$100K - $150K to invest short-term - Where do I place it?

The question is if you are willing to take on additional risk? For example, you could put it in an index mutual fund, and maybe see it go up 20%. Or down 30%. That is the problem. If you need the money that quickly, you cannot ride out the cycles.

Another option is to look for brokered CD's, or even pick up a bond that matures on the date that you need the money. You may be able to get higher rates by taking on something that is lower in quality. That might get you a few more points, but it might also take a loss.

-john-

On Jan 29, 3:59 am, Davey Boy wrote: I'm wondering if there's a better

I'll give you a different answer. Consider a closed end (leveraged) municipal bond fund such as those offered by Nuveen. They are currently paying 5% + tax free and are 100% liquid. Volatility isn't bad, in my opinion.

Frank

Bonds took a big hit last week and could should economic conditions suddenly change. They are best mixed with stocks because they somewhat hedge each other.

Money-market mutual funds are currently paying around 5% as well. They have the disadvantage over CDs that they're not FDIC-insured (though only the first $100K at any given bank is insured anyway), and the advantage that you can withdraw any amount of the money at any time. Also, the interest rate for money-market funds is variable, which is an advantage over CDs if rates go up, and a disadvantage if rates go down.

Ya pays yer money and ya takes your choice.

advantage over CDs if rates

Well put. Absent liquidity and quality issues, the choice between money market accounts and CDs/bonds is a bet on interest rates.

In general those who think rates will strengthen over their time horizon should look at something that has a floating interest rate - like money market instruments. Conversely, those who think rates will stay about the same or decline should look at products that lock in the current rate - like CDs (and bonds.)

-HW "Skip" Weldon Columbia, SC

So let me think. You "cashed out", meaning you extended the life of your mortgage to get this money. So now you owe more and for longer periods of time to your mortgage company, not to mention the fees you paid to refi. This is so you get money to go to school? Me personally I would get a student loan instead.

Yield curve inversion comes into play here. We are in a rare situation where short term yields are higher than those of long-term yields. That usually does not bode well for the economy (usually is a historical term and, of course, does not guarantee future performance). Yield curve inversion is also the reason that money market rates are currently comparable, if not superior, to bonds and long-term CDs.

For better or worse, yield curves do not stay inverted for long. The market has a funny way of attempting to correct itself (sometimes our gov't "motivates" it along though). You should consider the possibility that money market rates may not sustain themselves and you will need to make investment adjustments in the coming years.

take on additional risk?

One *important* point is that buying a single bond exposes the investor to credit risk (unless the investor buys a US Treasury bond

-- note a treasury, not a Fannie Mae or Freddie Mac or a municipal bond, etc.).

The world is full of blue chip companies, highly rated by Moody's, Standard and Poors, that then went bust. Or became the subject of Leveraged Buy Outs (one of the world's leading private equity investors has predicted that we will see a $100bn LBO in the next couple of years-- beating the previous record, the $70bn RJR_Nabisco one), which will demolish their credit rating.

You could lose the whole lot on the off chance of buying into another Enron or Worldcom.

a different answer. Consider a closed end (leveraged)

Leverage increases the risk level.

messagenews:Xns98C6AA1F7EA07mikioigtenet@216.196.97.142...

around 5% as well. They have

My own thought is the OP should:

- split the money into 2 amounts, either 100k and 50k or 2 75ks, and invest them at different FDIC insured banks.

Invest in a ladder: 6 months, 12 months, 18 months, 2 years, roughly

Any other strategy has a higher risk associated with it

FWIW up here bank rates are really low, but I did find a 4% savings account ... not bad considering the cash is available ... for up here that is. So that's where my cash is building for now until I figure what to invest in. I have a 1yr GIC maturing this month, and that's where it's going. There are brokers who will find you high paying saving accounts at no cost. I suggest you at least phone around and put yer cash into one of those while you think the situation over.

I would put my money into T-Bills since they are state-tax exempt so most times you wind up with a higher effective rate than a CD. Of course if you don't pay state tax the advantage might not be there.

-Scott