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 11:05 AM ^
August 23rd, 2015 at 1:48 PM ^
August 23rd, 2015 at 11:06 AM ^
Kitten Mittens
August 23rd, 2015 at 11:07 AM ^
August 23rd, 2015 at 11:07 AM ^
August 23rd, 2015 at 11:14 AM ^
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August 23rd, 2015 at 11:34 AM ^
I would agree with your low cost index fund if he said he wanted to invest it for the long term.
However, he said he wants to use the money in 2 years to use as a down payment to buy a house. The S&P 500 could be down 50% in 2 years or up 100% in that time frame. Since it is for a house, I would rather be safe than sorry...I think he should just go with a very safe short term government bond fund that won't net a lot, but won't drop.
August 23rd, 2015 at 11:43 AM ^
My overarching opinion is he shouldn't be tied to the two year timeframe. Let the market work for you, but realize that sometimes it's down, so you may have to wait a little bit. It always goes up eventually so just wait until eventually. It'll probably be up in two years anyways, but if it isn't it'll be up relatively soon after that. Strict sell dates really handcuff you when you're investing.
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August 23rd, 2015 at 11:49 AM ^
People said the same thing in 2006 and look what happened to the market in 2008. No one knows when the market will take the next major dive but it is bound to happen. And people shouldn't put their life on hold for the whims of the market. If you know you want the money within 5 years, stocks aren't the right investment. Go with something conservative and be guaranteed you will have at least your original investment back unless the entire economy collapses.
August 23rd, 2015 at 7:12 PM ^
I cannot believe some of the people telling him to invest in the market. Bottom line: If the "two years" window is solid and firm, invest in something ultra safe. Don't worry about a return. In this market, with rates as low as they are, you cannot have it both ways; you cannot expect both a solid return AND low risk. Could it happen in the market? Sure! But so could another bubble-bursting market crushing event. In sum, either keep it liquid (just as cash) or find a bond or other low risk instrument.
August 23rd, 2015 at 10:32 PM ^
with your opinon to short oil. I always believe to buy low and sell high. Oil is at it lowest point in 8 years. China is hitting rock bottom as well as India. I am buying oil as fast as I can.
Although I agree oil is not for someone who has a short, 2 year time horizon. I pick world class, best of breed stocks and I always outperform the S&P500, some years I double the S&P. I spend several hours per week reading quarterly reports, listening to conference calls and reading everything I can about my favorite companies.
A 2 year time horizon is not very long. However the Vanguard Index fund is the best option for the OP IMO.
August 23rd, 2015 at 12:52 PM ^
Nobody can pick a stock strategy that will consistently outperform the market, it's been proven time and again.I've done it. The individual stocks I've had have done a lot better for me than my mutual funds.
August 23rd, 2015 at 12:58 PM ^
That makes you lucky, not the proprietor of a longterm, replicable strategy.
August 23rd, 2015 at 1:35 PM ^
I'm not saying I invest in 50 new stocks a year or anything like that.
But I don't think it's all that difficult to identify promising stocks. There were some companies whose products I was familiar with, and when they launched an IPO, I got in on them. I'm not that surprised that their stock has done well, since they had already established market share before going public.
Having said that, in the case of the OP I'd be leery of the market if I needed to get my money out in just two years.
August 23rd, 2015 at 6:21 PM ^
has a documented track record of real money investing in individual stocks that has clobbered the market over many years. They pick many losers (as does any professional investor) but they let their winners run and have been beating the market since the 90's.
August 23rd, 2015 at 5:13 PM ^
This is godawful advice for money that you know you will need to spend within 2 years.
Stick it in 2 year CD or a money market fund and forget about trying to get some massive return in 2 years.
If you want to play the stock market, save up a little money that you wont need to invest into putting a roof over your head and do it with that.
August 23rd, 2015 at 11:13 AM ^
August 23rd, 2015 at 11:13 AM ^
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August 23rd, 2015 at 11:43 AM ^
Like a fad-chain with multiple successful competitors in an industry with significant cost-pressures, and a company with slowing year-over-year same-store sales.
August 23rd, 2015 at 12:33 PM ^
August 23rd, 2015 at 8:16 PM ^
Shake Shack is the real deal. I believe McDonald's, Subway, Burger King reigns are over and the quality all-natural joints have serious staying power.
If I was the OP I'd short Panera Bread (PNRA). That place has become high school cafeteria food for $12 a pop. Restaurants are dingy and dirty, employees appear to all hate life, new food releases are disgusting.
August 23rd, 2015 at 11:14 AM ^
I would invest in meth.
August 23rd, 2015 at 11:15 AM ^
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August 23rd, 2015 at 11:53 AM ^
Explosion at a nursing home and the other got in a shoot out with some Nazis
August 23rd, 2015 at 12:15 PM ^
The other died of cancer in the snowy woods, but before he passed away we were treated to an extended revenge-fantasy dream sequence to appease the sentimentalists in the audience.
#MindBlown
August 23rd, 2015 at 12:54 PM ^
...customer loyalty.
August 23rd, 2015 at 11:19 AM ^
Any investment you make that will pay out in two years is probably too high risk to chance loosing any of your down payment. Put it in a savings account and rest easy knowing you just made a great profit and it'll be there when you buy!
August 23rd, 2015 at 11:22 AM ^
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August 23rd, 2015 at 11:27 AM ^
That makes sense but... If he want's to buy in two years, the potential gains couldn't possibly be enough to risk losing the substantial profit he's already made.
August 23rd, 2015 at 11:32 AM ^
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August 23rd, 2015 at 11:41 AM ^
Your clients would be broke
August 23rd, 2015 at 11:49 AM ^
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August 23rd, 2015 at 12:00 PM ^
currency. Uncertainty in the Eurozone with the various problems they have, including Greece. The market is tied to world issues now a days. The mindset of buy the S&P and let it ride is dangerous. With that mindset, you could atleast have some darn good memories in Vegas with 20 grand. I trade for living and see the volitility daily. It's not as simple you claim. We are at or near historical highs so a pullback is bound to happen.
August 23rd, 2015 at 5:45 PM ^
...the 2001 crash, the S&P took 6 years to recover to the level it was at its peak. And then almost immediately after in 2008, it crashed again and took another 5 years to get back to that same mark. For someone like the OP, or someone investing to put a kid in college, this is a pretty good demonstration why an index fund isn't a very awesome idea.
August 23rd, 2015 at 12:29 PM ^
August 23rd, 2015 at 1:10 PM ^
get through your head. that is horrible advice for a two-year window. similarly, there are many college investment accounts started for children. a good strategy is to invest in an S&P fund when young, but gradually move to safer investments as the child approaches 18; ie. gov't bonds.
August 23rd, 2015 at 4:48 PM ^
But for long term, not a two-year window and not in someone with minimal risk tolerance during that window.
August 23rd, 2015 at 6:24 PM ^
the long term record of the S&P is around 8% returns per year. Actually, and quite literally, the odds of stocks going up 10% over a two year period are quite high, counter to your point.
August 23rd, 2015 at 7:55 PM ^
But what happens of there is an extended correction or bear market. Or lets say China's problems become worse and they go into a recession. That will reverberate throughout the rest of the worlds markets. We're at historical highs in all major indices, the dumbest thing an investor can do is buy at the high.
August 23rd, 2015 at 8:07 PM ^
two years, just giving some facts about the market. In any five year period you can name, the return on stocks is positive. In fact i think the market is due for more decline this year, so I'm not offering any advice, beyond that if it was my money, I'd put some portion of it in an index fund for sure
August 23rd, 2015 at 8:39 PM ^
But looking at the market "on average" can get ya killed. I'm looking for a market correction so I see the market trending downward. I hope it does. You can make money faster when the market drops.
August 23rd, 2015 at 12:28 PM ^
you have plenty of options and diversifying your money to create multiple income streams accomplishes two goals, expanding your financial opportunities and savings goals.
You could obviously go the conventional route and work with an investment advisor. You could also review some great investment newsletters that offer various opportunities from bitcoin mining to binary options and forex investment. Check out Stansberry Research. It offers varying investment options in a wide range of market sectors.
August 23rd, 2015 at 12:28 PM ^
you have plenty of options and diversifying your money to create multiple income streams accomplishes two goals, expanding your financial opportunities and savings goals.
You could obviously go the conventional route and work with an investment advisor. You could also review some great investment newsletters that offer various opportunities from bitcoin mining to binary options and forex investment. Check out Stansberry Research. It offers varying investment options in a wide range of market sectors.
August 23rd, 2015 at 11:36 AM ^
The stock market is "pretty much for sure" going to go up in the next 2 years? Do you practically guarantee it? There are "potentially signifigant gains" but no thoughts about losses?
You give horrible financial advice. But then again the OP is asking for financial advice on a Michigan football blog, so that's probably better than he should expect.
August 23rd, 2015 at 11:44 AM ^
But we're an eclectic group of mgobloggers...as long as he's able to filter the good ideas from the bad. It's his money after all!
August 23rd, 2015 at 11:54 AM ^
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August 23rd, 2015 at 12:08 PM ^
market will be up in 2 years. What are you basing this on? What market evaluations or indices are you getting your projections from? Or is this just an opinion like the sun will be up tomorrow?
August 23rd, 2015 at 11:41 AM ^
Wow, you sound like a recent business school grad. That is aweful advice and a lot of people lose even more money by putting it into too risky investments that they are guaranteed can't lose money.