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I have some money that I had saved up to buy a home sitting in savings right now earning below 1% APR I don't plan to purchase a home for at least 2 more years till the job market is reasonably stable, what is the best place to put this money so it will not lose too much value? I don't want to risk my capital so stocks are out of the question.
That is a real good question. I also have some money in an online bank (Emigrant) that is now only earning 1% but would rather lose a little to inflation than expose myself to a significant short term loss in some investment vehicle. It is also important to keep the assets liquid in case my employment is interrupted even though I feel relatively secure.
I am afraid someone is going to say gold and rare coins. That is banking on inflation with a 4% loss with respect to the spot market price when you buy it. I have been told at one place that on the backside they buy it back at the spot price and you do not have to discount it. Any gain is taxed like earned income and not captial gains. The whole idea gives me pause especially since the government could demand that all gold be surrendered at what ever they deem it is worth.
with a 2 or 3 year horizon a cd is about the best your going to find......
if you know how to use stock options its easy to create your own equity linked cd with no risk ... that way you guarantee yourself your principal but take a flyer for a little extra if the markets rise...its kind of like a cd on steroids ... no big gains but you could pick up another point or so if markets rise.
anything else and you risk principal...
if you already made the money you need for the house then that part of the game is won...just keep it safe..
Yep I"m looking at putting a big wag of money from my money mkt (hovering around 2% or less) into a CD at 3% or so, whatever I can find. Not great but better than what I'm getting.
I put a bunch of my free cash into LendingClub.com. Peer-to-Peer lending. I've earned 11% (APR) in the past 3 months. It's more risky, but diversification is key.
I put a bunch of my free cash into LendingClub.com. Peer-to-Peer lending. I've earned 11% (APR) in the past 3 months. It's more risky, but diversification is key.
Diversification? You could make undocumented payday loans to street people in West Hollywood and be diversified, too, but the cumulative risk is still astronomical and out of the control of the "investor." There's a reason that you're getting a 1000 basis point premium over insured deposit account rates, and it's the incredibly large default risk you're taking...diversified or not.
For the OP, shop around for the best jumbo CD rates, but be careful not to exceed FDIC deposit insurance limits at any one financial institution.
Online savings banks, credit union money markets and CDs. If you do use CDs make sure there arent severe penalties for breaking them. The higher interest rate earned (longer term) may compensate for the penalty incurred.
when someone talks about what to do with cash as opposed to where do i invest? it usually means they are looking for a place for keeping savings....
thats usually short term cash instruments, not gold, commodities, equities,real estate or bonds.....
if someone met their goal of getting money saved for a house then that money should then be taken out of the at risk pool and tucked away in short term safe savings... its when your trying to accumulate the money for that goal you can go riskier and more longer term.
the worst thing anyone can do is take a short term time horizon like 2 years and throw money into long term risky investments.
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I don't plan to purchase a home for at least 2 more years till the job market is reasonably stable, what is the best place to put this money so it will not lose too much value? I don't want to risk my capital so stocks are out of the question.
