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Investing 20K With Access To Funds (1 Viewer)

dmac37

dmac37

Footballguy
I just came into some money and I'm looking to invest about $20,000 while still having access to funds in case of an emergency. I'm in my 50's and already have a simple IRA plan through my employer for long term retirement. The goal is a low risk investment, access to withdraw without a penalty while making some interest.

A high yield savings account seems safe and has access to funds but the best annual percentage yield I have found is 1.00% with Ally.

What other options are out there for this situation? I would consider a higher yield with a "little" more risk.

 
Yeah, sorry....you can't have low risk, easy access to funds, AND high return.  You have to sacrifice in one or two areas.

You say you might need it in case of emergency, do you have other emergency money saved?

 
eoMMan said:
Yeah, sorry....you can't have low risk, easy access to funds, AND high return.  You have to sacrifice in one or two areas.

You say you might need it in case of emergency, do you have other emergency money saved?
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I understand there will not be a high return in this scenario. Looking for an option with a higher return other than a high yield savings account but may not be as safe short term but fairly safe long term.

No this is really the only emergency fund I will have as all my investments are simple IRA type with withdraw penalties.

 
Do you need access to 20K for an emergency? If only half would suffice, put 10K in a 1% guaranteed spot and then invest 10K elsewhere. An index fund, a mutual fund, whatever, but if you have some risk tolerance you can shoot for higher returns on at least some of that money.

 
dmac37 said:
I understand there will not be a high return in this scenario. Looking for an option with a higher return other than a high yield savings account but may not be as safe short term but fairly safe long term.

No this is really the only emergency fund I will have as all my investments are simple IRA type with withdraw penalties.
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Gotcha. 

I think I would just leave it in the money market at 1%. 

 
pecorino said:
Do you need access to 20K for an emergency? If only half would suffice, put 10K in a 1% guaranteed spot and then invest 10K elsewhere. An index fund, a mutual fund, whatever, but if you have some risk tolerance you can shoot for higher returns on at least some of that money.
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No I would only plan on 5-10K for emergency, so a 2 way split may be the way to go.I would still like the option to withdraw the other 10-15K if needed/wanted with no penalty or a small penalty as I'm in my 50's and have other retirement investments.

 
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Then find an index fund that you like, and either plop a chunk of money in there and forget it, or dollar cost average it and buy over a period of time. You can get that money out whenever you like if you've already paid taxes on it.

If you earn income and have not yet set up a Roth IRA (or if it is not fully funded) it would be wise to use that option as you won't have to pay tax in the gains yet the principal can be withdrawn any time. You can invest $5500 per year (maybe more based on your age) so in two years that would be most of your investment money.

 
How much do you want to access in an emergency?  It's found money, and if it were me, I'd put it in a S&P500 index fund in 2 or 3 slugs over a 1-2 month period and hopefully not touch it for 15-20 years.  Your capital is at risk though.

 
Reward Checking Account: https://www.depositaccounts.com/checking/reward-checking-accounts.html
 

You'll be required to jump through a few hoops every month (typically it involves using your debit card 12x times and using their billpay or direct deposit feature once a month). You should be able to get get 2% APY without much trouble. Consumer Credit Union brags about their 4.50% APY checking, but you have to spend at least $1000 in credit card purchases every month to hit that number.

 
Buy some Twitter puts. $15 week 4 Oct puts are about a nickel. If they aren't bought by then, anticipate a severe plunge. 3500 of them will cost you about $17,500 plus commission. If they fall to $12 you'll be a newly minted millionaire with access to lots of cash by the end of this month. 

Good luck!

 
Just throw the whole thing in an index fund already.    You're not going to need it and even if you do, it ain't going no where.   

 
fantasycurse42 said:
Buy some Twitter puts. $15 week 4 Oct puts are about a nickel. If they aren't bought by then, anticipate a severe plunge. 3500 of them will cost you about $17,500 plus commission. If they fall to $12 you'll be a newly minted millionaire with access to lots of cash by the end of this month. 

Good luck!
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This post inspired me to finally learn about options. At the time, TWTR was around 23 or so, maybe even a tick higher. But my Scottrade account is not set up for options plus I am still 99% clueless about them so I am still miles from this sort of investment. But the recent fall in price made me :emoticon: at remembering this post. Wow, what a call. FC, did you play it? Must be close to hitting with the beat down Twitter has taken lately.

 
as long as its not in an IRA (and even if it is), you can get the money out of a mutual fund in a matter of days. You might lose some principle but its not like your moneys locked in. 

 
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pecorino said:
This post inspired me to finally learn about options. At the time, TWTR was around 23 or so, maybe even a tick higher. But my Scottrade account is not set up for options plus I am still 99% clueless about them so I am still miles from this sort of investment. But the recent fall in price made me :emoticon: at remembering this post. Wow, what a call. FC, did you play it? Must be close to hitting with the beat down Twitter has taken lately.
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100 of them, wouldn't gamble on as many as I posted, that was shtick, cost me about $700, already worth $3700, these are gamble though and should be played small. 

I'm riding it out though, I was looking for a lotto ticket. If it gets to my price target, it'll be worth $30k. 

 
fantasycurse42 said:
Buy some Twitter puts. $15 week 4 Oct puts are about a nickel. If they aren't bought by then, anticipate a severe plunge. 3500 of them will cost you about $17,500 plus commission. If they fall to $12 you'll be a newly minted millionaire with access to lots of cash by the end of this month. 

Good luck!
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:coffee:

 
Half in money market, half in a preferred sock etf do you get like 5 percent with relatively minimal capital risk.

Look at pff  

 
dmac37 said:
I understand there will not be a high return in this scenario. Looking for an option with a higher return other than a high yield savings account but may not be as safe short term but fairly safe long term.

No this is really the only emergency fund I will have as all my investments are simple IRA type with withdraw penalties.
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If this is your only cash savings it's not about return it's about capital preservation. Take what you can get in a savings account and push for more yield in your ira.

 
fantasycurse42 said:
If you would've taken my advice, strong chance you'd be a millionaire exactly 7 days from now.
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TWTR is trading around 17 right now. Doesn't it need to drop to 15 to make those puts worth the big payout? I thought they'd expire if the price didn't hit 15. Still an options neophyte.

 
pecorino said:
TWTR is trading around 17 right now. Doesn't it need to drop to 15 to make those puts worth the big payout? I thought they'd expire if the price didn't hit 15. Still an options neophyte.
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If you held til expiration $15 Is break even, not a big payout. You want it falling as low as possible

They're trading around a quarter now, they were a nickel two weeks ago - You can already sell them for 5x what you paid for them. 

Hypothetically, if TWTR kept going up instead of the fall they've had, instead of being worth a nickel, they'd be worth like a penny now, especially since they expire next week. You'd prob be lucky to get anything for them.

TWTR earnings are a week from today, I don't see how they don't get crushed. 

 
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