Short term investments - Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

Cactus Jack · 06-10-2009, 04:27 PM

Hello,

I have a question for all you financial and investment gurus - I am looking at maximumizing my return on investment in the next 12 months but I do not want something too risky and risk losing my savings. I will be putting a lump sum each of the next 12 months and hope to beat inflation and get a small return.

I think I will do a tax free saving, invest most in short term bonds to have something safer and maybe risk 10% of my money on precious metals or resource funds.

The goal is next May to take out the money and use it to buy a house or perhaps relocate to another country.

Any help would be appreciated, my CP brethern.

Phaneuf3 · 06-10-2009, 04:36 PM

blackjack table.

sounds like you already have a relatively sound plan for a short term, low risk investment.

Slava · 06-10-2009, 07:15 PM

Any financial advisor I know of is going to tell you that you should put this into a high interest savings account or a GIC. Not that these are going to beat inflation (although at this point inflation is not a huge concern).

Thing is that you might be able to invest it and get a better return, but there is a risk associated with that. One year is not long enough term to know that on May 1st next year you will have a set amount of money to use as you see fit.

DuffMan · 06-10-2009, 07:59 PM

bet a bunch of money on game 7.

CrusaderPi · 06-10-2009, 08:03 PM

Send a PM to MoneyGuy

Patrick · 06-10-2009, 08:06 PM

Quote:

Originally Posted by Slava

Any financial advisor I know of is going to tell you that you should put this into a high interest savings account or a GIC. Not that these are going to beat inflation (although at this point inflation is not a huge concern).

Thing is that you might be able to invest it and get a better return, but there is a risk associated with that. One year is not long enough term to know that on May 1st next year you will have a set amount of money to use as you see fit.

Like who? No such this as high interest or a good GIC right now. The rates are super low. Most financial investors will say buy as "good stock" is at a discount for the next 3-5 years. The issue comes with a 1 year window.

Slava · 06-10-2009, 08:20 PM

Quote:

Originally Posted by Patrick

Like who? No such this as high interest or a good GIC right now. The rates are super low. Most financial investors will say buy as "good stock" is at a discount for the next 3-5 years. The issue comes with a 1 year window.

Well I'm a financial advisor, for one. I would never tell a client that they should risk money that they plan to use in a year in the stock market. I recognize that the rates are super low; while there are some fantastic deals to be had in stocks there are no sure things. Stocks over a one year period could be lower than they are today, as with almost any investment.

If this was money that would be used in the longer term I wouldn't hesitate to invest it, and go as risky as you can stomach....but one year is not that place. The OP mentioned precious metals and resource funds. These are great for the long term, but again over the course of a year this could mean that buying the house or traveling overseas with the money is not possible....that is a discussion that I don't ever want to have with a client!

MoneyGuy · 06-10-2009, 10:24 PM

Quote:

Originally Posted by Cactus Jack

...I am looking at maximumizing my return on investment in the next 12 months but I do not want something too risky and risk losing my savings.

This statement above scares me. No investment meets both of these objectives. High returns require higher risk. That's one of the fundamental principles of investing. You don't want higher risk; you don't invest. (GICs and HI accounts are technically not investments; they're savings vehicles - not the same thing.)

High-interest savings accounts and short-term GICs pay a pitiful rate right now, but an advisor who puts someone into a higher-risk vehicle or permits it risks a very disgruntled client, or worse. I lost a client once because I refused to allow something like this, but it was the right thing to do.

Do you want high returns or safety? You can't have both.

Phanuthier · 06-10-2009, 10:47 PM

Yeah, for 1 year, I wouldn't place any bets on metals or funds or anything. In the long run, you'll do great, but in 12 months and low risk, its pretty much what Slava said.

I'm a little perma-bull like Slava/MG though, I know in the next decade (and probably 5 years, likely even 1 year but not betting on that) there are some fantastic deals on stocks. 1 year is to short of a timeframe and you are just speculating.

Cactus Jack · 06-11-2009, 11:50 AM

So you guys are just saying that unless I really want to be risky I should put in GIC/High Interest E - Savings accounts and the like which pay 1-1.5%?

What if I put 25% of the money in a Tax free savings account, 65% in safer things like short term bonds and maybe use the final 10% on something a little riskier for rewards. I use 10% because it's the absolute most I could stand to lose and feel that perhaps I could make up any potential loss with the rest of my investment.

Slava · 06-11-2009, 12:00 PM

Quote:

Originally Posted by Cactus Jack

So you guys are just saying that unless I really want to be risky I should put in GIC/High Interest E - Savings accounts and the like which pay 1-1.5%?

What if I put 25% of the money in a Tax free savings account, 65% in safer things like short term bonds and maybe use the final 10% on something a little riskier for rewards. I use 10% because it's the absolute most I could stand to lose and feel that perhaps I could make up any potential loss with the rest of my investment.

Well that is not a horrible plan, as long as you recognize the potential for loss. The TFSA is not a specific investment, its an account that you can hold other investments in. You could hold your higher or lower risk investments within that structure. (The tax ramifications on income coming to you as interest are worse than those that are coming to you as dividends or capital gains, so for that reason you might want to hold your interest bearing investments there).

Psychologically people focus on the upside and anticipate their gains before they receive them. That is the number one reason that I would advise you not to take a huge risk here. You might make money, and you might even make a lot of money. You might also lose money and that could be a painful thing after a year of saving and planning what to do with that money.

If you want to talk specific investments I'd be happy to do that with you as well, but just make sure that you are looking at both the possible upside and downside before you jump in.

Frequitude · 06-11-2009, 12:37 PM

The only low risk, short term, high return investment is a virgin on birth control.

Cactus Jack · 06-11-2009, 12:46 PM

I'm not looking for a shoter term, low risk, high return investment. I want a short term, low risk investment that does slightly better than a GIC. Instead of 1%, I mean 3%, not 10%. If not, I'll just give up and put it in a GIC, "High interest e savings" account thay pay under 2% and that's it. I'm not looking to get rich here by doing this. I realize the risk involved, which is why I would only put 10% of money at most into those types of investments.

MoneyGuy · 06-11-2009, 12:47 PM

Quote:

Originally Posted by Cactus Jack

So you guys are just saying that unless I really want to be risky I should put in GIC/High Interest E - Savings accounts and the like which pay 1-1.5%?

What if I put 25% of the money in a Tax free savings account, 65% in safer things like short term bonds and maybe use the final 10% on something a little riskier for rewards. I use 10% because it's the absolute most I could stand to lose and feel that perhaps I could make up any potential loss with the rest of my investment.

You don't know what a TFSA is, do you? You can put $5,000 into a TFSA and can purchase almost anything you want within the TFSA. Talk to Slava.

Quote:

Originally Posted by Cactus Jack

I'm not looking for a shoter term, low risk, high return investment. I want a short term, low risk investment that does slightly better than a GIC. Instead of 1%, I mean 3%, not 10%. If not, I'll just give up and put it in a GIC, "High interest e savings" account thay pay under 2% and that's it. I'm not looking to get rich here by doing this. I realize the risk involved, which is why I would only put 10% of money at most into those types of investments.

Right now, even 2% is hard to get risk-free.

Rerun · 06-11-2009, 12:53 PM

Buy stock in oil companies. Its almost a sure thing that the price of oil will be higher in a year than it is now.

Slava · 06-11-2009, 01:01 PM

Quote:

Originally Posted by Rerun

Buy stock in oil companies. Its almost a sure thing that the price of oil will be higher in a year than it is now.

I think that people felt that way last year as well. Not only that, but a lot of people figured that oil would be doing pretty well to be back in the 60's in 2009...

Cactus Jack · 06-11-2009, 01:04 PM

Quote:

Originally Posted by MoneyGuy

You don't know what a TFSA is, do you? You can put $5,000 into a TFSA and can purchase almost anything you want within the TFSA. Talk to Slava.

I already have a tfsa and it's almost maxed out for this year's contribution.

Frequitude · 06-11-2009, 01:14 PM

Buy EV

Prototype · 06-11-2009, 01:20 PM

Buy USD right now, and in 6 months when the loonie drops again, cash it in. You lose some on the conversion to and from USD, but you'll do better than any other short term GIC/Savings account right now.

Just my opinion.

Slava · 06-11-2009, 01:31 PM

Quote:

Originally Posted by Prototype

Buy USD right now, and in 6 months when the loonie drops again, cash it in. You lose some on the conversion to and from USD, but you'll do better than any other short term GIC/Savings account right now.

Just my opinion.

Well if you really want to play that game you could invest in USD funds and do the same. You will get all of the appreciation plus the conversion...but in this short of a time frame its not really investing.