at all. If you want short term and no risk, then you can build a ladder of 9 month CDs. I would recommend looking at ING direct. If you are willing to accept some risk, then state level municipal bonds might be a good deal (in the next few months - look for a big price drop/yield increase) depending upon your tax bracket.
          “It is no use trying to 'see through' first principles. If you see through everything, then everything is transparent. But a wholly transparent world is an invisible world. To 'see through' all things is the same as not to see.”

          ― C.S. Lewis, The Abolition of Man​

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          • #6
            Patroklos,

            Remember, of course, that DanS is embracing his evilness. BEWARE!

            -Arrian
            grog want tank...Grog Want Tank... GROG WANT TANK!

            The trick isn't to break some eggs to make an omelette, it's convincing the eggs to break themselves in order to aspire to omelettehood.

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            • #7
              I hope you don't mind me piggy-backing here...
              How much do you weigh?

              A 2-3 year horizon dictates that you take almost no risk.
              Do you mean that an investment of that length simply doesn't have much risk, or that they do and I shoudl avoid it?

              Either put a significant sum or none at all.
              I thought 10K was pretty significant, is it not as these things go? I have more, but I don't want all my money beyond reach tied up somewhere.
              "The DPRK is still in a state of war with the U.S. It's called a black out." - Che explaining why orbital nightime pictures of NK show few lights. Seriously.

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              • #8
                Originally posted by Patroklos
                Do you mean that an investment of that length simply doesn't have much risk, or that they do and I shoudl avoid it?
                I mean that an investment of that length -- with a particular goal in sight -- shouldn't have much risk. Your primary goal is to buy a house. Gaining on your investment is much less important than maintaining the $10,000. If you lose a part of the $10,000, then there's no house.
                I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

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                • #9
                  Well, that is true.

                  The goal is to do something that will earn me more than just savings acount interest. I am not looking for a get rich quik scam. What you linked looks to be on the level of what I was thinking about.
                  "The DPRK is still in a state of war with the U.S. It's called a black out." - Che explaining why orbital nightime pictures of NK show few lights. Seriously.

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                  • #10
                    The jives with everything I've ever heard, Patroklos. If you have a short time horizon, you go low risk. Otherwise it can really blow up in your face.

                    If you're investing long-term, you can wait out a downturn and not sweat it too much.

                    -Arrian
                    grog want tank...Grog Want Tank... GROG WANT TANK!

                    The trick isn't to break some eggs to make an omelette, it's convincing the eggs to break themselves in order to aspire to omelettehood.

                    Comment

                    • #11
                      Significant

                      how much is 10K compared to your total sum? If less than 40%, then it is not significant.

                      DanS means that your timeline is short and that you should try to totally avoid risk. Getting in and out of investments quickly does not avoid risk. In many cases, it compounds risk. You avoid risk, by getting into investments which do not change in value that quickly.

                      Also, ignore what I said about the CD ladder. 6 month CDs suck (about 3.5%). The Vanguard Prime Money Market is getting about 3.64%. My Etrade savings account is getting 4.1%.
                      “It is no use trying to 'see through' first principles. If you see through everything, then everything is transparent. But a wholly transparent world is an invisible world. To 'see through' all things is the same as not to see.”

                      ― C.S. Lewis, The Abolition of Man​

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                      • #12
                        Plus when you do buy a house you usually spend a lot of money in addition to the house purchase. So you should have some extra cash ready.
                        I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
                        - Justice Brett Kavanaugh

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                        • #13
                          Managed funds that were recommended to us:

                          Davis NY Venture fund (NYVTX) - 4.75% load fee
                          ING Foreign fund (IAFAX) - 5.75% load fee
                          Nuveen CT Muni Bond (FCTTX) - 4.2% load fee

                          Anybody have an opinion on: 1) managed versus index in general; and/or 2) those funds in particular?

                          -Arrian
                          grog want tank...Grog Want Tank... GROG WANT TANK!

                          The trick isn't to break some eggs to make an omelette, it's convincing the eggs to break themselves in order to aspire to omelettehood.

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                          • #14
                            Yeh, I have an opinion. Don't listen to the guy who's pushing managed funds with loads.

                            Go as much indexed as you can. Sometimes suitable international index funds are hard to find, though. What are the expense ratios on those funds that you listed?
                            I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

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                            • #15
                              % Load Fees

                              Those load fees are taken out of your money when you buy the funds. Who do you think gets that money? How good of a return would you have to make to compensate for this up front deduction? You can go to Vanguard (or Fidelity) for very good managed funds with no loads.
                              “It is no use trying to 'see through' first principles. If you see through everything, then everything is transparent. But a wholly transparent world is an invisible world. To 'see through' all things is the same as not to see.”

                              ― C.S. Lewis, The Abolition of Man​

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