OT: Best Way to Invest $20K for 2 Years

Submitted by TheCool on

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!

hopkinsdrums

August 23rd, 2015 at 11:07 AM ^

See if there's a minimal risk Vanguard fund. I have a 30 year one that's pretty aggressive but there is probably a more conservative one consisting of a lot of bonds.

SAMgO

August 23rd, 2015 at 11:14 AM ^

Just buy the S&P in a low cost index fund. Nobody can pick a stock strategy that will consistently outperform the market, it's been proven time and again. You might even get a good value after the market sold off huge last week, but again who knows. Maybe the bull market has come to an end. I work in finance and I can assure you nobody has any idea, because if they did they wouldn't still be working.

If I had the risk appetite for it I'd short oil huge, but like you shouldn't do that because you could potentially lose a ton of money.




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wildbackdunesman

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.

SAMgO

August 23rd, 2015 at 11:43 AM ^

Yeah and I could be the President in two years. Neither of those scenarios will happen.

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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Farnn

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.

FauxMo

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.

MGoSoftball

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.

 

 

snarling wolverine

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.

 

 

 

 

 

trustBlue

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.

 

turtleboy

August 23rd, 2015 at 11:13 AM ^

That's a tough question, honestly. With speculative investments low risk and short term are usually on opposite sides of the equation. If you hadn't just bought a place I'd say put that 20k towards a rental property.

uchi

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.

GoBlueSF

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!

SAMgO

August 23rd, 2015 at 11:22 AM ^

Don't do this, put your money in the market. It will *probably* go up. And if it doesn't, like, who cares? It's paper losses, totally unrealized, so just wait until it eventually does go up to buy the house. We (very likely) won't see a down cycle like the one we just saw for a while, so it'll (very likely) be net positive in two-three years (not for sure but pretty much for sure). People lose money with too conservative investment strategies. Holding cash in a savings account is an investment position. You're choosing to not put it in the market, and you're choosing to give up those potentially significant gains for a lower risk profile that (in my FINRA seal of approval'd opinion) doesn't usually pay off.




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SAMgO

August 23rd, 2015 at 11:32 AM ^

I mean, the S&P could go up 10% in two years. That wouldn't be that crazy. I think that's worth the risk, but I mean that's just me. The risk isn't that high. It always goes up eventually, I guess it just depends on how tied he is to the two year timeframe vs waiting like one extra year potentially if things didn't go well.




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Blue4U

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.  

wolpherine2000

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.

umchicago

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.

Blue4U

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.

wolverine1987

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

charblue.

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. 

 

 

charblue.

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. 

 

 

Aero01

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.

SAMgO

August 23rd, 2015 at 11:54 AM ^

Well no, obviously there's no guarantee. Eventually it will go up, the key word there is eventually. I think over two years it'll be up, but that guarantee is never there, which is why it'd be good to not be tied to the two year timeframe. There's always risk in investing but if you're flexible on when to sell then you can mitigate a lot of it.




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