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lizahellenn
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      12-27-2010, 10:18 PM

What is the best short term investment for one's money with the highest
return, with the lowest amount of risk? I'm invested in CD's and they
give a good interest rate and very skeptical of the stock market yoyo
and not interested in the shaky housing market. But my question still
remains and want to know what do you think would be the best investment,
also thinking about foreign securities, but what do you think is a good
investment and also for retirement long term too?




--
lizahellenn

 
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dumbstruck
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      12-28-2010, 03:40 AM
On Dec 27, 12:18*pm, lizahellenn <lizahellenn.
(E-Mail Removed)> wrote:
> What is the best short term investment for one's money with the highest
> return, with the lowest amount of risk?


One counterbalances the other - pick low risk or high return, but not
both. Well, that is theory for which I usually perceive juicy
exceptions, but hard for me now.

> I'm invested in CD's and they
> give a good interest rate and very skeptical of the stock market yoyo


Good short term interest rates?! I thought they gave near-zero over
inflation.

> also thinking about foreign securities, but what do you think is a good


That used to be my specialty, but I am about run out of ideas. Most
foreign markets doing well have done so on mining, which now seems
risky for a bubble burst. I see Peru EPU holding up pretty well, but
that seems crazy undiversified.

> investment and also for retirement long term too?


Normally I might recommend a balanced fund like FFNOX which is mostly
US big cap, partly bonds, a sprinkling of foreign and small cap. But
many traditional types of bonds are turning toxic in the current weird
environment, and corroding returns.

OK, let me put my net kook hat on now, and brainstorm irresponsibly. I
think I have an answer for me, but not your preferred level of risk.
First lets look at performance of TYPES of mutual funds
http://news.morningstar.com/fund-category-returns/ and click on some
time period to sort it, like 3 month returns. Scroll down to the
"fixed income" header, and note about the only life in the party is
high yield bond and bank loans.

OK, lets look closer at the volatility of those returns in a graph of
bank loan, high yield, the SP500, and for another non-stock choice
let's throw in commodities: http://finance.yahoo.com/q/bc?t=2y&s...k%2Cspy%2Cusci
. (may have to paste links if parser garbles the special characters)
Observations:

1) Now you can see that high yield JNK dipped just as bad as the stock
market and lags it now. BUT it not only isn't falling like other bonds
but has been firehosing almost 10% dividends (type their ticker into
quote field to estimate yield)... which should get lightly taxed
another 2 years.

2) The bank loan funds give over 3% yield with quite low volatility,
which might be closer to what you look for. But if you back up the
graph with the 5 year button, you can see even they can swoon in
extreme circumstances.

3) As you are stock-averse, I throw in a new alternative approach ETF
for commodities USCI which is show a recent jump. But that trend may
be ripe for a retrenchment and it's risk is only balanced out by being
somewhat uncorrelated to stocks.

So in order of increasing risk & returns: CDs, then bank loan fund,
then JNK/FFNOX, then USCI.

 
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Pico Rico
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      12-28-2010, 11:30 AM

"lizahellenn" <(E-Mail Removed)> wrote in message
news:(E-Mail Removed)...
>
> What is the best short term investment for one's money with the highest
> return, with the lowest amount of risk? I'm invested in CD's and they
> give a good interest rate and very skeptical of the stock market yoyo
> and not interested in the shaky housing market. But my question still
> remains and want to know what do you think would be the best investment,
> also thinking about foreign securities, but what do you think is a good
> investment and also for retirement long term too?
>



A good husband.

 
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HW \Skip\ Weldon
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      12-28-2010, 01:45 PM
On Tue, 28 Dec 2010 05:30:25 CST, "Pico Rico" <(E-Mail Removed)>
wrote:


>> What is the best short term investment for one's money with the highest
>> return, with the lowest amount of risk?

>
>A good husband.


My default answer to this question has always been to find a spouse
who is "financially comfortable" and meets all of the following
characteristics:

Any previous marriages were happy
Has a good pension and Social Security,
Has no debts,
Has no children or other dependents,
Owns his/her home without a mortgage,
Has a minimum of $1 million in income-producing investments (exclusive
of real estate) and he/she is not spending all of the income now
Is willing to leave the home, real estate and investments to you
outright (no percentage and no trust).

I realize this is picky, but you said "lowest amount of risk".



 
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dumbstruck
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      12-28-2010, 10:12 PM
On Dec 28, 3:45*am, "HW \"Skip\" Weldon"
<(E-Mail Removed)> wrote:
> My default answer to this question has always been to find a spouse
> who is "financially comfortable" and meets all of the following
> characteristics:


Yahoo finance had an interesting article on how a few states allow
cutting off financial responsibility for a spouse who is predictably
about to bankrupt you. It said it was little known or used until the
long term care homes of NY for instance put a checkbox for it in the
checkin forms. It is so popular that it may be withdrawn.

They pointed out how frugal saver couples could end up the same as big
spender couples when one spouse went into expensive long term care -
all money gone except barely enough to live on for the healthy spouse,
then the state takes over payments for the sick one. So I guess by
mutual consent a couple that saved a lot could retain a bit more for
the healthy spouse.

Of course this can abuse the taxpayers, but on the other hand why make
it so savers can't enjoy their money at all while the big spenders
were able to? I wonder if the civil union laws thread this needle any
differently.

 
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Elle
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      12-29-2010, 01:44 AM
dumbstruck <(E-Mail Removed)> wrote:
> They pointed out how frugal saver couples could end up the same as big
> spender couples when one spouse went into expensive long term care -
> all money gone except barely enough to live on for the healthy spouse,
> then the state takes over payments for the sick one.


In many or all states, the healthy spouse does not have to live in
poverty for the rest of his/her life when the sick spouse's remaining
days are to be spent in a nursing home. Significant, legal asset
protection exists for those whose spouses have to go into nursing
homes. For example, the value of one's home is not counted in
considering Medicaid eligibility. These facts are well covered on the
internet. No complaining if after both spouses die Medicaid has dibs
on the estate for money the state expended on one's loved one. The
alternative is to throw the elderly into the streets. People /get/
something when they're on Medicaid. It makes complete sense that
where possible their estates have to make payment to the Medicaid
program. Some sixty percent of nursing home residents receive Medicaid
assistance.

 
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Ron Peterson
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      12-29-2010, 05:16 AM
On Dec 27, 4:18*pm, lizahellenn <lizahellenn.
(E-Mail Removed)> wrote:
> What is the best short term investment for one's money with the highest
> return, with the lowest amount of risk?


Treasury bonds have the lowest risk, but very low interest rates.

Paying off debt is also a very safe investment and pays high interest
rate for credit card debt, and adequate interest rate for auto loans
and real estate loans.

Some high dividend stocks have good payouts along with a 15% tax rate.
There is some risk that the dividends may stop or that the stock price
may decrease. Selling deep in the money calls can eliminate much of
the risk of a stock price decline.

I think that some exposure to the stock market is a good idea and the
energy sector is more certain to do well.

--
Ron

 
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dapperdobbs
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      12-29-2010, 06:29 AM
On Dec 29, 12:16*am, Ron Peterson <(E-Mail Removed)> wrote:

<...>
> Selling deep in the money calls can eliminate much of
> the risk of a stock price decline.
>
> I think that some exposure to the stock market is a good idea and the
> energy sector is more certain to do well.
>
> --
> * *Ron


Very interesting idea with the calls. If they're leaps, that keeps you
out of short-term gains should the stock drop low enough to motivate
you to buy back the calls and hold the stock. AT&T is paying ~5.8%
dividend; the Jan 2013 20 calls are priced 9.15-9.40 (stock at 29.38).
An early assignment would chuck the plan. At-the-money leaps usually
have the time value to sell, but as the stock rises the possibility of
early exercise comes in again - softened by the premium.

XOM looks buy-ey. Also drug companies have a shot at BRIC countries.
I'm having trouble figuring out why everyone is nuts about bonds.

 
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dumbstruck
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      12-29-2010, 06:03 PM
On Dec 28, 3:44*pm, Elle <(E-Mail Removed)> wrote:
> days are to be spent in a nursing home. Significant, legal asset
> protection exists for those whose spouses have to go into nursing
> homes. For example, the value of one's home is not counted in
> considering Medicaid eligibility. These facts are well covered on the


The article went thru all that and how little it could help for some.
Don't get diverted by my attempt to explain details, because that is
all greek to me; the specific issues are utterly alien to my
experience and prospects, so I will garble that part. Pay attention
to the theme which is etched in my mind - that a national article
outlined a new heavy use of previously overlooked state laws for legal
protection of assets that was characterized as so stunning and
unprecedented that the states may retract them.

Isn't that a valid issue to note here, at least when this thread took
a bizarre turn toward the risks of spousal drain on your financial
health? Looking at one more level of detail and more risk I will get
it wrong, it looked like one possible ray of light for the savers of
the world, who seem to be badly treated by US legal system. You are
expected to spend and borrow, and only rely on pensions or insurance
for safety - your savings are a temporary possesion to be attacked by
lawsuits or new taxes. In particular they covered successful Chinese
immigrants who lived by the saver principle without alternative assets
(pension, owned home, etc) and were rewarded for financial
responsiblity by being wiped out by technicalities in not quite
satisfying these weird state rules.

I have been unable to recover that article from Yahoo news - it had a
legal keyword I forget that meant financial dependancy of a spouse
which might find it. I can't debate the details of what the healthy
spouse is allowed to keep in NY, but it sounded slim. I don't see the
value of retaining a house if it eats you alive with expenses and you
can't retain a nest egg that can fund it and your life at 4% yearly
withdrawals. It just seemed like a rare exception to the legal deadly
embrace of spouses who can financially destroy each other by frivilous
cc debt, gambling, intoxicants, or attracting lawsuits. I have heard
some people trying civil union law rather than marriage for more
financial protection from each other.

This may be grasping for straws, but still more practical than the
post I replied to that recommended marrying a super responsible
millionaire.

 
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Elle
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      12-29-2010, 09:06 PM
On Dec 29, 11:03*am, dumbstruck <(E-Mail Removed)> wrote:
> On Dec 28, 3:44 pm, Elle <(E-Mail Removed)> wrote:
>
> > days are to be spent in a nursing home. Significant, legal asset
> > protection exists for those whose spouses have to go into nursing
> > homes. For example, the value of one's home is not counted in
> > considering Medicaid eligibility. These facts are well covered on the

>
> The article went thru all that and how little it could help for some.
> Don't get diverted by my attempt to explain details, because that is
> all greek to me; the specific issues are utterly alien to my
> experience and prospects, so I will garble that part. *Pay attention
> to the theme which is etched in my mind - that a national article
> outlined a new heavy use of previously overlooked state laws for legal
> protection of assets that was characterized as so stunning and
> unprecedented that the states may retract them.


I do not think legal asset protection for spouses (with wives/husbands
in nursing homes) is all that new nor heavily overlooked. I would have
to see the article to have a meaningful discussion.

> Isn't that a valid issue to note here, at least when this thread took
> a bizarre turn toward the risks of spousal drain on your financial
> health? Looking at one more level of detail and more risk I will get
> it wrong, it looked like one possible ray of light for the savers of
> the world, who seem to be badly treated by US legal system.


I am not sure you have the whole picture when for a second time you
overlook what those on nursing home Medicaid receive. You are not even
considering the alternative to nursing home Medicaid.

Your experience may be dwarfed by those of us who hold or have held
POA for elderly relatives in nursing homes. If they are not on
Medicaid, a prudent POA computes how long it takes to spend down the
relative's wealth until the relative does have to go on Medicaid and
also how much can be gifted or otherwise protected.

Tour a nursing home sometime and think about throwing over half of
these folks into the streets.

 
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