ORIGINAL REDDIT POST
Advice on investment options
Hello, We are selling our house in MD and have about $160k usd on our savings account (credit union). We currently live abroad (EUR zone) and are renting a house. What are some good options for us to invest this money - as a whole or in chunks - to get the…
Hello, We are selling our house in MD and have about $160k usd on our savings account (credit union). We currently live abroad (EUR zone) and are renting a house. What are some good options for us to invest this money - as a whole or in chunks - to get the maximal and safest return? Vanguard VMFXX, Broad stock index ETFs? Thank you all!
Collected discussion
Depends on your time frame. Are you retiring in the US? If so, make sure to fill up retirement accounts first. Otherwise.... If you need the money within 5 years, a HYSA or treasury fund will be best. If over 5 years, invest in a total market index fund like VTI or VT.
We already have fund in retirment accounts and would ideally be able to access the money if possible. If exchange rates go up we might be able to use the money for a real estate purchase here.
I meant the maximal return for a safe investment, if that makes sense.
What's your definition of a safe investment? This is like asking for the best reliability and quality for the cheapest car. It's a spectrum. Cheaper cars will in general be lower quality and less reliable than more expensive cars. At some point you gotta pick your price point, and then you can determine your answer.
Other than retirement accounts, the rest would be accessible. Couple day delay at most. For 'safe' it depends on your tolerance. If you want growth, and longer timeframe, the total market funds I mentioned will be solid. But they will vary with the market, but safer than an individual stock. If you don't want to risk the market, then HYSA is the most accessible and solid rate. A treasury fund like SGOV will be just as safe, a touch less accessible (have to wait for settling of 1-2days). HYSA and SGOV (and bonds and such)... the rates will vary.
Maximal/safest. Choose one. The risk and return of an investment tend to be inversely correlated. It's up to you to determine your personal risk appetite. From there you can determine what to invest in.
For Bonds, which are historically considered pretty "safe", you can maybe get 5% before inflation, 2% after inflation. They can still underperform over a few years but most people don't lose a ton of money on bonds. They just also don't gain a ton, either. For Stocks, which have been safe over long time horizons but should be conisdered somewhat risky within a 10-yr time horizon, you're looking at like 10% before inflation, 7% after inflation. And then you can pick whatever blend of those two you want to hit your "sweet spot". Anything beyond 100% stocks is probably too risky to discuss/recommend to someone asking about risk levels. A typical retiree, so someone who needs to maintain the value of their portfolio but can't really afford to lose too much of it in bad times either, usually sit somewhere in the 40-60% range for both (i.e. 40% stocks / 60% bonds, or 60% stocks / 40% bonds)