# Safe investments???



## The Gabba Goul (Feb 11, 2005)

As a young man, I'm always looking for safe places to squirrel away a little of my hard earned dough...with a good chunk of my 401 (k) being invested in stocks, and the prospect of a democrat in the white house darkening the horizon, and the fact that I dont have that much faith in my employer, I'm looking to scale back my contributions considerably and put that money into something else...I was looking at bonds, but I fear that the only ones that are paying anything require too long of an investment period, and the money would be tied up for too long and in the even that the economy took an upswing 4 (or more likely 8) years from now, I'd like to be able to put it into something else...I have a few CD's...eh...hardly worth it...I've been looking into annuities aswell, I know ING has one that's paying a guaranteed 7.5%...

any who...I know that we have some guys with a good head for business on their shoulders here on the fora, so I was wondering what some of my esteemed peers invest their money in when they dont feel like taking a huge risk, but still want to make a few duckets...


----------



## chatsworth osborne jr. (Feb 2, 2008)

*Also precious metals*

I'm seriously thinking of just getting some Euros, and letting their relative value to the inflating greenback serve as an investment. Is this somehow unsound?


----------



## TMMKC (Aug 2, 2007)

Bonds, T-notes or cold, hard cash until the storm passes.


----------



## Kav (Jun 19, 2005)

RACIST! Obama darkening our horizon is highly over rated.Seriously, get yourself over to famed SF ( yea, I know you hate SF) Butterfields and invest in some collectable firearms. Over time , fireams with collectablilty have outperformed all other investments including gold. And you can even use the things in a pinch, though shooting a cased, tiffany engraved Bisley will cause some depreciation.


----------



## Cruiser (Jul 21, 2006)

I was just talking about this to someone who's opinion I value greatly. Although this person normally advises folks to avoid buying single stocks in favor of indexed mutual funds, he suggested to me buying silver. And this is from someone who normally does not advocate precious metals as an investment. 

He said that with the amount of silver used in the manufacturing of high tech stuff and with the number of developing nations around the world, he thinks it is a good investment as the demand will continue to rise. I have no opinion here, just thought I would pass on what he told me since you asked.

Cruiser


----------



## Wayfarer (Mar 19, 2006)

I think you all are missing the boat here. We have our new friend noble to ask investment advice from. :icon_smile_big:


----------



## 16412 (Apr 1, 2005)

Buy a Pablo Picasso painting.

I believe buying bonds is good when interest rates are very high and then start coming down. With Jimmy Carter interest rates went through the roof. When Reagan stepped in interest rates came down. Those that bought bonds when Reagan stepped in made lots of money. With interest rates so low now is not a good time to buy bonds.


----------



## S. Able (Mar 26, 2007)

WA said:


> Buy a Pablo Picasso painting.
> 
> From Kass Meridian? :icon_smile_wink: I think a Warhol is a better call.


----------



## Kav (Jun 19, 2005)

Nah, you want that guy who mass markets those kische english cottage paintings. I tell you, these, Star Trek Klingon Battlecruiser models and Harry Potter first editions are the way to go.


----------



## Laxplayer (Apr 26, 2006)

I put all of my money into Pez dispensers. I have a bit of a sugar high right now.


----------



## Kav (Jun 19, 2005)

Worked out for that EBAY broad.


----------



## ksinc (May 30, 2005)

Well, long term you should definitely be maxing out all your tax-advantaged accounts. That includes 401ks, Roths, even Flexible Spending and Medical Savings Accounts and a mortgage interest deduction. Whatever you could earn by scaling back your 401k you would give back in taxes. Even if you are in a 15% tax bracket, how are you going to beat that in the market? Credit card debt is the same way. You can never make a risk free return that would beat what you save by paying off credit card debt unless you are at 0.09% fixed or something. I have a $20K Chase account that let me do transfers at 0.0% for 18 months that runs out April 15th. You have to be 'creative' because that won't directly allow a cash advance, but $20K interest free for 18 months earned me ~$1250 after-tax.

Annuities are a good product AFTER you have maxed out all those available options or are priced out of them because of AGI.

However, if you are worried about the short term, particularly employment risk you are talking about short term savings. Conventional wisdom used to be 3-6 months salary, but every CFO type I know recommends one year of salary. Post-Sarbox you really don't want to end up in jail because you "needed" to keep your job. One year in the bank will afford anyone to 'walk away'.

I feel something that competes with CDs, but has more flexibility is the new online-only savings banks. They are a great place to store short term savings and that's where I keep mine. 3-3.5% risk free is pretty good right now and they are EFT'd to your checking account so it's quickly accessible in an emergency. You can save some money immediately, for example, by raising all your insurance deductibles if you have enough short term savings.

If you are trying to beat inflation it isn't going to happen short term unless you take a risk in commodities or currencies of some kind. M3 is what 12% now?

Look at:
www.emigrant-direct.com
www.ingdirect.com
www.hsbcdirect.com

These accounts look pretty simple and stupid until you compare them to say the Fidelity Short Term Bond Fund in a taxable account. Even these MM/savings accounts beat the bonds after-taxes and you don't have 90-day trading rules and fees. I got rid of my MM and my credit union and I'm much happier.

OTOH I wouldn't listen to anyone on the internet about money either


----------



## PennGlock (Mar 14, 2006)

In the long-run, I'd call bonds less "safe" than a portfolio of stock. Inflation will eat up most of their real returns...

Right now I'd take a look at municipal bonds if you have your tax-advantaged vehicles maxed out. Muni yeilds are currently higher than really makes sense, IMO, and they have the unique benefit of being tax-free.


----------



## brokencycle (Jan 11, 2008)

I've read recommendations for actually selling commodities (not just precious metals).

You could do stocks that have dividends: utility companies do this a lot.


----------



## Rossini (Oct 7, 2007)

Bacteria?


----------



## Concordia (Sep 30, 2004)

Munis are cheap. But not without purchasing power risk or risk to tax revenue.

If you worry about global slowdown and declining dollar, get an unhedged international bond mutual fund.

At some point, hard assets-related funds may become more attractive, although this takes in a huge category. The long-term supply picture is mostly in favor of higher prices on many commodities. I still have Vanguard Energy in my 401(k), and would personally consider a hedge fund that did more creative things in natural resources.


----------



## JRR (Feb 11, 2006)

The Gabba Goul said:


> As a young man, I'm always looking for safe places to squirrel away a little of my hard earned dough...with a good chunk of my 401 (k) being invested in stocks, and the prospect of a democrat in the white house darkening the horizon, and the fact that I dont have that much faith in my employer, I'm looking to scale back my contributions considerably and put that money into something else...I was looking at bonds, but I fear that the only ones that are paying anything require too long of an investment period, and the money would be tied up for too long and in the even that the economy took an upswing 4 (or more likely 8) years from now, I'd like to be able to put it into something else...I have a few CD's...eh...hardly worth it...I've been looking into annuities aswell, I know ING has one that's paying a guaranteed 7.5%...
> 
> any who...I know that we have some guys with a good head for business on their shoulders here on the fora, so I was wondering what some of my esteemed peers invest their money in when they dont feel like taking a huge risk, but still want to make a few duckets...


Gabba,

You are what 25? Sweet Jesus, invest in index funds and stop worrying about it.


----------



## tabasco (Jul 17, 2006)

There is no "all-weather perfect" investment. EVERYTHING has a trade-off. 

While cash always trades at par, purchasing power parity suffers when USD declines relative to forex (like now) or inflation (like now). 

SOME of the risks to consider, in no particular order
liquidity
taxes
opportunity cost
inflation
capital/principal loss
currency

get the picture? The first thing to do is recognize that at some point you'll look at the your recent statement and the value will be less than you thought/expected, and you'll feel dumb. Get over it. It happens to everyone. 
The worst 2 things that can happen with investing are:
1. invest... win big, and think you're brilliant
2. invest...lose, and think "it's rigged"

Diversity is good, perspective helps, and time is priceless.

-stock broker


----------



## JRR (Feb 11, 2006)

tabasco said:


> There is no "all-weather perfect" investment. EVERYTHING has a trade-off.
> 
> While cash always trades at par, purchasing power parity suffers when USD declines relative to forex (like now) or inflation (like now).
> 
> ...


Stop, being logical....hurts the brain too much...hysteria is eaiser...


----------



## Northeastern (Feb 11, 2007)

Genuine Shell Cordovan


----------



## radix023 (May 3, 2007)

And never forget the Benjamin Graham rule (the guy Buffet studied):

Any stock you buy and hold for less than 5 years is speculation, a form of gambling. Investing *starts* at the 5 year horizon. If you need the money earlier than 5 years, you should be in bonds, CDs, money markets, not stock.

Most of what you hear on TV regarding stocks is talking about speculation/gambling (Kramer). Ignore it.

If you want safe, try these two names: Proctor and Gamble (PG), Colgate Palmolive (CL). They have consistently paid dividends for decades. Low volatility in stock price.


----------



## BertieW (Jan 17, 2006)

A safe investment seems wise. I would invest in a safe. It can hold your guns and gold if it's big enough, like Cheney's man-sized version.


----------



## 12345Michael54321 (Mar 6, 2008)

The Gabba Goul said:


> I was wondering what some of my esteemed peers invest their money in when they dont feel like taking a huge risk, but still want to make a few duckets...


If you currently rent, consider buying yourself a house.

In general, it may not be best to think of one's home as an "investment," per se. But also as a general thing, your home is likely to increase in value over the years, it'll spare you from having to pay rent, and then there's the mortgage interest tax deduction every year. (Plus, many people just prefer owning and living in a house of their own.)

Yes, yes, I know that many houses have declined in value over the past couple of years. But I also know that even with this decline, the vast majority of homes are worth considerably more today than they were 5 years ago.

Not suggesting this is the right investment for you. Just that it's something worth considering.


----------



## Intrepid (Feb 20, 2005)

Sure depends on age, etc, no one right answer. I'm sure that no one here looks to the Interchange for serious investment advice. Maybe a decent idea or two to think about, though.

I haven't seen anyone mention TIPS. Government bonds with a low fixed rate, but adjusted for inflation until they mature. They are way too expensive now (low fixed yield).

However, if fixed rates get up to 2%, you might consider them. If we have stagflation, like we did in the early 70s they would have been a good anchor then. They are a relatively new creation. In the 70s we had a grinding two year secular bear market, and high inflation. May be on the horizon, again.

Cash is sure hard to argue against, now. Looking at the future that may very well contain:
Inflation
Slowing economy, housing market in turmoil, and financial institutions unable to offer credit because of balance sheet problems
Increase in marginal tax rates, and capital gains rates
Commodities have taken a huge hit over the last few days, and the big run up there may be over.

At this point, it maybe good to remember, (I think it was Will Rogers) "I'm much more concerned about the return OF my money, than the return ON my money".

Looks like a rough patch ahead.


----------



## MrRogers (Dec 10, 2005)

Buy a home in a college town and rent it out for the mortgage + 10%. Some towns in the philly area are bombarded with kids, particularly near the bars. Get a 10-15 yr mortgage and by the time you are 40 you own the house to either continue to rent out or sell it and invest the money in something else. 

At least thats my plan in a year or so. I'm only 3 years your senior 

MrR


----------



## JRR (Feb 11, 2006)

Intrepid said:


> Sure depends on age, etc, no one right answer. I'm sure that no one here looks to the Interchange for serious investment advice. Maybe a decent idea or two to think about, though.
> 
> I haven't seen anyone mention TIPS. Government bonds with a low fixed rate, but adjusted for inflation until they mature. They are way too expensive now (low fixed yield).
> 
> ...


that a 25 year old can ride out in equities


----------



## fruityoaty (Jan 18, 2008)

There are no safe investments worth your time if you are young.

Buying a house in the next 6-12 mos is an excellent suggestion.

If you want to assume some risk financially, but get paid handsomely for it, look into commodities, since they can be strong when equities fall. Lumber is probably not done falling, but it will certainly rebound in the next few years, if you want to make money on the housing market without actually buying a house. 

If you want to be lazy but still do reasonably well, buy X dollars of Vanguard 500 every month. Buying a set dollar amount rather than a fixed number of shares will help your returns because you will buy fewer shares when the price is high and more when it is low. 

Truly safe investments are savings accounts, T-bills, etc., but the returns are very low. The financial world is all about risk. The more risk you assume, the higher your returns. It is up to you to decide what you are comfortable with.


----------



## Wayfarer (Mar 19, 2006)

fruityoaty said:


> If you want to be lazy but still do reasonably well, buy X dollars of Vanguard 500 every month. Buying a set dollar amount rather than a fixed number of shares will help your returns because you will buy fewer shares when the price is high and more when it is low.


Not everyone is a fan of dollar cost averaging. I would advise against it with your 401k, as others here would too. ksinc has the best explanation for it and I agree with it.



fruityoaty said:


> *Truly safe investments are savings accounts, T-bills, etc.,* but the returns are very low. The financial world is all about risk. The more risk you assume, the higher your returns. It is up to you to decide what you are comfortable with.


I would not agree with that. Those vehicles have risk too, namely that the returns will not keep up with inflation. Surely you have done some portfolio theory work back in b-school where the proof sets up the problem so you actually have to add riskier investments to lower the total risk of your portfolio?


----------



## PennGlock (Mar 14, 2006)

Wayfarer said:


> Not everyone is a fan of dollar cost averaging. I would advise against it with your 401k, as others here would too. ksinc has the best explanation for it and I agree with it.


Agreed, and I would go further- dollar cost averaging can be mathematically proved as bunk.


----------



## ksinc (May 30, 2005)

Well, thanks, I think.

The problem with the TIPs is the CPI is a BS number.

https://www.shadowstats.com/


----------



## eg1 (Jan 17, 2007)

PennGlock said:


> *In the long-run*, I'd call bonds less "safe" than a portfolio of stock. Inflation will eat up most of their real returns...
> 
> Right now I'd take a look at municipal bonds if you have your tax-advantaged vehicles maxed out. Muni yeilds are currently higher than really makes sense, IMO, and they have the unique benefit of being tax-free.


But then, in the long run, well, you know the rest ... :icon_smile_big:


----------



## ksinc (May 30, 2005)

eg1 said:


> But then, in the long run, well, you know the rest ... :icon_smile_big:


"Who wants to live forever? 
Who dares to love forever? 
When love must die"

?


----------



## Wayfarer (Mar 19, 2006)

ksinc said:


> "Who wants to live forever?
> Who dares to love forever?
> When love must die"
> 
> ?


There can be only one! And he's a countryman


----------



## ksinc (May 30, 2005)

Wayfarer said:


> There can be only one! And he's a countryman


"Hey Reggie, don't feel bad. There's only one guy that could have made that shot; and you're looking at him."


----------



## 16412 (Apr 1, 2005)

Annuitie- https://www.sec.gov/answers/annuity.htm

One of the few ways the poor can help themselves is by investing, somehow.


----------



## ksinc (May 30, 2005)

WA said:


> Annuitie- https://www.sec.gov/answers/annuity.htm
> 
> One of the few ways the poor can help themselves is by investing, somehow.


Yeah, but please not with a variable annuity.

IMHO*** A fixed annuity can be ok for some people. Usually once they have exhausted all other tax-advantaged options. It's like the saying "if you have to ask the price you probably can't afford it." If you are good candidate for an annuity product you are probably already doing pretty well and probably already know a lot about financial planning or have a good, reputable advisor. There are some exceptions like maybe a poor person that comes into a lump sum of money, but not very many exceptions. ***IMHO

Not that the obvious has to be said, but an annuity salesman is definitely not the right person to qualify you as a good candidate for an annuity product.


----------



## fruityoaty (Jan 18, 2008)

PennGlock said:


> Agreed, and I would go further- dollar cost averaging can be mathematically proved as bunk.


Can you post the proof or a link to it? Seems pretty intuitive to me. Maybe we are thinking of it differently. I've never taken a b-school course, but I'm quite mathematically capable.

Edit: I see now that DCA is not about getting higher returns, since putting your money it as early as possible is better. That makes sense. I was thinking more about someone who wants to save a little bit each month, but now it occurs to me that it is best to put as much into the market as they can afford, regardless of the current share price.


----------



## Untilted (Mar 30, 2006)

invest your money in a market index fund when the valuation gets even lower, and forget about it.

you will thank me in the long run.


----------



## fruityoaty (Jan 18, 2008)

Untilted said:


> invest your money in a market index fund when the valuation gets even lower, and forget about it.
> 
> you will thank me in the long run.


So you don't advocate buying when it is cheap? 

How is the small-time investor to know when the market is bottoming?


----------



## 16412 (Apr 1, 2005)

ksinc said:


> Yeah, but please not with a variable annuity.
> 
> IMHO*** A fixed annuity can be ok for some people. Usually once they have exhausted all other tax-advantaged options. It's like the saying "if you have to ask the price you probably can't afford it." If you are good candidate for an annuity product you are probably already doing pretty well and probably already know a lot about financial planning or have a good, reputable advisor. There are some exceptions like maybe a poor person that comes into a lump sum of money, but not very many exceptions. ***IMHO
> 
> Not that the obvious has to be said, but an annuity salesman is definitely not the right person to qualify you as a good candidate for an annuity product.


The first paragraph was just mentioning annuities. The second paragraph was for any type of sound-head investing.

I never paid attention to annuities until watching C-SPAN about SS. In away annuities sound like pensions.


----------



## ksinc (May 30, 2005)

Proctor & Gamble, SIP/DRIP.


----------

