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Thread: ideas for low-risk investments?

  1. #1
    Picaresque
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    Default ideas for low-risk investments?

    (disclaimer: of course I plan to talk with a financial advisor before doing anything with my money. But I figured I'd try and get some ideas here first, because right now I am 100% clueless about investments, period...and I'd like to have *some* idea of what I want to do when I meet with an advisor.)

    OK, so...

    I've got $10K sitting in a CD that's earmarked for graduate school. If all goes according to plan, I will have another $5K by the end of 2007, so $15K total.
    The interest that money earns right now is pathetic.

    Grad school is a backup plan for me, though--it's something to do if "plan A" for my life/career doesn't work out like I'd hoped. If I do go, it most likely won't be for another 8-10 years (early 30's, agewise. and yes, in my intended field it's possible to return for grad school as a mature student.)

    So, given how much $ I have now, and the amount of time I'll have before i actually need to use that money...what sort of investment would you recommend?
    Honestly, considering this is all the savings I have for school, I want something low-risk, even if that means a lower return. Anything's got to be higher than the interest I'm getting now, with the money just sitting in a CD...right?

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    Banned Melonie's Avatar
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    Default Re: ideas for low-risk investments?

    ^^^ not necessarily ! Actually, the 5%+ CD return in exchange for zero loss risk is a pretty good deal right now !

    Depending on which state you live in and your particular tax rate, you might also consider tax free muni bonds.

  3. #3
    Picaresque
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    Default Re: ideas for low-risk investments?

    ^^ 5%??

    I'm getting literally half that! Maybe I need to switch to a CD with the credit union. At least, I'm told interest is higher there than at the bank.

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    God/dess Emily's Avatar
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    Default Re: ideas for low-risk investments?

    it depends on the bank. Wachovia is doing 5.05% right now.

    But yeah, at least switch to an online bank like emigrantdirect.com. It's super easy to set up with your existing bank account and they are offering that on savings and a little more on CDs.

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    Featured Member Katherine's Avatar
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    Default Re: ideas for low-risk investments?

    I'm getting 5% on my regular money market savings account. It's a three month trial rate, which at the end of the three months all I gotta do is call my bank manager and she renews it.

    Check this out: 5.46% on a 6 month CD with a $1000 minimum.

    http://www.amtrustdirect.com/?WT.src...3&IQ_ID=882453

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    Banned Melonie's Avatar
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    Default Re: ideas for low-risk investments?

    if this savings is 100% for grad school, and if you are actually going to go to grad school eventually, you may want to seriously consider starting a state approved 529 account with that money. The upside is that the interest and dividend earnings can compound tax free. The downside is that if you don't actually go to grad school, you'll be stuck paying taxes plus a penalty to 'free up' your money.

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    Banned Katrine's Avatar
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    Default Re: ideas for low-risk investments?

    529's are very expensive with a variety of undisclosed fees. Plus they only cover qualified education expenses. Meaning, tuition, books, and on-campus housing. Plus the penalty if they aren't used, as Melonie mentioned.

    You could put a couple of grand into a Coverdell. The contributions are limited, but you can put any investment you want into it.

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    Featured Member Katherine's Avatar
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    Default Re: ideas for low-risk investments?

    Or, to go with the 529 plan, couldn't you keep it for your kids? It doesn't have to be 'in a name,' does it? So start one, and whatever you don't use can continue growing for 18+ years and pay for your future (or present) kid.

    I may be wrong about the ability to 'roll it over' to your kid though. I know that you are able to start one for your 'future' kids even if you're not pregnant or married. So...? Maybe Kat or Mel will know for sure.

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    Banned Melonie's Avatar
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    Default Re: ideas for low-risk investments?

    in New York at least, 529's can be rolled over to new beneficiaries. The taxes and penalties only come into play if and when the money is withdrawn for non-educational purposes.

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    Featured Member Katherine's Avatar
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    Default Re: ideas for low-risk investments?

    ^^ Great! So why don't you do that? Then, any money you don't use you can give to your future kids. Try and calculate well so you don't put too much extra in...

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  11. #11
    Banned Katrine's Avatar
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    Default Re: ideas for low-risk investments?

    Yes, all 529's can be rolled over. Each plan is different, but they usually cap contributions at about $250K. I really like the VanKampen 529. I spent a day analyzing about 10 different ones, and it came out with the best return/risk/fees.

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  12. #12
    Picaresque
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    Default Re: ideas for low-risk investments?

    LOL...I would rather die than have children, so the 529 transfer thing isn't really a benefit to me. And I most likely will be doing grad school in the UK, so...bah. I'm screwed there. But I will definitely shop around for a better interest rate!

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    Default Re: ideas for low-risk investments?

    Alot of CDs are paying around 5% now. Check around with some different banks to find one. My USBank branch has been offering 5% short term CDs for a while now. Also, even Paypal is giving 5+% on your balance if you go for their moneymarket option.

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