Where to invest?

[socal_man1]

Ok folks, I've got about $10k I was hoping to put into a conservative investment. I would like to shoot for 5% return over a year. I would like to be able to access this money in about a year, should the economy recover. Any thoughts?

[kork13]

5% for a 1-yr investment? hmm.... good luck. Best shot might be buying (and holding to term) short-term municipal or corporate bonds. Not sure if rates like that are available with such a short term, but might be worth investigating. If you found a reliable one with the time frame/rate you're after, holding it to term would guarantee your rate of return.

Otherwise, you could try a bond MF/ETF, you may be able to make 5% there, but it's by no means guaranteed, and you hold a fair bit more risk there.

Last idea... There are some high-yield checking accounts out there paying 4.5% - 5.25% interest, provided you use you make a certain number of transactions each month.

Just a few options to look into.... The last is the most possible, but also the most hassle (having to use their debit card for the 10 purchases/month, or whatever).

[gekkoplus]

Making 10 transactions a month is not that difficult.. I have 5 transactions for paying my utility, phone, cable etc. set up to automatically run each month.. all I need to do after that is use my card for groceries and gas..

[swanson719]

Good luck finding a 5% over a long term. Community America Credit Union has a 6% introductory rate that ends 31 Dec 09, but you have to have a checking account with them with direct deposit, and the 6% is only up to a $1,500 deposit, and anything past that makes a miserable 0.5%. So that's pretty useless for a 10K investment. Your best bet right now would be to look into municipal bonds. Nothings going to pay 5% when interest rates are so low - why should a bank pay 5% to borrow from you, when the gov't has the discount rate at half a percent? Doesn't make sense.

[disneysteve]

There are plenty of stocks with 5% dividend yields and plenty of bonds with 5% rates. Are they conservative investments? Perhaps some are.

[bhartiaxa]

deleted by user

[Broken Arrow]

Hmm, I see kork and others have already beat me to it.

In order to achieve 5% right now, you're either going to have to take risks somewhere, or you will have to lower your yield expectations to perhaps 2.5% to 3%.

5% in one year is doable, but you're basically looking at short-term corporate bonds or bond funds. I don't know if that fits your definition of conservative or not. Muni are possible, but you're basically looking at California bonds though, and that too is not without its risks.... Interesting times we live in when even state government-issued bonds can be viewed as risky.

Personally, I would just hone in on the options that will work best for you, and settle for the best return available in that selection. My credit union is currently paying 4%, and for a conservative investment vehicle that offers both liquidity as well as capital preservation, I don't feel the need to look any further.