Where to put my next 2-3k?

**jIM_Ohio** · 08-13-2010, 02:32 PM

Originally posted by Relmiw View Post

i'm 25 and have been able to build up some money while in school. i'm starting grad school in a couple years though, and will possibly have to withdraw a lot of this money at this time.

i've put 5k into CDs and am about to put 5k into a vangaurd fund (though i'm not quite sure which one yet)

i'm gonna have around 3k cash and i'm looking for a place to invest another 3k. what should my next step be for this money?

If the money has a specific purpose (grad school) and a decent (close) time table (5 years), keep it all in cash.

What is your best case over 5 years?

Turn $3000 into $6000 (that is an 18% annualized return- VERY optimistic, but possible)
what is your worse case? $3000 drops to $1500 and stays there- would you delay grad school for market to recover?

I would keep it all in cash.

**Scanner** · 08-15-2010, 08:16 AM

I agree with JimOhio - however, it sounds like you could be in a position to fund losses. If you can tolerate funding a potential loss, I like Vanguard's Wellsely fund - it's 60% bonds, and 40% stocks.

That "magic mixture" seems to maximize gains, while minimizing risk.

It does have losing years though so keep that in mind whereas with CD's, there is no principal risk.

You'll have to decide if a 5% differential on average is worth the risk or not, if that potential reward is enough.

With that small amount ($20,000 at the most it seems), it may not be. 5% of $20,000 is $1000. Does an extra potential $1000/year sound worth it to you for risking principal?

**FrugalDad123** · 08-15-2010, 11:35 PM

You're 25? Wow that's young. Buy some gold and silver pieces and hold on to them until you're 50. Promise yourself to just sell them on your fiftieth birthday and just party.

**wincrasher** · 08-16-2010, 07:29 AM

Do some of you not read the posts at all???

He needs the money in a couple years. Invest in CDs or Treasuries. You won't make alot, but you'll have safety.

I'm not big on mutual funds, state bonds or munis. There is alot of turmoil still, and I think, should see alot of defaults. Some blue-chip corporate bonds may have less risk for a bit more yield.

Gold is a terrible investment. Silver is worse. You'd be buying near the peak. As the global economy improves (albiet slowly) gold will fall - it always has and always will.

**jpg7n16** · 08-16-2010, 10:01 AM

Anything less than a 5 year horizon should be in something short term like Wincrasher was saying.

Gold and silver are speculative, so they are inappropriate for a short term need. Stocks are also not short term IMO.

Look into CD's, a short term bond fund, and/or the forever non-sexy Money Market accounts. (You likely won't get a high return on this money)

**FrugalDad123** · 08-16-2010, 01:15 PM

Ouch. ok... I'm learning, I hope. That what SA is for, right?

**Broken Arrow** · 08-16-2010, 01:29 PM

The ability to listen and learn is a timeless and admirable quality, and is infinitely more important in my opinion than being right or wrong. For that, you have my respect, FrugalDad.

Precious metal is a long-running discussion here (although this is a common discussion in other financial forums and sites as well), and speculatively, I would say they are often times more volatile than many individual stocks out there.

To be fair though, I also don't have too much against having some precious metal as a stabilizing agent in a reasonably-diversified portfolio, held passively for the long-term. In which case, you're more interested in the diversification and value store than you would than the speculative growth potential.

That said though, because precious metal has been running on a relative all-time high right now, this is an asset class that you want to under-weigh with your contributions. If you do it passively, you'll be doing that anyways, since you will buy less than normal because of said relative high price. But I would caution against anything more than 25% here.

As for the original question, I can't add much (which is why I didn't comment earlier). Were it up to me, I would probably just drop it in some corporate bonds that I like. Last I checked, I could get up to 5% for some Goldman Sachs. That's good enough for a couple of years. That or just high interest savings if I prefer to keep the money liquid. I can get about 2% to 3% APY right now.

**ferriwinkle** · 08-16-2010, 01:40 PM

i agree with Broken Arrow, high interst savings, or since you know the time frame, maybe a CD.

**FrugalDad123** · 08-16-2010, 04:13 PM

Originally posted by Broken Arrow View Post

The ability to listen and learn is a timeless and admirable quality, and is infinitely more important in my opinion than being right or wrong. ...

Thank you, Broken Arrow. And thank you for your perspective and insight.

**littleroc02us** · 08-17-2010, 11:49 AM

When your going to school you are already investing in your future, so don't worry about making money right now in the market. I would put the cash so it's readily availabe in a money market fund which could give you a minimal return of around 1.3%. Check BankRate.com for the best money market accounts. You will need money for school. Stick to paying cash for everything, so that you don't owe anything when you come out. There is no such thing as good debt, only debt that needs to be paid off.

**gambler2075** · 08-22-2010, 01:37 PM

Depends what you are comfortable with, but I believe there are some good opportunities investing in specific biotech stocks that seem to be undervalued. I've been a biotech stock trader for about 7 or 8 years and I have done fairly well for myself. Some ups and downs, but more ups than downs

Anyway, I have a speculative position in a stock called CHTP, which you might want to check out. Phase 3 results due in a month or so, and I think there is a good chance that they could be positive. I have found that buying stocks in the month or so before a FDA decision or phase 3 result is usually pretty good for a runup... holding through the FDA decision is usually not a good idea though :P

Let me just add that biotechs undergo huge changes in waves of greed and fear, and the prices of those stocks also undergo crazy moves too. I think by trading as a contrarian (buying when others are selling) some people may be able to gain an advantage and beat the S&P 500.

good luck,
g

p.s. this is not investment advice. This is for informational use only. Do your own research/consult a financial advisor before buying or selling any stocks. There, that should just about cover the disclaimer, hehe.

**gambler2075** · 08-23-2010, 04:56 AM

Are you sure that you don't mean 'hooey' not 'hoo ya?'
just kidding

Certainly buying individual stocks is not for everyone. Probably not for most people. But I have found that it is what works for me. Not every time, but on average, I have been doing fairly well with it. So I am just throwing it out there. We'll see what happens in a month or so, I could certainly be wrong, but I am willing to take that risk. All I am saying is that you might want to check into individual stocks, before you dismiss the idea out of hand.

Anyways, good luck in however you decide to allocate your money.
g

p.s CHTP at 4.06 as of this post. I'd expect a pullback to the 3.80 range and consolidation for a few days before possibly continuing higher as the Phase 3 results date gets closer.

**jpg7n16** · 08-23-2010, 08:08 AM

Single startup biotech/pharmaceutical stocks are also highly speculative and extremely inappropriate for this OP's short term goals.

Gambler's posts remind me of those faxes that come in saying "This is the best stock ever! It's gonna go through the roof soon, so buy now!"

So forgive me, but I can't help but think there is some alterior motive to a person whose 1st 2 posts proclaim this 1 pharmaceutical stock - and he even puts a disclaimer in post 1. Who does that?

Do not buy a speculative single stock to plan for a short term goal.

**gambler2075** · 08-23-2010, 06:16 PM

Hey, fair enough. I understand where you are coming from as far as doubting a stock pick. I won't post again about it until I sell, probably in a month or so. We'll see what happens to it. In the meantime I will leave this forum alone.

g

Where to put my next 2-3k?