Author Topic: best guaranteed ROR for $150k  (Read 1966 times)

kenmoremmm

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best guaranteed ROR for $150k
« on: January 10, 2018, 10:15:46 PM »
looking at selling a property in the highly appreciating, but likely bubbling, RE market of seattle. tempted to 1031 the proceeds, but would have to invest out of state to find something worthwhile (and then lose $ on management fees).

so, option B is to just dump it into something with no chance for a loss. i believe the market is overvalued and i will take the risk of not investing into stocks, crossing my fingers that this market timing works. if not, then it's a loss of some % on the money, and i will live with that.

i'm not familiar with much outside of CDs and bonds, and even bonds seem confusing to me at times.

2Birds1Stone

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Re: best guaranteed ROR for $150k
« Reply #1 on: January 11, 2018, 05:55:50 AM »
For guaranteed return, there are CD's paying upward of 2% now.

You may regret it though, most folks are feeling pretty darn good about the new tax policy, share buybacks, etc.......often time the end of the bull is where the most of the gains are made.

If you time the market and sit on cash, how will you decide when to buy in?

Highly unadvised.

Amiright @homestead neohio ;)

homestead neohio

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Re: best guaranteed ROR for $150k
« Reply #2 on: January 11, 2018, 06:09:56 AM »
It depends on the goal. If you plan to utilize these funds in the next year or two and you need to preserve all the capital (cannot handle a loss), holding in a money market or CD could be fine.  You may forgo some returns as you noted, but if you can live with that, it would achieve your goal.

If you plan to add this money to your FIRE stash and retire on it with a 4% SWR where your time horizon is 30 years, I'd drop it in the market per your IPS and AA.  Time in the market > timing the market.  Lump sum > DCA > paralysis and not investing.  If those thoughts make you squeamish, perhaps your AA is too aggressive for your true risk tolerance.

I tease 2B1S about his cash position because he counts it as part of his stash for 4% SWR (long time horizon) and it is against his AA.  He's taking some steps, so I alternate encouragement and face punches.

VoteCthulu

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Re: best guaranteed ROR for $150k
« Reply #3 on: January 11, 2018, 04:14:36 PM »
Don't market time.

Bonds are generally not a good place for short term money right now because of rising interest rates. I think CDs are the best no risk investment today, but there might be a higher yield FDIC insured account out there somewhere.

ChpBstrd

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Re: best guaranteed ROR for $150k
« Reply #4 on: January 15, 2018, 08:30:40 PM »
The "guaranteed" part is a binding constraint. I can think of many investments that aren't correlated with stocks, bonds, or Seattle real estate, but only treasuries and bank CDs come with a full guarantee. How much risk is acceptable?


kenmoremmm

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Re: best guaranteed ROR for $150k
« Reply #5 on: January 16, 2018, 01:27:04 PM »
some risk is acceptable. but, i would like to think of this as a short term stash to swoop in when markets correct significantly. so, i would prefer some flexibility and safety. otherwise, if the risk is too high, i might as well dump in stocks.

MishMash

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Re: best guaranteed ROR for $150k
« Reply #6 on: January 16, 2018, 01:39:31 PM »
some risk is acceptable. but, i would like to think of this as a short term stash to swoop in when markets correct significantly. so, i would prefer some flexibility and safety. otherwise, if the risk is too high, i might as well dump in stocks.

Synchrony bank is currently offering a 2% 12 month CD.  We just dumped some of our short term cash into it.  If you want access on a dimes notice their savings account is 1.45% and they are pretty good about raising the rate after the fed does.

2Birds1Stone

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Re: best guaranteed ROR for $150k
« Reply #7 on: January 16, 2018, 02:46:01 PM »
some risk is acceptable. but, i would like to think of this as a short term stash to swoop in when markets correct significantly. so, i would prefer some flexibility and safety. otherwise, if the risk is too high, i might as well dump in stocks.

If you plan on using the money to time the market anyway (swooping in during a perceived "good entry point", you may as well dump it into your investments at your long term asset allocation. With a CD you lose 3 months interest on a 12 month (usually) for early withdrawal.

Frugancial Advisor

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Re: best guaranteed ROR for $150k
« Reply #8 on: January 16, 2018, 04:07:39 PM »
If you're looking for a guaranteed rate of return you can eliminate stocks & bonds altogether. That leaves cash, cash equivalents, and CDs.

If you know how long you have until the funds are required, then a CD will provide the better return. If you need the funds parked and accessible at any time, then a high interest savings account (outperforming money market right now) is the better option.

Identify the goal first, then the investment. Not the other way around.

Mighty-Dollar

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Re: best guaranteed ROR for $150k
« Reply #9 on: January 17, 2018, 02:24:12 AM »
i'm not familiar with much outside of CDs and bonds, and even bonds seem confusing to me at times.
Investing in bonds is as simple as BND or AGG. Putting money in CD's is not investing.

VoteCthulu

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Re: best guaranteed ROR for $150k
« Reply #10 on: January 17, 2018, 10:54:54 AM »
i'm not familiar with much outside of CDs and bonds, and even bonds seem confusing to me at times.
Investing in bonds is as simple as BND or AGG. Putting money in CD's is not investing.
Yes it is.
http://www.dictionary.com/browse/invest
Why do so many people want to redefine the word "invest" to exclude products they don't like? I understand drawing a line between investing and gambling / speculation, but saying that real estate or interest bearing CDs and deposit accounts aren't investments doesn't make any sense to me.

Frugancial Advisor

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Re: best guaranteed ROR for $150k
« Reply #11 on: January 17, 2018, 06:12:23 PM »
i'm not familiar with much outside of CDs and bonds, and even bonds seem confusing to me at times.
Investing in bonds is as simple as BND or AGG. Putting money in CD's is not investing.
Yes it is.
http://www.dictionary.com/browse/invest
Why do so many people want to redefine the word "invest" to exclude products they don't like? I understand drawing a line between investing and gambling / speculation, but saying that real estate or interest bearing CDs and deposit accounts aren't investments doesn't make any sense to me.

Exactly. Ask someone who invested in CDs in the 80s and made double digit returns to explain how they didn't 'invest' their money. Putting your money into anything with a potential for return and/or payback is investing.