Where is the best place to put my money?

[sobmaz]

Welcome to the War Zone!

The Fed declared war on savers about 2 years ago. Those that made good decisions and have savings to show for it are being asked to accept below normal yields (actually, no yield) so that the banks can rebuild their balance sheets and so that those who borrowed more than they could really afford can now afford it due to the lower rates.

Your money is WORTHLESS in cash form and that is how the Fed likes it.

You have three choices, gamble in the stock market or gamble in the housing market. The third is to move away from bubble land for a few years and use your money to live rent free.

I have been sitting on 550K for 2 years now while forking over 2100 a month in rent while earning about 300 a month in interest.

From what I calculate house prices need to fall about 10K a year just to make up the difference between what I am paying in rent versus what it would cost to own (true cost).

I may be forced to move to a place like Phoenix and just buy a nice home in a nice part of town for 150K cash and then come back in 5 years after this has all been sorted out. Being that I have the mobility to do so it wouldn’t be the worst fate.

[UCGal]

[quote=walterwhite]i dont know; those money market funds are kinda risky in a meltdown. maybe just put it in fdic bank not likely to fail.[/quote]

There are money market funds and money market bank accounts. My understanding (which could be wrong) – if the money market account is through an FDIC insured bank – it’s a savings account with FDIC insured up to $250k. If it’s through a brokerage account it’s “insured” under SIPC… which will cover the asset – but not the value of the asset… a MMF is typically $1/share. So if you have $100 in it, you have 100 shares. SIPC would guarantee you that if your brokerage account went tits up you’d get your 100 shares. It does NOT guarantee the price per share… so if the underlying fund goes broke, you’d be broke.

There was a big deal in 2008 about 2 MMFs “breaking the buck” – meaning their shares dropped to less than $1. For a while the treasury backed the value of the money market funds – but that expired a while back.

Breaking the buck is very rare. But it *can* happen.

[UCGal]

[quote=walterwhite]i dont know; those money market funds are kinda risky in a meltdown. maybe just put it in fdic bank not likely to fail.[/quote]

There are money market funds and money market bank accounts. My understanding (which could be wrong) – if the money market account is through an FDIC insured bank – it’s a savings account with FDIC insured up to $250k. If it’s through a brokerage account it’s “insured” under SIPC… which will cover the asset – but not the value of the asset… a MMF is typically $1/share. So if you have $100 in it, you have 100 shares. SIPC would guarantee you that if your brokerage account went tits up you’d get your 100 shares. It does NOT guarantee the price per share… so if the underlying fund goes broke, you’d be broke.

There was a big deal in 2008 about 2 MMFs “breaking the buck” – meaning their shares dropped to less than $1. For a while the treasury backed the value of the money market funds – but that expired a while back.

Breaking the buck is very rare. But it *can* happen.

[UCGal]

[quote=walterwhite]i dont know; those money market funds are kinda risky in a meltdown. maybe just put it in fdic bank not likely to fail.[/quote]

There are money market funds and money market bank accounts. My understanding (which could be wrong) – if the money market account is through an FDIC insured bank – it’s a savings account with FDIC insured up to $250k. If it’s through a brokerage account it’s “insured” under SIPC… which will cover the asset – but not the value of the asset… a MMF is typically $1/share. So if you have $100 in it, you have 100 shares. SIPC would guarantee you that if your brokerage account went tits up you’d get your 100 shares. It does NOT guarantee the price per share… so if the underlying fund goes broke, you’d be broke.

There was a big deal in 2008 about 2 MMFs “breaking the buck” – meaning their shares dropped to less than $1. For a while the treasury backed the value of the money market funds – but that expired a while back.

Breaking the buck is very rare. But it *can* happen.

[UCGal]

[quote=walterwhite]i dont know; those money market funds are kinda risky in a meltdown. maybe just put it in fdic bank not likely to fail.[/quote]

There are money market funds and money market bank accounts. My understanding (which could be wrong) – if the money market account is through an FDIC insured bank – it’s a savings account with FDIC insured up to $250k. If it’s through a brokerage account it’s “insured” under SIPC… which will cover the asset – but not the value of the asset… a MMF is typically $1/share. So if you have $100 in it, you have 100 shares. SIPC would guarantee you that if your brokerage account went tits up you’d get your 100 shares. It does NOT guarantee the price per share… so if the underlying fund goes broke, you’d be broke.

There was a big deal in 2008 about 2 MMFs “breaking the buck” – meaning their shares dropped to less than $1. For a while the treasury backed the value of the money market funds – but that expired a while back.

Breaking the buck is very rare. But it *can* happen.

[UCGal]

[quote=walterwhite]i dont know; those money market funds are kinda risky in a meltdown. maybe just put it in fdic bank not likely to fail.[/quote]

There are money market funds and money market bank accounts. My understanding (which could be wrong) – if the money market account is through an FDIC insured bank – it’s a savings account with FDIC insured up to $250k. If it’s through a brokerage account it’s “insured” under SIPC… which will cover the asset – but not the value of the asset… a MMF is typically $1/share. So if you have $100 in it, you have 100 shares. SIPC would guarantee you that if your brokerage account went tits up you’d get your 100 shares. It does NOT guarantee the price per share… so if the underlying fund goes broke, you’d be broke.

There was a big deal in 2008 about 2 MMFs “breaking the buck” – meaning their shares dropped to less than $1. For a while the treasury backed the value of the money market funds – but that expired a while back.

Breaking the buck is very rare. But it *can* happen.

[EconProf]

The comments about low interest rates to savers are sadly true. This is part of the tragic fallout of the current Fed policy to help the big banks rebuild their balance sheets while hurting savers.
The best return for most people is to pay off any debt. Credit cards that charge you, say, 12% should never have a running balance. By paying the bill off, you implicitly are earning a 12% rate of return. OTOH, I’d guess you are already doing this.

[EconProf]

The comments about low interest rates to savers are sadly true. This is part of the tragic fallout of the current Fed policy to help the big banks rebuild their balance sheets while hurting savers.
The best return for most people is to pay off any debt. Credit cards that charge you, say, 12% should never have a running balance. By paying the bill off, you implicitly are earning a 12% rate of return. OTOH, I’d guess you are already doing this.

[EconProf]

The comments about low interest rates to savers are sadly true. This is part of the tragic fallout of the current Fed policy to help the big banks rebuild their balance sheets while hurting savers.
The best return for most people is to pay off any debt. Credit cards that charge you, say, 12% should never have a running balance. By paying the bill off, you implicitly are earning a 12% rate of return. OTOH, I’d guess you are already doing this.

[EconProf]

The comments about low interest rates to savers are sadly true. This is part of the tragic fallout of the current Fed policy to help the big banks rebuild their balance sheets while hurting savers.
The best return for most people is to pay off any debt. Credit cards that charge you, say, 12% should never have a running balance. By paying the bill off, you implicitly are earning a 12% rate of return. OTOH, I’d guess you are already doing this.

[EconProf]

The comments about low interest rates to savers are sadly true. This is part of the tragic fallout of the current Fed policy to help the big banks rebuild their balance sheets while hurting savers.
The best return for most people is to pay off any debt. Credit cards that charge you, say, 12% should never have a running balance. By paying the bill off, you implicitly are earning a 12% rate of return. OTOH, I’d guess you are already doing this.

[lepetitangel]

Hi All

Thanks for the advice. That’s exactly how I feel…it’s risky to put it either in stock or housing market…so my only risk-free bet is in bank…earning less than 1% yield.

Would you recommend buying bonds or gold or other forms of investment?

I’ve made money but also lost money in the stock market…and that’s why I figure the whole thing is a big scam. There’s a reason why Wall Street people are rich…cuz they’re robbing retail investors like me. I’m lucky enough to just get my money back I think.

Okay…I guess I’ll just be happy and keep the money in bank for now.

[lepetitangel]

Hi All

Thanks for the advice. That’s exactly how I feel…it’s risky to put it either in stock or housing market…so my only risk-free bet is in bank…earning less than 1% yield.

Would you recommend buying bonds or gold or other forms of investment?

I’ve made money but also lost money in the stock market…and that’s why I figure the whole thing is a big scam. There’s a reason why Wall Street people are rich…cuz they’re robbing retail investors like me. I’m lucky enough to just get my money back I think.

Okay…I guess I’ll just be happy and keep the money in bank for now.

[lepetitangel]

Hi All

Thanks for the advice. That’s exactly how I feel…it’s risky to put it either in stock or housing market…so my only risk-free bet is in bank…earning less than 1% yield.

Would you recommend buying bonds or gold or other forms of investment?

I’ve made money but also lost money in the stock market…and that’s why I figure the whole thing is a big scam. There’s a reason why Wall Street people are rich…cuz they’re robbing retail investors like me. I’m lucky enough to just get my money back I think.

Okay…I guess I’ll just be happy and keep the money in bank for now.

[lepetitangel]

Hi All

Thanks for the advice. That’s exactly how I feel…it’s risky to put it either in stock or housing market…so my only risk-free bet is in bank…earning less than 1% yield.

Would you recommend buying bonds or gold or other forms of investment?

I’ve made money but also lost money in the stock market…and that’s why I figure the whole thing is a big scam. There’s a reason why Wall Street people are rich…cuz they’re robbing retail investors like me. I’m lucky enough to just get my money back I think.

Okay…I guess I’ll just be happy and keep the money in bank for now.

[Author]

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