I have 110k to invest. What are my best options WITHOUT risk?

Question

Currently I have my money in a money market account getting 5% interest.. I'm getting a good 450 a month on the interest but I really don't see myself needing this money anytime in the near future. 5-10 years.
I know a certificate of deposit is a good option but the ones I've seen are about the same rate as what I'm getting with my money market account.
Now I do want to find something that has 0 risk. Meaning there is no way I'll lose any of the money invested. With that said, what are my other alternatives? I've heard of things like T-bills, bonds etc. What would give me the highest return on investment right now? Anyone or any website you can refer me to? Thank you.

Answer 1

There is no such animal. By investing in CDs and money markets you run the risk of having to reinvest this money in a different interest rate environment, or that your money will not grow fast enough to beat inflation. Plus you pay current income tax on the interest (unless this is IRA money).

I would suggest taking a look at municipal zero-coupon bonds. These are bonds that pay no interest, but are issued at a discount and grow to their face value (usually $1,000 each). Lets say you look at 10 year bonds, and they are currently trading around $630 each yielding somewhere around 4% tax-free. If you're in the 20% tax bracket, your taxable equivalent yield is 5%. Buy 110 bonds for $69,300, take the $40,700 difference and invest it in a conservative, low cost, diversified mutual fund portfolio.

Worse case scenario is after 10 years your bonds will be worth $110,000 (with a $40,700 tax free gain). This is only if your mutual funds go to 0, which is highly unlikely. If you can average 7.2% over the next 10 years with your mutual funds, you'll have approximately $81,400 + $110,000 = $191,400 total value. While it's not the highest possible return, it's a very conservative one (and a fairly realistic return of 7.4% per year). You could also look at laddering the bonds to take advantage of any future increase in yields. I would expect this strategy to earn more than this in the real world, but you never know.

Talk to an advisor about this startegy because zero coupon bonds have their own risks (they tend to be more volatile than other bonds) although the vast majority of them are AAA rated and insured, making their risk of default very low. If you're talking about IRA money, then substitute the munis for US Treasury STRIPs. Make sure you have any advisor disclose the commission or sales credit on the bonds DO NOT pay more than one point ($10) per bond, and try to talk them down to 1/4 to 1/2 of a point. (Not unreasonable if they are only facilitating the trade. They will get paid on the mutual fund buy as well.)

As far as funds go, if you look at advisor sold funds, then only deal with American Funds, as they have very solid performance with low internal costs. If you're going to go it alone, then look at Vanguard.

Answer 2

Basically, you're close to zero risk right now. I say close, because the FDIC (Federal Deposit Insurance Corporation) only insures people up to $100,000 per bank. Please note that that is per bank, not per account. If you have two accounts in a bank each with $100,000, then only half of your money is insured, even if you have the money divided into two accounts. Consider moving half of your money to another bank offering the same rate as you're earning now.

T-bills are also safe alternatives, however, you have to lock up your money and you won't get a better return than you already are at this time. Some bonds will pay you a higher return, but you'll be taking on more risk, and you'll have to lock up your money. I suggest that you stay put for now except for moving some of your money into another bank. We are in an interesting investment climate right now. Short term interest rates are very close to long term rates. This is an anomaly. Wait until the rates begin to differ more before moving into something long term.

Answer 3

You should put the maximum into your retirement accounts before considering other investments.

I use Scottrade and Real Estate Mutual Funds UMREX and TAREX have been very good time. They are not zero risk, but dang, I have been making over 20% per annum.

Also, you can invest in Tax Free Munis, and get tax free gains.

Answer 4

There's no 0 risk my friend...in every investment or business, there is a risk...110k is no joke at this time...think carefully. Try Microloans.

Answer 5

Stock funds and Bonds are the way to go. Really safe. Do a stock fund which if it started to falter would be saved by the government. Bonds might get your money doubled in the next ten years if the market steps up. Stock funds are not as stable as bonds but after ten years you might get your money up 2 and 1/3 times. Make sure it is a stock fund you think will really pan out and is helped by the government. Try DCGN that my be good for you. It is safe by the government and it is growing slowly. In ten years you will probably be able to triple your money. Make sure you watch it and sell it when you think it has hit a high peak. It is about $5 now and once it hits $12 then you sell it. You will get double your money. Then by the stock again when it is down to 5 or 6 and start over the process. Hope this was helpful.

PS please award best answer

Answer 6

You pretty much covered your options. To invest with (near-)zero risk, you have to invest in government securities or government-guaranteed instruments (such as CDs). Money-market accounts are a viable alternative, but they include high-grade corporate securities (such as commercial paper and soon-to-mature corporate bonds), which provides a little extra return with a barely noticeable increase in risk.

Answer 7

You can use options to setup a costless collar on a promising stock.

Using Google as an example, you can buy 200 shares of Google at $470 each and collar it for a riskfree ride to $540 by end of next year.

Answer 8

Penny stocks are loosely categorized companies with share prices of below $5 and with market caps of under $200 million. They are sometimes referred to as "the slot machines of the equity market" because of the money involved. There may be a good place for penny stocks in the portfolio of an experienced, advanced investor, however, if you follow this guide you will learn the most efficient strategies https://tr.im/e3f14

Answer 9

Treasury Bill Auction Results

Treasury Direct
http://wwws.publicdebt.treas.gov/ai/ofbi...

Savings bonds:
http://www.treasurydirect.gov/indiv/rese...

Treasury notes
http://www.treasurydirect.gov/indiv/rese...

T-bills
http://www.treasurydirect.gov/indiv/rese...

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Answer 10

No such animal you have low risks - CD's , money market - or high risk such as high paying yeilds.

Rule of thumb. Lower return lower risk. Higher return higher risk..
I would split my money into three piles of equal or non-equal amounts and invest in each of the relms... at 150K I would get an adviser...