Investment

Discussion in 'Financial Planning' started by lizahellenn, Dec 27, 2010.

  1. lizahellenn

    lizahellenn Guest

    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
     
    lizahellenn, Dec 27, 2010
    #1
    1. Advertisements

  2. lizahellenn

    dumbstruck Guest

    On Dec 27, 12:18 pm, lizahellenn <lizahellenn.
    > 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=FFRHX&l=on&z=l&q=l&c=jnk,spy,usci
    . (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.
     
    dumbstruck, Dec 28, 2010
    #2
    1. Advertisements

  3. lizahellenn

    Pico Rico Guest

    "lizahellenn" <> wrote in message
    news:...
    >
    > 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.
     
    Pico Rico, Dec 28, 2010
    #3
  4. On Tue, 28 Dec 2010 05:30:25 CST, "Pico Rico" <>
    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".
     
    HW \Skip\ Weldon, Dec 28, 2010
    #4
  5. lizahellenn

    dumbstruck Guest

    On Dec 28, 3:45 am, "HW \"Skip\" Weldon"
    <> 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.
     
    dumbstruck, Dec 28, 2010
    #5
  6. lizahellenn

    Elle Guest

    dumbstruck <> 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.
     
    Elle, Dec 29, 2010
    #6
  7. lizahellenn

    Ron Peterson Guest

    On Dec 27, 4:18 pm, lizahellenn <lizahellenn.
    > 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
     
    Ron Peterson, Dec 29, 2010
    #7
  8. lizahellenn

    dapperdobbs Guest

    On Dec 29, 12:16 am, Ron Peterson <> 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.
     
    dapperdobbs, Dec 29, 2010
    #8
  9. lizahellenn

    dumbstruck Guest

    On Dec 28, 3:44 pm, Elle <> 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.
     
    dumbstruck, Dec 29, 2010
    #9
  10. lizahellenn

    Elle Guest

    On Dec 29, 11:03 am, dumbstruck <> wrote:
    > On Dec 28, 3:44 pm, Elle <> 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.
     
    Elle, Dec 29, 2010
    #10
  11. lizahellenn

    dapperdobbs Guest

    On Dec 27, 5:18 pm, lizahellenn <lizahellenn.
    > wrote:
    > 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


    People here have recommended various books in the past, all dealing
    with what is referred to as investment and financial planning. It
    sounds like one with a stress on personal financial planning would be
    good for you to become familiar with, then you can explore some of the
    topics in more detail as your interest and needs indicate to you.

    IMO, finding a superior company to invest in is the best approach. In
    my experience it is safer to rely on Americna accounting, than foreign
    accounting, rules. Many U.S. companies have substantial sales outside
    the U.S., so your interest in foreign securities sounds very odd to me
    given your comment about the "stock market yoyo."

    But reading is your lowest cost highest return. A website is not
    sufficient.
     
    dapperdobbs, Dec 30, 2010
    #11
  12. lizahellenn

    Elle Guest

    On Dec 29, 5:20 pm, dapperdobbs <> wrote:
    > reading is your lowest cost highest return.


    Beautiful and the greatest truth for investors of any kind.
     
    Elle, Dec 30, 2010
    #12
  13. On Wed, 29 Dec 2010 19:39:23 CST, Elle <>
    wrote:

    >On Dec 29, 5:20 pm, dapperdobbs <> wrote:
    >> reading is your lowest cost highest return.

    >
    >Beautiful and the greatest truth for investors of any kind.


    My thought as well. In fact, I may steal his comment and use it
    myself.
     
    HW \Skip\ Weldon, Dec 30, 2010
    #13
  14. lizahellenn

    Don Guest

    On Dec 29, 4:20 pm, dapperdobbs <> wrote:

    > But reading is your lowest cost highest return. A website is not
    > sufficient.


    And that includes the kind of reading you are doing right now. The
    internet makes it possible to gain some insights not even the books
    were able to provide!

    Someone might retort that you have to sort out the wheat from the
    chaff amidst the tons of opposing notions found in internet
    newsgroups. But that is true of the books on the library and bookstore
    shelves too! If you read a lot, after a while you will begin to "get a
    feel" for what is valuable and what is not.
     
    Don, Dec 30, 2010
    #14
  15. lizahellenn

    Chip Wood Guest

    On 12/30/2010 5:51 AM, HW "Skip" Weldon wrote:

    >>> reading is your lowest cost highest return.

    >>
    >> Beautiful and the greatest truth for investors of any kind.

    >
    > My thought as well. In fact, I may steal his comment and use it
    > myself.
    >

    What if the lying, thieving, Congress buying, greedy Wall St. gurus that
    "schemed" the last burst bubble and are now desperately trying to get
    around "transparency" are writing the books?

    Chip
     
    Chip Wood, Dec 30, 2010
    #15
  16. lizahellenn

    Elle Guest

    On Dec 27, 3:18 pm, lizahellenn <lizahellenn.
    > wrote:
    > What is the best short term investment for one's money with the highest
    > return, with the lowest amount of risk?


    Treasury bonds and CDs.

    snip for brevity
    > ... and also for retirement long term too?


    Take a weekend and start becoming familiar with the concepts of
    diversification and asset allocation using the free online and even
    fun tools at http://sites.google.com/site/ellessite/assetallocation

    Then buy index funds, CDs and treasuries per your desired asset
    allocation, timeframe, and desired risk exposure. Feel free to ask
    about what funds would be good to meet a specific requirement, per
    what the asset allocation tools spew out.

    If you are employed and want to discuss tax protected retirement
    vehicles such as IRAs and 401(k)s, start another thread. Generally
    speaking, it is financially savvy to have as much of your retirement
    savings in a tax protected vehicle as possible.
     
    Elle, Dec 30, 2010
    #16
  17. lizahellenn

    Guest

    dumbstruck <> writes:

    > 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.


    Be careful. Bond dividends are NOT generally "qualified dividends"
    which get the preferential dividend tax rate. I wouldn't expect
    JNK's dividends to be qualified dividends at all.



    --
    Plain Bread alone for e-mail, thanks. The rest gets trashed.
     
    , Dec 30, 2010
    #17
  18. lizahellenn

    Guest

    Ron Peterson <> writes:

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


    Treasury bonds (particularly longer-maturity ones) have huge
    risks - inflation and interest-rate risk. What they have very
    little of is default (credit) risk.

    That's not to say that they don't (generally) have a place in a
    well built diversified portfolio. But don't mistake the lack of
    credit risk for a lack of risk overall.

    > 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.


    True.


    --
    Plain Bread alone for e-mail, thanks. The rest gets trashed.
     
    , Dec 30, 2010
    #18
  19.  
    Rich Carreiro, Dec 31, 2010
    #19
  20. lizahellenn

    dumbstruck Guest

    On Dec 30, 1:18 pm, wrote:
    > Be careful.  Bond dividends are NOT generally "qualified dividends"
    > which get the preferential dividend tax rate.  I wouldn't expect
    > JNK's dividends to be qualified dividends at all.


    Thank you, thank you for the caveat!. Now I recall being baffled by
    the scarcity of "qualified" dividends at tax times, but then naively
    chase after any old dividend the rest of the year. I guess I will have
    to puzzle over a tutorial on what is "qualified".
     
    dumbstruck, Dec 31, 2010
    #20
    1. Advertisements

Want to reply to this thread or ask your own question?

It takes just 2 minutes to sign up (and it's free!). Just click the sign up button to choose a username and then you can ask your own questions on the forum.
Similar Threads
  1. Replies:
    4
    Views:
    1,023
    Arthur Kamlet
    Aug 3, 2006
  2. Al
    Replies:
    0
    Views:
    322
  3. Mike
    Replies:
    4
    Views:
    250
  4. RM
    Replies:
    6
    Views:
    328
    Cal Learner-- MVP
    Sep 6, 2005
  5. RM
    Replies:
    0
    Views:
    269
Loading...

Share This Page