Need investment advice, please...

[bobola]

Yesterday my wife and I just sold a property in a cash deal and are looking for a safe investment with decent yields. After taxes and fees the amount will be 250k or so. The only debt we carry is a 15 year fixed rate mortgage on the house at a 5.35 rate, which I have been advised to leave in place for tax purposes.

We are interested in short term CD's or a money market, but interest rates have been falling a bit in the past few months.

I don't have a big problem with that as we are not what you would call risk takers, but I am a bit confused as to the recent problems in the bond markets. I keep reading articles talking about how municipalities, states, hospitals...etc... have to pay ever higher interest rates because bond buyers are becoming scarce. If high inflation indicates too much floating around, where are the buyers? I'm a buyer...how can I get in on this action...???

Would it be a good idea to invest in short term bonds right now as the interest rates are ratcheting upward, and if so, where and how? And how short are short term bonds?

I spoke to a broker who sells annuities at a guaranteed 7% and have considered parking 25k or so there and forgetting about it. The problem I have with that idea is that inflation may very well pass that rate up, if it hasn't already done so, which means I would slowly lose money in the long term.

Metals and commodities markets are something I am not comfortable or familiar with.

We though about buying a rental property but I don't want to be a landlord unless i found a house at a fire sale price.

I've looked at the peer-to-peer loan idea, which has a good return, but wouldn't be comfortable with the risk.

I work for Sprint, track the stock closely and am thinking about buy a big chunk as it hit a 52 week low on Friday, but the way things are going it could go a lot lower! Most of the goodwill (25 billion or so) was written off the other day making the company easier to buy, and WIMAX launches in early April which leads me to think the stock can only go north from here.

With property prices falling we may very well jump back into another building in 2 or 3 years and have another go at it. We were forced to sell a small commercial building by eminent domain, which in itself is a very frustrating thing to have to endure, but to have that cash at this time is OK.

Any suggestions or advice is greatly appreciated..!!!

[Jim Nickerson]

Re: need investment advice, please...

bobola,

I'm surprised no one has made a reply to this; perhaps no one wishes to tell others what to do with the other's monies. I wouldn't, but we all can put up suggestions of what we hopefully would actually do as opposed to what we might do if given what might be a similar circumstance. Whatever is you total circumstance, probably no one else is in exactly in the same situation--you know that and anyone else who offers you suggestions should know it.

I asked myself, what would I do with 250K in new capital right now?

Well, I am sitting on about 600K of cash which is in money market funds yielding 3.29 or 3.43 7-day yields.

Do I plan on this being how that money will be deployed over the next 30-35 years (wife's life expectancy). Absolutely not as long as I have any say in the matter.

My point is that one does not today have to make a committment to something for a longterm investment. To me a lot of things in which I might invest are high right now. Equity indices may well be about to head even lower, Nasdaq on Friday took out previous lows I believe.

I don't like these low yields, but I can abide them for a while. I think other opportunities will emerge, though it may take a while.

If you are looking for the perfect hedge against inflation that is perfectly safe, to my knowledge, such doesn't exist.

I had to call Schwab (in which I hold no position) to find the yields above. I asked about the possibility of money market funds at Schwab becoming worth less than $1/share. The representative said that whenever all the SHTF with SIV's and whatever else is at play with regard to high risk, Schwab had about 4% of its money market funds exposed to SIV's, and that has all been reduced to approximately 1% now. He said the chance of Schwab's money market funds becoming worth less than a bonar a share is "remote." He said he could not use the word "guarantee," which I didn't expect him to use anyway.

I have felt all along that money market funds in big brokerages are rather safe.

[randallriggs]

Re: need investment advice, please...

I have noproblem letting you know what I've done. Last year after reading itulip and other websites for a while, i cashed in all of my mutuals and parked the money in FXE and GLD 50-50. Since that time I've made very nice gains. in fact better than I ever have thru a money managed mutual. Now, after more reading, I've divested most of the FXE, and gone into some REITs yielding 15-20 dividends and am thinking of going long BRIC countires thru EEB, EWZ, and some other ETFs. I think the US markets will go lower long term but may go sideways for a while until Benny does not have anymore cuts to make. I think GLD will continue up for a while and once I hit my triggers, I'll get out. I watch and read about the markets every day for 2 hours. I hope that helps

[Jim Nickerson]

Re: need investment advice, please...

I have noproblem letting you know what I've done. Last year after reading itulip and other websites for a while, i cashed in all of my mutuals and parked the money in FXE and GLD 50-50. Since that time I've made very nice gains. in fact better than I ever have thru a money managed mutual. Now, after more reading, I've divested most of the FXE, and gone into some REITs yielding 15-20 dividends and am thinking of going long BRIC countires thru EEB, EWZ, and some other ETFs. I think the US markets will go lower long term but may go sideways for a while until Benny does not have anymore cuts to make. I think GLD will continue up for a while and once I hit my triggers, I'll get out. I watch and read about the markets every day for 2 hours. I hope that helps

randall, I guess surely "15-20" references percentage yield. What ever happened to the warning regarding high yield investments, i.e. there is greater risk or entities would not be willing to pay such rates? I guess that sort of thinking has become passe.

[Jim Nickerson]

Re: need investment advice, please...

Yesterday my wife and I just sold a property in a cash deal and are looking for a safe investment with decent yields. After taxes and fees the amount will be 250k or so. The only debt we carry is a 15 year fixed rate mortgage on the house at a 5.35 rate, which I have been advised to leave in place for tax purposes.

We are interested in short term CD's or a money market, but interest rates have been falling a bit in the past few months.

I don't have a big problem with that as we are not what you would call risk takers, but I am a bit confused as to the recent problems in the bond markets. I keep reading articles talking about how municipalities, states, hospitals...etc... have to pay ever higher interest rates because bond buyers are becoming scarce. If high inflation indicates too much floating around, where are the buyers? I'm a buyer...how can I get in on this action...???

Would it be a good idea to invest in short term bonds right now as the interest rates are ratcheting upward, and if so, where and how? And how short are short term bonds?

I spoke to a broker who sells annuities at a guaranteed 7% and have considered parking 25k or so there and forgetting about it. The problem I have with that idea is that inflation may very well pass that rate up, if it hasn't already done so, which means I would slowly lose money in the long term.

Metals and commodities markets are something I am not comfortable or familiar with.

We though about buying a rental property but I don't want to be a landlord unless i found a house at a fire sale price.

I've looked at the peer-to-peer loan idea, which has a good return, but wouldn't be comfortable with the risk.

I work for Sprint, track the stock closely and am thinking about buy a big chunk as it hit a 52 week low on Friday, but the way things are going it could go a lot lower! Most of the goodwill (25 billion or so) was written off the other day making the company easier to buy, and WIMAX launches in early April which leads me to think the stock can only go north from here.

With property prices falling we may very well jump back into another building in 2 or 3 years and have another go at it. We were forced to sell a small commercial building by eminent domain, which in itself is a very frustrating thing to have to endure, but to have that cash at this time is OK.

Any suggestions or advice is greatly appreciated..!!!

Just ran across the anecdotal comments by John Mauldin regarding Sprint.

http://www.safehaven.com/article-9598.htm 3/1/08

Apple, Sprint, AT&T, and Going to the Dark Side
I have been a Sprint customer for at least ten years, I think. They are losing customers at a very serious rate. Some two million are expected to leave this quarter. I am one of them.

My new Treo phone stopped working. It is only a few months old. I gave it to my assistant to take to Sprint and get it exchanged, as I have insurance on it, which I pay $5 a month for. Also, Sprint has the worst customer service. It can take hours to get through the lines at their nearest store, and you can be on hold for a long time on the phone, so I let my assistant deal with them. After waiting forever in line, she got to the desk and explained the problem. They took the phone and came back and said they would not replace it as I must have dropped it in some water, since it was corroded on the inside. They are not responsible if I drop it in the water. She had to get out of line and call me.

I told her I had not dropped it in the water and I wanted a new one like the contract said. I spend almost $5,000 a year with Sprint, and I wanted them to honor that contract. She once again had to get in line, waiting for an hour to get to another clerk, who told her he could not do anything, but we could call customer service. After she endured yet another conversation and waited another hour, I told her to come on back to the office.

I called my friend who is an expert in the cell phone business, and he said AT&T was the best. I got in the car with my daughter, we drove five minutes to an AT&T store, and in an hour I had a new iPhone from Apple, at a lot less per month than Sprint. No waiting in line. Very friendly and knowledgeable service.

[rabot10]

Re: need investment advice, please...

bobola,

Fisrt I have no problem giving anyone my 2 cents.

GoldMoney 75% silver 25% Gold. JMHO - If U take my advise u will do REALLY REALLY WELL and Kiss my feet sometime in the future. Could take a few years to see it or may only be a few months. (don't like my feet kissed but rubbed is a big thing to me!)

Jim U sly dog U married a little girl.

rick

[rachits]

Re: need investment advice, please...

I think its going to be extremely hard to find "safe" decently yielding instruments to park your money in. Real treasury interest rates are negative (even some TIPs -- which is bloody scary if you ask me).

"Safest" thing I can think of are muni bonds (there is a small, but very real chance of default -- depends on state / city), oil companies / royalty trusts (risk of falling oil prices), good yield CDs under 100k (risk of bank collapsing and FDIC hassle + inflation risk + interest rate risk if CDs are longer term). Precious metals / mining companies (quite volatile, risky). Foreign currency sovereign bonds (actually I haven't really done research on this, anyone know a good way to get into this & what the risks are?)

Disclaimer, I am invested in roughly 1/3 GLD (gold), 1/3 ultra short ETFs (TWM, SRS, SKF, FXP -- concentrations in that order), 1/3 inflation stocks (PBT -- oil + NG field trust, MOO -- agribusiness ETF). I would call this a risky portfolio, and I don't think you are looking for this. Do your own due diligence, yadayada. I, personally, am not a professional, although I have done a ton of reading, more so in the past two years.

[Jim Nickerson]

Re: need investment advice, please...

bobola,

Jim U sly dog U married a little girl.

rick

Dog, yes; sly, no. Won't tell wife you called her "little girl" though she would like that.

Disclaimer, I am invested in roughly 1/3 GLD (gold), 1/3 ultra short ETFs (TWM, SRS, SKF, FXP -- concentrations in that order), 1/3 inflation stocks (PBT -- oil + NG field trust, MOO -- agribusiness ETF). I would call this a risky portfolio, and I don't think you are looking for this. Do your own due diligence, yadayada. I, personally, am not a professional, although I have done a ton of reading, more so in the past two years.

One thing bobola can take away from your disclaimer is you do believe in a degree of asset allocation into various sectors, which I agree is wise.

[icm63]

Re: need investment advice, please...

check my asset model

http://www.elitetrader.com/vb/showth...hreadid=118791

I am 100% in SHY ETF.

Will BUY some FXS, FXA if we get a pull back.

[rachits]

Re: need investment advice, please...

Disclaimer, I am invested in roughly 1/3 GLD (gold), 1/3 ultra short ETFs (TWM, SRS, SKF, FXP -- concentrations in that order), 1/3 inflation stocks (PBT -- oil + NG field trust, MOO -- agribusiness ETF). I would call this a risky portfolio, and I don't think you are looking for this. Do your own due diligence, yadayada. I, personally, am not a professional, although I have done a ton of reading, more so in the past two years.

Replying to myself, I just want to let you also know that I'm hella nervous about all my positions because a major drop in the price of oil would probably cause a major drop in all three of the asset classes I mentioned above. I am betting on that not happening or at least not happening without a severe recession / drop in the stockmarket.

[barrydd933]

Re: need investment advice, please...

Putting some of your money in CD's under 100k so you're covered by FDIC,short term 6-8 months,if you are riskier,SH and DOG ETF's are safer shorts than the ultras,currently my play,long term and only ups I have are PHO and PBW ETF's for water and clean energy,have those in my wife's(AKA Ol' ball and chain) account.Hope she's not looking over my shoulder!

[GeraldRiggs]

Re: need investment advice, please...

randall, I guess surely "15-20" references percentage yield. What ever happened to the warning regarding high yield investments, i.e. there is greater risk or entities would not be willing to pay such rates? I guess that sort of thinking has become passe.

jim:

thanks for the comment. I've been in these NG trusts yielding 15-20% for quite a while and they have been solid

[c1ue]

Re: need investment advice, please...

I spoke to a broker who sells annuities at a guaranteed 7% and have considered parking 25k or so there and forgetting about it. The problem I have with that idea is that inflation may very well pass that rate up, if it hasn't already done so, which means I would slowly lose money in the long term.

First, free advice is just that - free. Not advice.

Given that, an annuity is not necessarily bad if you are looking for something safe. But I would strongly recommend that you look extremely closely at all the fine print. In particular get written, witnessed statements from your (hopefully long time) broker specifically stating the worst case terms for the annuity.

There are a number of annuities which have 'escape' clauses which can bring the yield down to nearly zero in certain circumstances, and anything promising a long term yield of over 30 year Treasuries is extremely suspect in my mind.

Thus beating inflation should not be the first order - it is protecting your capital, then getting what you are promised.

As for me, my views are extremely clear.

For a passive investment with a high degree of safety - I'd look into a yen denominated bond. The yield won't be great, but you'll get something plus the currency appreciation option.

I'd wait to see if the yen rebounds before the March fiscal end of year in Japan though.

[CanuckinTX]

Re: need investment advice, please...

Like many others on here I'm heavily invested to capture what I believe is a deteriorating investment environment in the US. Gold, natural gas, short S&P, some foreign funds, nothing domestic for equities.

However the only piece of advice I'd offer is to be very careful about putting more of your financial future into your employer. You already derive a majority of your income from Sprint I'm sure in the form of your paycheck, so why double down and load up on their stock too?

And I'm sure a good path to ruin is to buy stocks that are around their 52 week low. Sure it may sound cheap and you think you're buying at the bottom, but like you said, it could go a lot lower! I've also read that Sprint is losing a lot of customers lately so tread lightly with their stock.

If you want low risk your best bet is to be fairly diversified. Even if you put your money into a safe CD then you'll probably still be losing value to inflation. If you do insist on the safe route, maybe 90% of your money into something CD's and then 10% into GLD to hedge the inflation part?

[bobola]

Re: need investment advice, please...

Thanks to everyone who responded.

Jim – My thought was to do some short term stuff and wait for what I think is a bottom in the stock market and then jump in. John Mauldin’s experience with Sprint is exactly why the company is sinking. Customer care has punched a huge hole in this ship called Sprint and more water is coming in than is bailed out. Mgmt says they are trying to fix it but it will take time. If it makes anyone feel better, they hose employee accounts up too. My mom and dad have my ‘perk’ phone, which has unlimited roaming and minutes at no charge, and she dropped it in a lake. New phone, new 2 year contract and they hosed up the billing for 4 months – wife’s phone is on the same account and gets billed. Several calls during that time eventually fixed it. At one point they were charging twice what we owed and I was told to ignore the bill, and then 2 months later they charged a negative amount which I also ignored. Eventually the billing was correct. The new CEO appears to be a go-getter and hopefully things will change. It can’t get worse.

Rachits - You said; “I just want to let you also know that I'm hella nervous about all my positions”. That’s exactly the position I don’t want to be in. I never worry or lose sleep over money and I don’t intend to. I also spend a lot of time researching and reading everything I can about finance and the economy. My wife recently gave me the order to stop with the bad news – she says I am getting paranoid. I personally think we are heading for a very, very serious situation in this country and have considered buying something like a hobby farm with a pond so that I can eventually grow my own food and farm fish.

C1ue – thanks for that advice on annuities.

Rick Bishop – any prediction on the top for gold and metals in general? How much higher can it go? I am inclined to agree with you but there may be more risk than I am looking for. If I take your advice and do well, I’ll buy you a gift certificate to your local foot masseuse..LOL…

Barry – thanks. We like the clean & green industry ideas as well.

A friend has been ramping up his part-time organic garden and has done well selling his produce. With the price of food going up rapidly my idea of selling the house in the city and buying a small farm or property near the city with a water source looks ever more attractive.

Am curious what others think about where these current financial problems will take us in 3, 4 or 5 years. Depression? Ten or so years of nil growth like Japan? Another thought is to sell the house and live on a sailboat near a big city. No easier way that I know of to leave for so-called greener pastures if things get bad here. Call me paranoid but the more I read the darker the future looks.