OT: Best Way to Invest $20K for 2 Years
FIRST POST!
My wife and I recently sold our house and moved to Houston, TX. Of the profit from the sale of our house is $20,000 that we are saving for the down payment for our next home which we plan to use 2 years from now when we find our "Forever Home". What is the best form of investment to use to get the greatest return with minimal risk in such a short time period? I know very little about investing so all information is considered helpful.
Thanks in advance for taking the time to help a brother out! GO BLUE!
August 23rd, 2015 at 1:02 PM ^
Ann Arbor real estate.
August 23rd, 2015 at 1:04 PM ^
Definitely the absolutely wrong place to ask.
You really, really need to get professional advice.
August 23rd, 2015 at 3:05 PM ^
August 23rd, 2015 at 1:11 PM ^
Buying that first home is a wonderful thing.
Keep the 20k safe. As others noted the Houston real estate market is soon to get hit from low oil prices if the trend continues. You might get the perfect timing to pound on a deal early.
August 23rd, 2015 at 1:15 PM ^
August 23rd, 2015 at 1:17 PM ^
A decline for the next 18 Months or so is in the works.
I would buy leaps on the market with 20K and monitor weekly.
August 23rd, 2015 at 1:31 PM ^
Sent from MGoBlog HD for iPhone & iPad
August 23rd, 2015 at 1:39 PM ^
In your two-year scenario of saving, the best return for you is return of investment. In this scenario, you have already realized a profit in your house sale. Now, you need to preserve that profit in the least risky manner. In this short term, cash is king. Keep your cash. Save it for the next day.
However, do not stop saving. This means supplement your sure and existing profit by penny pinching and saving as much as you possibly can. Increase your savings through additional earned income directed to savings. The end result will be profit preservation supplemented by additional cash flow of disciplined savings.
The stock market is volatile and risky right now. I am betting that it's going lower. I took some profit before the dive, am waiting for an additional drop, and will then reinvest. However, anything I reinvest is subject to partial or great loss. It's just how it is, buffered by investment strategy focussed on long term. This is 180 degrees from your situation.
August 23rd, 2015 at 1:38 PM ^
August 23rd, 2015 at 1:39 PM ^
August 23rd, 2015 at 1:46 PM ^
August 23rd, 2015 at 1:48 PM ^
August 23rd, 2015 at 3:00 PM ^
August 23rd, 2015 at 2:09 PM ^
Buy some bricks and blow it up. Just stretch that shit, and put out that product.
/s
August 23rd, 2015 at 2:40 PM ^
How's he supposed to get a hook-up with a trustworthy connect though? You can't exactly dial that up with the Yellow Pages.
August 23rd, 2015 at 2:58 PM ^
August 23rd, 2015 at 11:02 PM ^
Yeah, the paranoia, the shady characters, the looming threat of jail time, the heavy reliance on gun play...
August 23rd, 2015 at 2:41 PM ^
Welcome to Houston. Housing here is more affordable than other parts of the country. But there are pockets ias well, where you can spend a million for a decent place. Anyway, one way to keep your principal intact for this two years AND not lose value due to inflation would be CDs. Bankrate.com would be a good place. You should talk to a financial advisor who works on fees and not on commission from the products s/he sales.
Wish you luck in whichever path you choose.
August 23rd, 2015 at 3:09 PM ^
Hey buddy,
First off congratulations on growing the nest egg, and kudos to you for trying to responsibly grow it.
Second off, how satisfied would your wife be if in two years she asks you why your 20K turned into 3K and all you had to say was "Well this guy on the internet said..." None of these people have any risk in giving you advice, and some of them are giving the worst possible.
Buy this book (or maybe the tenth edition if you want it to cover the 2008 collapse):
http://smile.amazon.com/gp/product/0393330338?psc=1&redirect=true&ref_=…
(A Random Walk Down Wall Street, Burton Malkiel if the link doesn't work)
Read it, make the wife read it, and collectively decide on a course of action. (Hint: probably Bonds unless you want to roll the dice)
I'd be happy to discuss more, if PMing is possible feel free to do that or comment here and I'll look for it.
August 23rd, 2015 at 3:32 PM ^
If the market tanks everybody loses and any investment you have loses. That's why I'd bet big and limit my downside to $5K or so.
August 23rd, 2015 at 4:16 PM ^
August 23rd, 2015 at 4:32 PM ^
Your answer, specifically the part where you say you're not into playing the stock market yet suggest you may invest in mutual funds, suggests that you don't quite understand what a mutual fund is.
A mutual fund is a collection of investments, often a mix of stocks, bonds, and cash, put together by a manager for a (GIANT) fee. So does it make sense that you don't want to invest in stocks, yet you want to pay someone a horrific fee, often upwards of two percent, to invest your money into stocks?
You're going to be offended by this next statement, but please don't lose the wisdom in it. You are in over your head.
In order of lowest risk/return to highest: Cash, CDs, Bonds, Stocks.
Stocks are too volatile for a two year horizon, cash is too conservative (in my humble opinion). Consider CDs and Bonds/bond funds, but know that you are in over your head and educate yourself (or perhaps pay a fee-only advisor if you don't want to educate yourself, that's still a smart move). Again feel free to message me or reply or what have you.
August 23rd, 2015 at 6:20 PM ^
:/
Not really sure someone is "in over their head" comparing the different yields from a 1% 12-24 mo CD v. 0.71% 2 year US Treasury.
August 23rd, 2015 at 7:51 PM ^
I'm not sure you quite understand mutual funds too if you're claiming they can charge 2%. I challenge you to find even one mutual fund that charges even 1.5%, let alone 2%. Most mutual funds sit right in the 1% range. I'm not saying that's too high or too low, but only hedge funds are going to charge you 2%.
August 23rd, 2015 at 6:06 PM ^
This is really just directed more at the prior responses than the OP, but many of the commenters are negative on mutual funds. I realize some have excessive fees, but isn't there a range of fees and costs from different companies? Given that a diversified portfolio of stocks requires owning many different companies over different sectors why isn't a mutual fund a sensible way to diversify for someone who's pot of money to invest is too small to buy stocks in 10-20 companies?
August 23rd, 2015 at 6:30 PM ^
Similar circumstances, though I was leaving a city that I knew I would come back to in 2 years.
I took the conservative investment route and regret it, because the west coast city I live in had real estate values go up WAY more than I earned on my investments. I should have rented out my old place, or smarter yet - bought my current house and rented that out. I didn't want the hassle, but property management companies can manage it for your for a not unreasonable cut of your rent.
I would say -- what are you waiting for? Buy the house now. Others on here have speculated that the Houston market will go down, which is obviously something that would play to your advantage. BUT - it's a speculative risk, just like putting your money in stocks in the short run. You might come out ahead, you might come out behind. Housing in Houston could go up too - like with the S&P, that's the most likely scenario.
If you're goal is to live cheap and save money to get more downpayment, just be house poor instead. Sure, you'll have to borrow more, but you'll also have 2 years worth paid off. And bonus -- you get to live in the house you want to, starting making the repairs you want, brainstorm, etc. So hit up family for a loan if you can, or buy a smaller house that you'll love for 5-10 years. More often than not it's better to be on the home ownership ladder than a rentor.
Maybe you want to wait to figure out neighborhoods, get to know the city, etc. but if so, I would say do it in a year, not two.
There are no profitable short-term options that aren't high risk. You want the closest thing to a sure thing you can get -- buy your house already.
August 23rd, 2015 at 7:20 PM ^
August 23rd, 2015 at 7:45 PM ^
Sent from MGoBlog HD for iPhone & iPad
August 23rd, 2015 at 9:20 PM ^
Sent from MGoBlog HD for iPhone & iPad
August 23rd, 2015 at 9:22 PM ^
Sent from MGoBlog HD for iPhone & iPad
August 23rd, 2015 at 10:23 PM ^
For a married couple, generally you can take $500,000 in profit on the sale of the home with no tax penalty (it's $250,000 for someone single).
August 24th, 2015 at 9:27 AM ^
August 24th, 2015 at 4:41 PM ^
August 24th, 2015 at 5:24 PM ^
Has anyone mentioned hookers?
August 24th, 2015 at 9:08 PM ^
5-6 years ago years ago, I think just sticking it in cash and no investment at all because home prices were flat or falling and not going up and had al;ready fallen a lot from insanely inflated levels everywhere in the United States. Now unfortauinetly home prices are back to insanely infalted levels and seem to keep gouing up in most areas unfortunately. Now there is a risk if you do not investment home prices could go up more and the purchaisng power of the monmey will be reduced in terms of how muich home you can buy as home prices could be even higher in 2 years.
5-6 years ago, there was practivally no chance that home prices would go up in a couple of years time. Then suddnely in 2012, home prices started to surge and got close to their peaks in late 2014 to early 2015 and may have stopped going up but do not know for sure.
I bought my home in 2013 and had to pay quite a bit more than I would of had I bought anywhere from mid 2009 to early 2012. But still significnatly less than peak prices I would have had to pay in SE Michigan which were around 2004-2005. Now my home is worth close to the peak and way more than I paid. I rusghed to buy a home because prices going back up bothered me so much and I never htought it would happen so soon, but as of the point of 5-6 years ago, it looked like it would take longer than it did, but if you wiated until early 2012 or even 1st quarter, to buy a house you were fine getting a bottom price deal. But if you wiated longer the bottom passed you, but in early 2013 when I bought it was a much better price still than the peakl por even Spring 20078 when the market started to crash. It was more like the late Summer early Fall 2008 prices when he market was crahsing hard, but far from bottom.
August 24th, 2015 at 10:54 PM ^
call these guys. they'll straigten your ass out.
March 10th, 2020 at 10:27 AM ^
Good question. There are many possibilities for you, but I recommend to choose carefully, because you can loose all your money. I think better will be to use some ready-made proven investment options to get good profit. I can recomment you to ask for help from wealth management canada group, they are experts in invesment!
August 12th, 2020 at 6:12 PM ^
Good night! I want to say that this sum is enough for successful trading if you know how to do that. I believe that it will be nice for you to connect with some competent person who will help you to make nice investitions and to work with an honest broker company like FxPro. Yeah, there are many different companies in this sphere, but I want to say that this one has rather convenient terms for the work and you can check them on the following link. It is the best variant if you don't want to lose a lot of time on the learning of all trading aspects.
August 14th, 2020 at 6:15 AM ^
Thank you for this recommendation, it is very actual for me. I am also thinking about trading, but I am not so competent in this kind of investitions. Some of my friends prefer to work with olymptrade.broker , but I don't understand is it a really fine variant. Maybe someone can share the experience?