300k in savings account

[Broken Arrow]

Open a swiss bank account last i checked they were 12% returns. 50k needed to open though.

Can you elaborate on which swiss financial institution this is with? And who are the intermediaries? Also, what kind of investments?

[YoungBuck]

I would love to see the details on a product which guarantees a 7% return.

Its called a venture variable annuity.

[noppenbd]

Its called a venture variable annuity.

Interesting, I read the prospectus and did not see anything about a guaranteed doubling of your money. Could you tell me where that appears in the prospectus?

http://mediacenter.merrillcorp.com/interface/viewer.asp?LocationID=1510661&ClientID=7&Purpose=HUMAN_VIEW&Caller=RETRIEVE_FILE

[maat55]

I recommended that OP look into a variable annuity because I read somewhere about the 7% return. I personally would not have one, but I'm not pessimistic about the stock market.

After researching variable annuities, they appear to be at least partially stock mutual fund investments. I have no idea how volatile they are. We're not even sure what OP's plan for the money is.

[noppenbd]

Variable annuities in general are mutual funds wrapped in an insurance package. So your money can be invested in any number of mutual funds (most of which carry high management expenses). To add to that, there is typically a 1-1.5% insurance fee, plus any riders that get added on. So you end up paying 2.5-3% a year. And that is assuming you don't withdraw the money before 8 years. If you withdraw early you'll pay anywhere from 2-8% penalty. Even assuming you keep the money in, with nearly 3% in fees I find it impossible to believe you will double your money in 10 years, since the underlying investments would need to return in excess of 10% a year. This is certainly possible with 100% stock funds, but for an insurance company to guarantee it sounds highly unlikely.

[mrpaseo]

Good advise above, allow me to add; I would suggest you start with an emergency fund (Probably already have this).

Consider diversifying the total balance, I agree with maybe 100k in a few Mutual Funds. If you want access, the ladder CD's are a good idea.

Basically how this works is you buy five CDs: 1yr, 2yr, 3yr, 4yr, and a 5yr.
Each CD should be purchased for the same dollar amounts but they will each earn a higher rate than the shorter term. Using this system will give you access to a portion of your money every year. So, let's say you purchase five CDs for 10,000 each for a total of 50,000. At the end of the first year you would cash out your 1yr CD and purchase a 10,000 dollar 5yr CD giving you some interest in your pocket and a higher rate as you are buying a 5yr CD rather than the 1yr CD. In this process you will have access to 10,000 every year.



Again, a stock mutual fund for a say 1/3 of it. You can split this between four different stock mutual funds to diversify. This is actually easier to get to than the CDs as there will be no penalties for early withdrawl, but there is a risk involved. Of course if you keep these long term, you will not have to worry about that.

Recap:

30-50,000 in Emergency fund high interest savings/money market HIGHLY LIQUADABLE

50-100 in a ladder CD account (ING Direct offers this for any dollar amount and as short as monthly I believe, but look around for the best deal).

100-150k in a diversified mutual fund portfolio covering:

1) International
2) Large Cap
3) Small Cap
4) Growth and Income

Vanguard has very low cost to no load, I also have a few Fidelity funds and I fully enjoy their "Full View" snap shot of your investments. With a simple set up they will go and retrieve up to date info from your other investments and bring them all to one page. Finally, I have a few Janus accounts that I have been very happy with ove the past eight years or so.

Good luck, and I am sorry for your families misfortune,
Ray

[bigsaver]

How about the Vanguard's VIPSX, the inflation protected securities. Because of high inflation, it has been paying better than stocks in the past year?

[Scanner]

I vote muni bonds - interest accrues tax free and you can buy bonds that have insurance on the principal.

This is where the major financial gurus put their money - Orman, Ramsey, etc.

[MomofFour]

I vote muni bonds - interest accrues tax free and you can buy bonds that have insurance on the principal.

This is where the major financial gurus put their money - Orman, Ramsey, etc.

Scanner, where and how do you buy muni bonds? And, how is the rate of return on them?

[Scanner]

You can buy them from any full or discount brokerage service. I have Charles Schwab and I am sure if you call up, they can walk you through the process on purchasing a bond from the state you live in.

Rates of return vary with the prevailing interest rate. I am sure they will come in around 3% for insured muni's although I haven't checked lately. The interest will depend on whether it's insured or not (lower if insured), the term, if it can be recalled, etc.

Just be careful. . .a bond is a loan, in this case to the civic gov't of the states you live in. You may be locked into a certain term much like a CD. If you want your money for whatever reason, you must wait for the bond to mature and/or sell it on the bond market.

In that case, you have market risk and could lose or gain depending on the bond market.

But if you buy bonds and just plan to hold onto it, there is no prinicipal risk if they are insured.

You could as an alternative to bonds park the monies in a muni bond fund. . .but then you always have prinicipal risk as the value of your investment can and will fluctuate. So, if you aren't cool with your 300K dropping to 280K one year and then up to 320K the next, then don't do that.

[cipixul]

I agree with you buying stock at such a low price, if you got the cash but you may be blocking your money for quite a while there... maybe long years before you mark your winnings, so think about that too.