Best place to put a fairly large sum of money..... (inheritance, years)
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Where would you guys recommend putting a fairly large sum of money where it will draw interest and still be fairly safe? Someone I know said they put theirs into a Horace Mann fund of some type and it draws....oh, I think they said 3 or 4%.
Really tough question to answer as there is no such thing as a safe 3-4% return today with interest rates so low. You have basically a few options: Cash which is absolutely safe but pays under 1% which is a losing investment after taxes and inflation. Bonds are fairly safe and pay more but the climate for bonds is really bad now, they go down as interest rates go up and rates had to go up eventually as they are doing now. Then we have the stock market and everyone understands the risks there.
What is your timeline? Can you leave the money there for several years to ride out the ups and downs of the market? We have a number of mutual funds that we could suggest, many with combination of stocks and bonds which would no doubt be your best bet. But none are "safe", they will go up and down.
As Dave said, knowing your time line is key. If you will not need this money for anything in some specific amount of time I personally would put it in the stock market as it will do the best over the long run. But you have to have the stomach for that as stocks go up and down, but they always recover. You never "lose" money despite what people say.
Bonds or CD's can be OK but again, they are better if you know the time frame. If you don't want to own stocks then the next best thing is bonds (not bond funds) or CD's. Get like 5-year maturity of either and sit on them. You are guaranteed to not lose money but you have to wait the full 5 years. You can get shorter maturity of either but you get better interest on longer maturity CD or bonds.
US Treasury bonds are easy to buy on-line. Shop around for CDs. Good rates on CDs appear but quickly sell out.
I would stay away from bond funds unless you are investing for the long run, like more than 5 or 7 years.
You take that money to the Bank, and you tell them you want to put it in a "Non-Intercourse" account -- You don't want anybody screwing around with it !!
I see there are higher yield checking accounts paying up to 2.25%. You must use a debit card a number of times a month and have a direct deposit every month. Here they are:
I am interested in this thread as well. In a few years I will have a large sum of cash to put away. It is from the sale of primary home and the intent is to keep it to be used for long term care so it needs to have an access but that access can be a draw down as needed but not needed for living expenses. Only for LTC. If the money earns 2 to 4% annually that is good enough for us.
I see there are higher yield checking accounts paying up to 2.25%. You must use a debit card a number of times a month and have a direct deposit every month. Here they are:
That is interesting, had no idea these interest rates existed. Probably won't help the opening poster, this is park and forget it money and I'm not sure he/she will be able to meet the direct deposit or debit card requirements.
So for both the OP and Golfingduo if the timeline is more than a couple of years my suggestion is a fund many here are big fans of, Vanguard Wellesley (VWINX). It's a mix of mostly bonds with stocks as well. Incredible track record, especially in down markets, with extremely low fees for a managed fund. https://personal.vanguard.com/us/fun...FundIntExt=INT
The returns probably won't match the 10 year average of 6.6%, as noted it's not a great bond climate. But any form of cash, including CDs that are mostly paying under 2%, just won't offer viable returns IMO.
Last edited by DaveinMtAiry; 01-20-2017 at 05:59 AM..
I've converted everything to cash and have it in various safety deposit boxes. Might not give me any growth, but it sure is safe. I would rather have access to cash than to make (or lose) a little profit on it. Especially in these upside down times. Should I die, my sons will also have no problem getting my inheritance.
But that is just me.
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