Short term investment options (6 months) for $8k?

cheapie · 04-17-2006, 09:02 PM

I have about $8k I'm going to use in about 6 months and wondered if any of you have advice on what a great short-term investment might be.

my car loan balance is at about $14k and is at 2%. I should be able to save up the remaining $3200 or so ($6k minus payments) in 6 months. I would just throw the $8k immediately into the loan but I'm getting 4% at ING so I'll just keep it in there or something else until I have enough to pay it off....unless there's some reason I shouldn't do so.

Why am I paying off the loan instead of just paying the 2% and earning a higher interest rate on the extra coin? I just don't like the loan hanging over my shoulder.

TIA for any advice you may have!

InfiniteNothing · 04-17-2006, 09:46 PM

I say go for it. I totally understand not wanting a car loan hovering over you. If an extra % point would sway you, I think there are CDs out there that earn about 5%. Foriegn (i.e. iceland) CDs earn more.

johnnymk · 04-17-2006, 10:52 PM

http://www.bankrate.com

Daedalus · 04-18-2006, 02:03 AM

I wouldn't recommend a single foreign currency CD as a safe alternative. Too much volatility--down almost 20% over the past couple months. Iceland is running a 16% current-account deficit, which completely dwarfs the US' 6+%. The USD is weak, but so is the Krona. And the Krona will never be the world reserve currency of choice. I got in during the recent jump, but for the long term and my risk is spread over more than 1 currency.
Depends how much risk you can bear. If you can bear no risk there's maybe $39 difference between 4.5 and 5.5% to worry about. I think US bonds are prime right now based in risk/return, but even then returns won't be stellar. Maybe buy a put on a REIT?

cheapchinese · 04-18-2006, 05:41 AM

wait a min.. how can I open a foreign account?
i mean.. i don't need to be in that country to open an account in their cuurency?

cheapie · 04-18-2006, 06:24 AM

Quote:

Originally Posted by Daedalus

I wouldn't recommend a single foreign currency CD as a safe alternative. Too much volatility--down almost 20% over the past couple months. Iceland is running a 16% current-account deficit, which completely dwarfs the US' 6+%. The USD is weak, but so is the Krona. And the Krona will never be the world reserve currency of choice. I got in during the recent jump, but for the long term and my risk is spread over more than 1 currency.
Depends how much risk you can bear. If you can bear no risk there's maybe $39 difference between 4.5 and 5.5% to worry about. I think US bonds are prime right now based in risk/return, but even then returns won't be stellar. Maybe buy a put on a REIT?

i must confess i know nothing about a REIT. i even googled it and am not that much better off for it. lol.

MikeD · 04-18-2006, 08:10 AM

C'mon...man up and throw it all at GOOG. Then you can buy at the next G/A meetup.

chadlnc · 04-18-2006, 02:11 PM

With that amount of money for such a short term I would just pay off the loan. You may be able to make a couple of dollars, but nothing that I would consider to be worth it.

cheapie · 04-18-2006, 02:14 PM

you mean pay it right now instead of holding it until i have all the money for the loan? i was hoping to make enough maybe for at least one payment or so.

Daedalus · 04-18-2006, 02:40 PM

Put it all on RED.

Seriously though, you have conflicting emotions/reasons. You don't like being in debt, which is a natural, common reaction for most people. From early on we're taught debt is bad, and we associate it with shame and negative feelings. But you also want to make some money on the $8k beyond what you'll pay in interest, which is your cognizant rational self saying that it's worth more in a bank than it is covering the loan. I would never pay off a 2% loan under today's conditions faster than necessary. That is $8k worth of opportunity and if the best thing you can think of today is to leave it in ING at 4% then so be it, that is all well and good. But it'll be there, ready and willing. You might come across an excellent investment opportunity in 6 months and 1 day, and wish you had $8k to throw at it. The reason to keep it in the bank is not because you might make an extra $64 this year; it's because it costs you nothing to have that opportunity.

ray · 04-18-2006, 05:15 PM

There aren't too many no/low-risk short-term investments that will really get you more than the 4% you already make with ING.

Pay off the loan.

Daedalus · 04-18-2006, 07:08 PM

Quote:

Originally Posted by ray

There aren't too many no/low-risk short-term investments that will really get you more than the 4% you already make with ING.

Very true. Call it amazing if you even find a few. Be thrilled if you find only one good one. An "investment" does not have to be something you buy from a banker, broker or realtor. How many people have started multi-million dollar businesses with less than $5k? You can limit your risk any way you choose. My favorite story is buying over $2k worth of new CNC cutting tools for $20 at a garage sale from a guy who inherited them from his father. I thought maybe they cost as much as normal drill bits, and I didn't even know how many were in the box, but I had a good feeling and I would be out $20 at most. I'm hoping next time it's $200k for $2k. Probably won't ever happen, but I'll be able if it does.
The assumption here is that you have the discipline to keep your powder dry and ready for battle at a moment's notice. If you have a propensity to spend what you have, then yes, probably better to pay off a loan. Other than that, why forego both income and opportunity? I don't any benefits.

cheapie · 04-19-2006, 07:34 AM

good thoughts. if i lost the money tomorrow it wouldn't really hurt me. it's extra money and our budget can easily handle the car payment today. so i wouldn't mind a little bit of risk for the potential reward. i think i'll pray about what to do with it and sit on it a bit. i've even thought about giving it away.

a missionary acquaintance of mine lives in the philippines and he sent out a newsletter with the following story.

Quote:

Many of you may remember my first convert and disciple in the Philippines - Paul Noveda. Less than a year after giving his heart to Jesus...Paul died leaving behind a wife and a toddler son. Paul was 34 years old.

Shortly after Paul's death, his wife Daisy was baptized. She is a strong, wise, and humble woman. We helped her financially for a few months after Paul passed away. With the money we gave her (about $40 per month) she started her own business selling litson baboy (roasted pig) in her village on weekends. For over a year Daisy has managed to support herself and her son (Mico).

Daisy lives in a squatter area in a bamboo house on stilts over water. The overcrowded impoverished village is rampant with TB, alcoholism, and other sicknesses. It is a rotten environment to raise a young boy; there are many bad influences and a sub-standard school.

Mico just turned 5. He will start school in June. It has been on my heart to help relocated them to a better school. We will buy a small piece of property and build her a house. The house will also be used to hold Bible studies in the village we move her to.

We need your help. It will cost up to four thousand dollars to buy the property and build the house. Please email up if you wish to help Daisy and Mico.

while i understand many of you might not understand/agree with the religious part of it, i am sitting here thinking about this woman and her son who is the same age as my son. it's easy to just write him off as some little brown poor kid across the ocean that has no connection to me. BUT...he is someone's baby that is likely loved and valued just like my child and is where he is through no fault of his own.

how amazing is it that i could revolutionize his life simply by writing a check. what would it cost me? a cruise? another nice bike that i wouldn't ride anymore than the ones i already have? 50 meals at a nice restaurant?

sigh...of course it could be a waste of money if the mom is in the situation because she's a perpetual screwup. dunno. i think i'm seriously going to consider it.

your thoughts?

InfiniteNothing · 04-20-2006, 10:07 AM

Go thirds. Put a third in the car, a third in ING, and a third to charity (though I'm not so hot on the conversion mission: "say you love Jesus or you don't get money." Not to mention the mortality rate is 1 in 2 of converting thus far

)

cheapie · 04-20-2006, 10:15 AM

lol. that's not how it is at all. these folks work daily in the dumps where tons of homeless kids and adults are helping to feed, clothe, and take care of their medical needs as well.

04-17-2006, 09:02 PM	#1
cheapie Chief of Naval Operations Join Date: Aug 2002 Location: raising my pimp hand strong Posts: 13,038	Short term investment options (6 months) for $8k? I have about $8k I'm going to use in about 6 months and wondered if any of you have advice on what a great short-term investment might be. my car loan balance is at about $14k and is at 2%. I should be able to save up the remaining $3200 or so ($6k minus payments) in 6 months. I would just throw the $8k immediately into the loan but I'm getting 4% at ING so I'll just keep it in there or something else until I have enough to pay it off....unless there's some reason I shouldn't do so. Why am I paying off the loan instead of just paying the 2% and earning a higher interest rate on the extra coin? I just don't like the loan hanging over my shoulder. TIA for any advice you may have! __________________ 70% of the world is covered by water. The rest is covered by Bob Sanders

04-17-2006, 10:52 PM	#3
johnnymk Chief of Naval Operations Join Date: May 2000 Location: LEVITTOWN< PA> USA Posts: 13,621	http://www.bankrate.com __________________ “Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.” (Winston Churchill)

04-18-2006, 08:10 AM	#7
MikeD President, Cowboys Nation Join Date: Dec 2004 Location: In the 'burbs, west of D.C. Posts: 5,139	C'mon...man up and throw it all at GOOG. Then you can buy at the next G/A meetup. __________________

04-18-2006, 02:11 PM	#8
chadlnc Lieutenant Commander Join Date: Mar 2001 Location: North Carolina Posts: 947	With that amount of money for such a short term I would just pay off the loan. You may be able to make a couple of dollars, but nothing that I would consider to be worth it. __________________ "We're just patriots against an unjust law. Just like all those guys in prison." - Homer J. Simpson

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04-17-2006, 09:46 PM	#2
InfiniteNothing Chief of Naval Operations Join Date: Aug 2002 Location: San Diego Posts: 10,086	I say go for it. I totally understand not wanting a car loan hovering over you. If an extra % point would sway you, I think there are CDs out there that earn about 5%. Foriegn (i.e. iceland) CDs earn more.

04-18-2006, 02:03 AM	#4
Daedalus Lieutenant Commander Join Date: Dec 2002 Posts: 824	I wouldn't recommend a single foreign currency CD as a safe alternative. Too much volatility--down almost 20% over the past couple months. Iceland is running a 16% current-account deficit, which completely dwarfs the US' 6+%. The USD is weak, but so is the Krona. And the Krona will never be the world reserve currency of choice. I got in during the recent jump, but for the long term and my risk is spread over more than 1 currency. Depends how much risk you can bear. If you can bear no risk there's maybe $39 difference between 4.5 and 5.5% to worry about. I think US bonds are prime right now based in risk/return, but even then returns won't be stellar. Maybe buy a put on a REIT?

04-18-2006, 05:41 AM	#5
cheapchinese I love free! Join Date: Apr 2003 Location: LA, California Posts: 2,998	wait a min.. how can I open a foreign account? i mean.. i don't need to be in that country to open an account in their cuurency?

04-18-2006, 02:14 PM	#9
cheapie Chief of Naval Operations Join Date: Aug 2002 Location: raising my pimp hand strong Posts: 13,038	you mean pay it right now instead of holding it until i have all the money for the loan? i was hoping to make enough maybe for at least one payment or so.

04-18-2006, 02:40 PM	#10
Daedalus Lieutenant Commander Join Date: Dec 2002 Posts: 824	Put it all on RED. Seriously though, you have conflicting emotions/reasons. You don't like being in debt, which is a natural, common reaction for most people. From early on we're taught debt is bad, and we associate it with shame and negative feelings. But you also want to make some money on the $8k beyond what you'll pay in interest, which is your cognizant rational self saying that it's worth more in a bank than it is covering the loan. I would never pay off a 2% loan under today's conditions faster than necessary. That is $8k worth of opportunity and if the best thing you can think of today is to leave it in ING at 4% then so be it, that is all well and good. But it'll be there, ready and willing. You might come across an excellent investment opportunity in 6 months and 1 day, and wish you had $8k to throw at it. The reason to keep it in the bank is not because you might make an extra $64 this year; it's because it costs you nothing to have that opportunity.

04-18-2006, 05:15 PM	#11
ray captain awesome Join Date: Jan 2003 Posts: 7,054	There aren't too many no/low-risk short-term investments that will really get you more than the 4% you already make with ING. Pay off the loan.

04-20-2006, 10:07 AM	#14
InfiniteNothing Chief of Naval Operations Join Date: Aug 2002 Location: San Diego Posts: 10,086	Go thirds. Put a third in the car, a third in ING, and a third to charity (though I'm not so hot on the conversion mission: "say you love Jesus or you don't get money." Not to mention the mortality rate is 1 in 2 of converting thus far )

04-20-2006, 10:15 AM	#15
cheapie Chief of Naval Operations Join Date: Aug 2002 Location: raising my pimp hand strong Posts: 13,038	lol. that's not how it is at all. these folks work daily in the dumps where tons of homeless kids and adults are helping to feed, clothe, and take care of their medical needs as well.

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