Liquid vs. Investments. Which is better?
Lets say you have money. A couple hundred thousand lying around. I don't want to keep it under the mattress. Should I throw it in a high yield CD overseas? A friend of mine was telling about depositing some money in a Brazilian bank that yielded almost 15%. Then he went into dollar futures and how that shot up. I was completely lost after that but where should someone with a lot of cash put their money. Nothing on the state side yields more than 4% right now.
Outside of investments, where do you tickerhounders keep your money?
Answers
4075 points
EthanR answered one year ago …
Chidog, a good rule of investing is to only invest in what you know and understand. So you may want to stay away from your friend's aggressive investments until and unless you understand what he is doing.
As far as CD's go, the best I have seen is about 4.50% for 12 months right now. Since we are near the low end of the FED moves right now, I'm not sure I'd want to go out longer than 12 months in a CD. I think the two best places to invest right now are money market in a brokerage account, waiting on the stock market to calm down, and buying foreclosure investment real estate for rental purposes.
From your picture it would seem that you have a very long term investing career ahead of you, so even if you get into stocks a bit too early, in time you will be fine. Both the stock market and real estate market have come down significantly and are soon enough going to represent some very sweet values. So hang in there, and let the game come to you.
2222 points
readytoretire answered one year ago …
Liquid is only good if you plan to invest in something. Investment in a money market may be OK, depending on the market (and many wish that is where they had their investment). But long term, stocks have done better than that. Staying with something you understand is a given (part of the reason that we are in this mess is that all the smart people forgot that). The easy way to tell if you understand how you will profit is if you can explain it to someone else. Can you tell the downside. Jefferson Count, Al. thought they could, and now they are looking a massive bill they can't afford. 4% on a safe bet for a 12 month CD may be the thing. If you are more comfortable with risk, you may want to look into easing into the market. Since no-one knows when the bottom is until it is too late, never put all the money in at once for an investment. Trading on speculation for an event included.
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