random investment question

[nael]

okay, here's the scenario- I have a small sum of cash right now, but I will need it in one year. what could i invest in that will be safe but will get me a better return than my checking account.
I was thinking 1 year treasury bills...but I have no clue how to invest in them.
basically- i'm clueless...and i figure there's got be at least one finance major on this board.

[Aegis]

Well, most of the major safe stocks are a tad more expensive these days, but they are pretty consistent. I'd say CISCO systems, personally, but I'd wait for someone comptetant with stocks and finances

[dragon wench]

Cisco is a very sound bet
I work in an investment firm (as a social researcher though, I'm not a finance sort )
I'll check with some of my cohorts tomorrow regarding some other decent safe stocks.

[Xandax]

Bonds usually yield a more secure, but lower, invenstment return. So if you can find a 1 year term on some bonds that would be possible (like your treassure bonds)

Stocks can yield higher return, but at a higher risck, and as the global economy is at the moment, I'd be carefull about investing in stocks currently - especially if you can't afford to loose (some of) the money. If you however can find a solid stock then the money is rather secure, similar to a bond.
I don't know of any international (for me ) secure stocks so can't help you pick one.
investment person to talk to.

[Xandax]

Quote:

Originally posted by dragon wench Cisco is a very sound bet I work in an investment firm (as a social researcher though, I'm not a finance sort ) I'll check with some of my cohorts tomorrow regarding some other decent safe stocks.

Get me some insider tips please - got some for a danish stock a few years back, but didn't have money to invest back then .... lousy, cause could have scored a high short term profit (and it would have been an untracable insider tip for me )

[CM]

Nael unless you have 100,000 dollars you cant really afford a US T-bill. They tend to be extremely pricey and for 3 months, 6 or 9 months. However you do get it back in 1 year.

Secondly bonds are long term equities, bonds will be at a minimum 3 years. So that is no go for you.

The option i would go for is stocks. They are short term andyou can pull out whenever you want.

1 peice of advice. Dont place all your money in the stocks. You could easily lose all of it.

If you are new to all of this you could get a mutual fund. Basically a guy manages your money and you pay into a fixed portfolio.

I did a bit of finance when i was doing economics. But dont think i know what i am talking about when it comes to what stocks you should buy. Ask a professional for that.

[HighLordDave]

The problem with investing in stocks is that you must be prepared to lose everything, not that you will, but the possibility exists that you could.

If you are just looking to make a little more than simple interest off a savings account, but can't afford to lose the base sum you have now, I suggest a CD (and I don't mean The Best of James Taylor). The return rate is better than a savings account, but the chance of loss is zero.

[smass]

I would agree with HLD.

I am a financial planner in RL. They key to making smart investment decisions is considering first and foremost your time horizon. If you need the money in a short period of time - 1 year in this case - then you need to defer to guaranteed investments like CDs (certificates of deposit) or money market accounts.

Individual securities like stocks can have tremendous upside - but carry significant short term risk. Mutual funds by their nature more diversified - but a stock based mutual fund is still tough to recommend for a one year time horizon.

Bond type mutual funds may also be risky given the current interest rate climate. We are at a 45 year low in interest rates right now. If interest rates go up - that will mean the value of outstanding bonds will decline. So investing in a bond based mutual fund could be a losing proposition for the next year.

I know interest rates are low - but you should be able to get 2-2.5% or so on a 12 or 15 month CD - not great - but you will be guaranteed to have the money in a year - with non-guaranteed investments you will be risking your principal and that is not prudent for a short time horizon.

[Grendel]

Seems obvious to me, just ask Martha

[nael]

okay, the CD sounds right for me...would i go through my bank for that, or what?