Elite Money Advice Sought

H

Handsome

I would like some opinions from elite members here on the following:

I have an 83 year old aunt who will be receiving approx $150k from a will....she would like to put the major portion of the money into something short term..like every 6 months or so and her number 1 priority is to preserve her capital...

She asked me what I thought and I suggested a 6 month CD at a local bank now that CD's are paying much better than they did a year or so ago...

Any suggestions from you members here I will pass along to her.
Thanks in advance.
 
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If capital preservation is the #1 priority, then CDs are a good alternative. But why only a 6mo term? Does she really plan to spend the entire amount in 6mo?

If not, then you might want to consider laddering the maturity dates. Thus you might put 30k each into a 1 yr, 2yr, 3yr, 4yr, and 5yr CD. When a CD matures, roll it into a 5 yr CD if you can afford to. (you can also construct a 3 year ladder with 50k increments). Laddering provide a higher rate of return without locking up the entire amount in one long-term CD or risking much if interest rates rise further. Of course, you'll need balance the benefits of the longer term CDs against the lower rate you might get with a smaller size in each CD.
 
Tell your aunt to open a ForEx acct.

I'll trade it for her on a 30% me / 70% her profit split basis.

Locked for 2-years.

She'll make a LOT more than the dribble she'd make with a CD (5.5%). With about the same stability of funds.

Show her the sKaLpZ Journal.

FX
 
She can open an account at a place like Fidelity investments for free, put some spending money in a money market account (fed MM pays about %4.92, and a municipal MM pays about %4.3).
She can have daily access to the funds in the MM through checks.

Put the rest in 6 or 12 month cd's, (%4.9 to %5.4) with the monthly interest payment funneled back into the money market account.

All for free. ( over $30.000.00 account = free)


PS. local banks suck for this sort of thing!
 
if she's guaranteed 150k payments and she's old (with respect of course). she might want to issue bonds that pay 150k a year for say 5 years and just take the lump sum now. a lot of pop stars do this - they reckon their albums will provide a steady stream of income for years to come but want the money now.

then take the lump sum and put it in a high performing hedge fund.
 
http://www.treasurydirect.gov/

You can set up your own Treasury account and buy directly, using ladders or whatever strategy you like. There are no fees or hidden charges and most are yielding over 5%. You can electronically transfer funds to and from your bank acct to the Treasury account.
 
I also recommend a FIDELITY account. You can buy T BILLS for free at auction every Monday, no commission. Much easier than a bank or Treasury Direct. Their MM fund FDRXX also yields 4.87% currently.
 
Thanks for all the good advice...I appreciate it as well as she will....as for the question as to why just 6 months....she feels due to her being old that she would rather go with 6 months and if all is well at the end of the 6 months, then just put it in another one once the 6 months are up...

But the good recommendations from all of you I will show her so she can consider each and everyone of them....

Thanks again!
 
Quote from Coinzy:

Tell your aunt to open a ForEx acct.

I'll trade it for her on a 30% me / 70% her profit split basis.

Locked for 2-years.

She'll make a LOT more than the dribble she'd make with a CD (5.5%). With about the same stability of funds.
More...

The freakish thing is - coinzy is not joking here.

What happened, coinzy? In your last incarnation here you were looking for $1MM to trade based on your paper trading results. Have you burned through that $1MM already?
 
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