How would you invest $100,000 - at no risk?

[m3racer]

From what I've seen seen, those step-up CD's usually have lower interest rate than regular CD's (as much as 1% lower).

I've seen both higher and lower apy's. Just keep looking.

[safari]

I've seen both higher and lower apy's. Just keep looking.

I was talking about the regular and step-up CD's offered by the same bank. The step-up CD rate will always be lower than the regular CD rate. A step-up CD makes sense if you're opening a long term CD (> 2 years) and expecting the interest rates to rise, which in itself is contradictory. If I expected the interest rates to rise, I wouldn't want to lock my money in a long-term CD. I can't think of any reason why someone would consider a step-up CD. It's just another gimmick that the banks came up with.

[bjl584]

The original question that was posed gives me a feeling of uneasiness. You MIGHT have some jobs lined up that SHOULD net you $100,000 in the near future. One thing that I have learned is that making assumptions about finances or anything else in life is risky at best. I'm not quite sure what your situation is, but I know that personally my money is invested slow and steady every month in stocks, mutual funds and cash. Before I knew it, a six figure portfolio was staring back at me. Now, if $100,000 were dumped into my lap all at once, well, that's a whole different story. Personally, I would probably use a portion of it to pay off some debts and the rest would be invested with the rest of my assets. But, that's just me. In your situation it depends on your age, your debts, your investment goals, etc. Do you have a broker or financial advisor? Maybe it would be a good idea to schedule a meeting with such a person to get some direction and work out an investment strategy that best fits your goals and your personal situation.

[Risico]

I want to thank everyone for thier ideas and general help Yes I am going to wait until I get a "nice chunk" of money...hopefully in the range that I said in this topic, which if we get that job and it looks pretty close to 95%.. then Ill probably find this topic and mayb ask for a little more help/detail..

But this was a nice start to keep in the back of my mind!
Thanks so much

[jIM_Ohio]

Hello

I was looking for some help from some smarter people here!

I am about to start a Construction Company pretty soon and we have some jobs lined up which might be pretty big. I can see within a year or earlier we will have $100,000 in savings.

Just putting it in a normal bank account does pretty much nothing..

2 Questions: (Explain in Detail, Links Please)

1) If you had $100,000 how would you invest it with NO RISK?

2) If you had $100,000 how would you invest it with very LOW RISK?

risk takes on different forms. It cannot be eliminated. Risk is managed.

Principal risk is the risk of losing the amount invested (I think this is what you mean)
Inflation risk is the risk the principal amount cannot purchase what it used to
interest rate risk is the risk that rates change during the investment period which are not to your benefit.
return risk is that you could have gotten a higher return (for a given amount of risk).

Here is what I think. If the goal is to protect the 100k, then CDs or money markets, with around a 4.5% annual return should be expected. No principal risk, high inflation risk, high interest rate risk.
**edit after reading all posts: ladder the CDs so one matures in 1 month, another matures in two months, another matures in 3 months, with 12 total CDs (one for each months expected expenses) then keep other funds in a money market. The CD ladder (12 CDs) and money market mix should mitigate interest rate risk in the short term**

if moderate return for 1 year is desired, I might suggest looking for a corportate bond fund with a 6% return/yield, or maybe invest in some foreign securities like swiss francs. Again 1 year timeframe. Reduces return risk, inflation risk, adds in interest rate risk, default risk and currency risk.

if moderate return for 5 years is desired, I might suggest looking for any of the following:

50-50 cash/equity mix. Invest equities in a dividend/ large cap value fund like PRFDX (disclaimer, I own this fund) and 50% in cash/money markets. Each year I would sell 10% of the equity position to cash. I would expect around an 8% annual return from this, there is significant principal risk (which decreases every year), inflation risk goes to very low, interest rate risk starts low, increases each year.

PRFPX permanent portfolio. Expect around a 4-10% annual return. Invests in mix of swiss francs, commodities, dividend paying stocks and US bonds. Principal risk is there, inflation risk is the goal of the fund (meaning this should be zero if fund meets it's goal), other risks (interest rate, currency, political etc...) should cancel each other out.

If it was me, assuming this was profit, I would put 50% in cash (CDs or money markets) and 50% in PRFPX.

[fatcatz]

Maybe look into ARS?

I was just talking to a financial advisor about this same thing.

Where to put 100K that's relatively safe, earns a decent rate & still liquid.

He suggested "auction rate securities" The brokerage houses sell them at no charge to the investor. The issuer pays the fees (got to be fees somewhere...as long as I'm not paying them.)

Basically a municipal bond auction, the tax-free aspect really appeals to me.
I've been buying CD's, but now considering these.

You probably should calculate your marginal tax rate, then compare taxable to non-taxable.

best wishes

[Broken Arrow]

I agree that munis of some kind are always an option, but again, I would look into them carefully. They may be tax-efficient, but what about their rates? Sometimes, depending on where you stand with the Tax Man, tax efficiency may or may not be worth it if the net return is still not competitive enough against other debt instruments.

While I'm here, for something in the middle of the road, Treasuries are also an option. I'm not saying this is definitely the way to go, but it's extremely safe and still quite tax-efficient.

[QueenOphelia]

75k @4.5% will throw off around $300 a month. Enough for a car payment maybe.

I did this when I got my severance and wasn't sure where this portion of my $ should be invested. I eventually moved alot to Mutual Funds and stocks, but still have a chunk in CDs.

[Risico]

Very Interesting I see Jim_Ohio kinda tagged some/most of my thoughts, which I didnt really explain correctly originally. But honestly everyone has kinda tagged in every post

Yeah this all started about a year ago, I asked a guy I was doing work for and became kinda friendly with, he was a day trader.

I just asked him basically... what's something as safe as the bank but gave me a higher interest I can put my money in?

at the time he said, he tells friends put it at Emigrant Direct. So I just saved the site, But that was a year ago and I always love asking others for their opinion! Plus that guy kinda turned into a flake. So now I am thinking??? hmmmm???

Another Question.

Financial Advisors

How do I know I have a good one? OR is what I am asking (with this topic) such a simple standard thing that I really dont have to feel out the guy to see if he really knows his stuff?

See I am thinking If I go into a place and say " I have $100,000.. blah blah blah" they only hear $100,000 and just BS me and say anything to get me to go with their company.

* To be honest sometimes even reading this topic, allot of this goes over my head and my eyes glaze over

How do you pick the right one? .. or am I just not understanding your business... is this kinda "investing" like I am asking here... pretty simple/standard for a person in your field?

Just Curious on everyones thoughts
Thanks

[duke4ever]

You might also wana try investing in mutual funds. They are pretty risk free and the profits are not bad either. Search online to see which mutual fund suits you best.

[disneysteve]

You might also wana try investing in mutual funds. They are pretty risk free

I think you need to clarify that statement. Certainly, there are some types of mutual funds that are low risk, like those investing in government bonds or highly rated corporate bonds, but you certainly can't generalize that mutual funds overall are "pretty risk free" as some are very high risk.

[Scanner]

To be honest sometimes even reading this topic, allot of this goes over my head and my eyes glaze over

What's confusing you?

Yes, you are right about financial advisors. You'd be better off sitting down with your accountant.

Listen, if you don't understand this stuff (and that's okay to admit), I would advise just sticking to FDIC insured investments until you learn a bit. Stick the money in CD's or a savings account until you have a better idea what you want to do with the money (assign it a goal - new house, retirement, college, etc).

[Broken Arrow]

If it helps any, my eyes still glazes over at some of this stuff.

[momon]

What would I do if I had $100,000 to invest, and I was a complete novice when it came to trading?

To succeed at anything education is required. We live in an expert driven society. We just want to concentrate on our own expertise and delegate everything else to other experts. Hey I did it as well when I just started out I invested in dealsjamaica because at the time 5% fixed interest per was enough to cover my need. However, I strongly believe there are three areas in our life in which we must become our own expert, or else we will suffer immeasurably.

So where do we have to go beyond “readin’, ritin’ and rythma-tick”? The first and perhaps most obvious area is family - - both our spiritual family and our physical family. Our family is where we can gain our greatest satisfaction and happiness. If we can learn giving, sharing and responsibility summed up in the word carrying, we do well, very well.

The second area that is crucial is our health. It must becoming clear that simply depending upon doctors and big Pharma is the road to slow suicide. We need to listen to our body and optimize how we feel. This means wholesome food, adequate exercise and sunshine, as well as above all else, personal peace. We need to educate our selves to fall into harmony with nature.

The third area we can never delegate is the management of our money. The worst thing we can do is to gullibly and blindly find a financial y to our best interests. So here are some suggestion an online site where you can get started brining yourself to financial enlightenment moneyinstructor.

To begin educating ourselves in investments, is far better to read books and attend seminars where we are the ones who are taught the nuts and bolts of the stock market, the real estate market, and either home-based business or personal entrepreneurship.

My current desired area of expertise now is in the stock market. I read many books on the psychology of investing, analysis of stock market charts, the biographies of those investors who personally made it big in the market, and on trading systems. Where I ended up is using the best online broker I know of, interactivebrokers, and the best training system I could search out, TraderZone.

But don't follow blindly my thoughts and recommendations - - that would start you on the road to disaster. Go educate yourself. Become your own best expert in the crucial areas of your life. That is where you'll find peace and prosperity.

[filifefc]

There's something wrong with your question. It should probably be how to invest $100k with little risk.

Depending on the risk level you want to take, I would put some into a high yield savings account and some in index funds. Only way to be risk free is to be 100% savings account, which doesn't give a good return for the most part.