I want to put $10k away for 6 months....

[texastek76]

Of course my first thought was to just stash the cash in a 6 month CD, then I realized that you can get the same APY but putting the money into an online savings acct. Then another thought hit me. With the market taking a beating these days I could probably earn more money (of course risking it to) but placing it in a broad mutual fund for six months. I pulled some numbers and here it what they say:

$10k for 6 months in a CD (or money market) earns about $200.

I checked the past eight 6 month periods for the Vanguard Total Stock Fund (VTSMX). This goes back four years assuming you buy in January and sell in July (and vice versa). This period starts just after the market had settled after 9/11.

The average return on $10k was $622. The minumum return was -$126. The maximum return was $1370.

This is very tempting to me!

It should be noted that the five 6 month periods just prior to this data set were all negative returns (post tech bubble burst followed by 9/11 downturn).

Anyway - just thought I'd throw this out there as the numbers have been interesting to me and I am leaning to stashing the money in the mutual fund for 6 months. For a little perspective - I am 31 with no debt other than the house. I tend to lean to the aggresive side when it comes to investing as I have a pretty big time horizon.

[aida2003]

This is my personal opinion and it's also advised by experts: Don't risk your money if you NEED it very soon and 6 months is definitely a SHORT period of time to invest in stock market.
You say you're agressive on investing, but I think it's imprudent to do for the 6 months. Of course, if you listen to the alarming buzz in investing community (from experts to amateur investors), majority tend to think that 2008 will be rocky. But if your mind is all set and you know you won't regret losing some money, go ahead and take a risk.
Let us know in 6 months how you fared. Wish you luck, of course.

PS. We opened a taxable VTSMX 4 years ago (investing monthly). I cannot remember numbers exactly, but as of 12/31/07 we were in black for sure, but now I'm guessing it's $0 paper gain including dividends. I'm going to increase investments from $100/mo. to $200/mo. just because I hope to reap rewards in the future (NOT in 6 months though).

[jIM_Ohio]

What is money going to be used for in 6 months?

[texastek76]

What is money going to be used for in 6 months?

Some of it will be used to finance an anniversary vacation for the wife and I. Most of it though will continue to be saved. That is another reason I am leaning toward the fund becuase hopefully we won't need this money this year and it will continue to grow in the fund.

[lucasrd]

is there an ETF that tracks the S&P? I might go with an ETF instead of a full-fledged mutual fund...that way you can pin-point your price you buy and sell at instead of waiting to buy and sell at market close....

If you could stand to lose not just $126 (going off of the averages) but $2000 or 20% , which is what would happen (possibly worse) if the bond insurers bail-out falls through, go ahead and give it a try...there are just too many unknowns in the market right now to declare a bottom and say things still couldn't get worse.

[jIM_Ohio]

Some of it will be used to finance an anniversary vacation for the wife and I. Most of it though will continue to be saved. That is another reason I am leaning toward the fund becuase hopefully we won't need this money this year and it will continue to grow in the fund.

I would put the money for the vacation in a CD. If vacation is 9k, then 9k in a CD. Do not let the market take away a vacation. Your wife will not let you make other money decisions (maybe) if you blow the vacation.

The invest the rest. If purpose for money is beyond 10 years, consider 100% equities. For every yeear less than 10 you need the money, add 10% to bonds. As horizon shortens a year, add 10% more bonds.

So vacation money is 100% cash.

Remaining money is in 10 year portfolio

year 1 100% equities
year 2 90% equities, 10% bonds (sell 10% to bonds)
year 2 80% equities, 20% bonds (sell 10% more to bonds)
year 3 70% equities, 30% bonds (sell 10% more to bonds)
year 7 30% equities, 70% bonds (sell 10% each year to bonds)
year 9 10% equities, 90% bonds

more than likely by year 8 or 9, the original amount is all in bonds or cash, and the remainder is in equites working towards next intermediate goal.

[jIM_Ohio]

is there an ETF that tracks the S&P? I might go with an ETF instead of a full-fledged mutual fund...that way you can pin-point your price you buy and sell at instead of waiting to buy and sell at market close....

If you could stand to lose not just $126 (going off of the averages) but $2000 or 20% , which is what would happen (possibly worse) if the bond insurers bail-out falls through, go ahead and give it a try...there are just too many unknowns in the market right now to declare a bottom and say things still couldn't get worse.

I think SPY is an ETF which tracks S&P. I think speculating on the market for short term gain is a bad move.

Believe in capitalism- long term the market goes up. Long term is at least 6 years in my book.

[disneysteve]

I think SPY is an ETF which tracks S&P. I think speculating on the market for short term gain is a bad move.

Believe in capitalism- long term the market goes up. Long term is at least 6 years in my book.

I agree. I would never put money I needed in 6 months in stocks. Today, I'd go with a CD as MMA rates are probably on the way down.