[quote=kev374]So I have $250,000 in savings parked in cash right now earning 1.9% in a CD that’s due to expire soon. I’m just so confused what to do. I don’t want to invest in stocks as I’m not sure the market is in a bubble condition and about to retract soon. I don’t want to invest in gold as it has risen to maniacal levels and i’m not sure if that is a bubble as well.
Given inflation exceeding interest rates (due to our government’s fiscal policies) my nest egg is losing value and i’m not quite sure what exactly to do.
I don’t want to consult a finacial adviser because I personally think most of them are ignorant and don’t know much more than anyone else on this form. I also know many people who have been given extremely bad advice by financial advisers and have lost of lot of their net worth due to them.
I would like to know what you guys in a similar situation as myself are doing to protect the value of your savings.[/quote]
Hey Kev374,
I know lots of people in your situation that don’t want to be in the stock market or already cashed out of gold already and don’t want to get in at these prices.
I’ve mentioned this before on another post but I’d recommend probably sticking it in an account where you will earn Frequent flyer miles. Look at one like this:
You will earn plenty of miles. CD’s are paying almost nothing these days anyway. You can rack up plenty of miles per year. Even if you don’t fly much, odds are you probably know family/friends that do. It’s against the rules to “sell” your miles but you can easily barter with your friends or family for them and earn MUCH more than the puny rates you are going to earn in a savings account or CD.
Not only that but the best bang for the buck is using the miles to upgrade to business or first class on international flights. I’ve used upgrades many times on international flights that were worth as much as $7,000 or more.
Also, check out the One World Awards using American Airlines miles. GREAT use of miles if you plan an around the world trip or even a trip with many stops. You can read up on it here:
I’ve done a few of those before and flown around in business or first class on miles I’ve earned in these accounts and a GREAT use of miles, IMHO.
Plus the best part is the miles aren’t taxable…. so it’s tax free “income” vs. the puny rates that you will earn in a CD that will also be taxed.
The banks like Bank Direct have devalued big amounts and made the program more limited compared to before. Before, you could stick in a million or more and earn massive amounts of miles each month. Same at BBVA Compass (old Guaranty Bank). Many of us are fortunate enough to have been grandfathered in at BBVA where we still get miles in our savings accounts. But they devalued them there as well. $100,000 used to earn 10,000 miles per month but now it’s 5,555 miles per month.
These accounts are FDIC insured so no worries there. Plus you can add on your wife and kids as POD beneficiaries so you can easily get the protection levels up. But you’re guaranteed anyway to $250,000 so you’re good.
This is something that is kind of idiot proof. You don’t have to do anything and you get the miles. Plus you can pull the money out whenever you want. No long-term commitments. The low interest rate environment will stick around for the next few years so it won’t make sense to roll it over in a new CD.
I fly pretty much non-stop so these miles are really valuable to me. Maybe not so much for you. But I still know friends and clients that I’ve recommended these programs to and they absolutely LOVE it. It’s typically not difficult to find people that can use these miles.
This would be the easy thing to do vs. any other major investment that has risks like buying a house, etc.
