Best Investment Oppurtunity

[responduser]

Hi,

I am looking for some tips on which investment would be the best in the following case.

1. Low risk
2. Best return
3. Minimum time (Upto 5 years)

[kork13]

I'd point you to some of the more conservative mutual funds... A strong index fund like the S&P 500, or Bond MF's would probably give the best return, though they're sometimes still kinda risky (esp. in the current market). I'm keeping about $6k in a money market fund getting about 3.5% return to keep it growing while ensuring its safety (I'm paying off a car loan with it). MMF's are generally very safe. Going down further, there are certificates of deposit, which have guaranteed returns, but you can't touch it without penalty during the life of the CD, and the rates are kind of low right now... my bank offers a 5-yr CD at 2.51%. Of course, there's always savings accounts, but those are getting at or below 1%, so that's probably not what you're after... Of course, that's just me personally, and there are others here with much more experience, so they may have some better ideas for you.

[jIM_Ohio]

best return with low risk is an oxymoron.

Add to that, risks are NEVER eliminated, only managed.

There is principal risk (the risk that if you invest 10,000, the 10,000 is there when you need it).
There is inflation risk (the risk that 10k today, can only buy 5000 worth of goods because prices increased over time)
There is interest rate risk (the risk that the 3% interest you earn this year might get reduced to 2% or 1% next year)
There is return risk (the risk that you could have gotten a higher return in another investment)
There is currency risk, political risk, security risk and so on.


No one investment eliminates all these risks. You need to define how much of each risk suits you, then find an investment mix which manages those risks.

In my case, I believe inflation risk and return risk are my two biggest issues. To deal with this I have high principal risk with 90% of my money invested.

If money is invested for less than 7 years, I would suggest staying away from equities. If money is needed in less than 10 years, I would avoid putting 100% of money in equities as well. If 11 or more years is time horizon, 100% equities would give highest chances of highest returns possible, and 11 years would minimize many of the other risks in short term.

[maat55]

Your best long term investing is in Mutual Funds, diversified over four types, Growth and Income, Agressive growth, Growth and International.

Short term, MMF's, CD's and Savings. Find a finance book and read about all the different types of investments. Start out simple, while you are learning.

[bucketheadmn]

Hi,

I am looking for some tips on which investment would be the best in the following case.

1. Low risk
2. Best return
3. Minimum time (Upto 5 years)

Find a savings account with a somewhat decent interest rate and park your money - especially if your time frame is under 5 years.

[Broken Arrow]

Welcome, responduser. Can you tell us what you have in mind for this money? Retirement? Emergency fund? Your next car or house down payment?

[responduser]

Thanks for the replies.

But my main purpose is to save money for my and my children to have a secure future.

[jIM_Ohio]

Thanks for the replies.

But my main purpose is to save money for my and my children to have a secure future.

Future is longer than 10 years, correct? Probably longer than 15 years?

In that case I would recomend taking on principal risk so you can beat inflation risk and return risk.

Inflation risk is the risk that the costs of goods and services goes up over time. Gallon of milk might cost $4 in a few years, box of cereal might cost $6 in a few years. Those rising prices are inflation.

Return risk- the risk that other investments will give a higher return than the investment selected.

To beat these two risks, I suggest investing in equities- which have principal risk.

Principal risk means the amount you invested initially will fluctuate daily. If you invest $10,000 today it might buy you 10 shares of something worth $1000. Tomorrow the $10,000 might be down to $9000. You still have your 10 shares, they are just worth a little less than yesterday. Over time principal risk goes away. Because the second day might increase from $9000 to $10500. Third day might drop to $9750. Fourth day might increase to $10750. And so on. You always have your 10 shares, what changes daily is the value of those share on the open market.

Generally speaking, equities provide best method of beating return risk with small amounts of capital (small is less than 200k IMO). If you have less than 200k, the probability you can find another investment which can consistently give you a 9% return year in and year out is quite low (9% return means the $10,000 invested is $10,900 at end of year 1, $11881 at end of year 2, $12950 year 3, $14115 year 4, $15386 year 5, $16771 year 6, 18280 year 7 and $19925 year 8- note in 8 years the 10k investment doubled to 20k). Donald Trump might have ways of getting a 15% return by investing 10 M in a new casino, new condo or similar, but the average investor does not have 10 M, or even 10k at their disposal most of the time.

The ride is NEVER linear. If the market went straight up like that everyone would do it. The reality is one year you could make 8%, the next year lose 10%, the next year lose 12%, the next year gain 30%.

If you have the TIME to wait out the market, then you will see 9% returns over a 10-15-20 year timeframe. The longer the timeframe, the less principal risk you have.

[personalbudgetstuff]

Silver, Silver, Silver, Silver, can't emphasis enough. Great opp right now as Silver is undervalued, we're running out of it and we need it for just about everything.

[Personal Finace Fleur]

i believe that the best place to invest your property is in the internet

[personalbudgetstuff]

Investing in Silver

After I made a post earlier I just got an email from the guys and GoldSilver.com with interesting blog post on grocery inflation and hedging inflation with Silver. Check it out.

[James00]

I would prefer choosing a site that deals with personal finance.

[whitewater30]

Investment Opportunity

Good Quality growth stock mutual funds are on sale right now.

[Broken Arrow]

Good Quality growth stock mutual funds are on sale right now.

Yes... generally speaking, a lot of stuff is on sale right now, so the question to me is more along the lines of, "What is your risk tolerance?" and "What is your asset allocation?"