Subscribe
We have received numerous phone calls lately from folks with CDs maturing. Most of these people are receiving rates markedly lower than their initial CD investment. On our radio show, we have spoken about matching your objectives with your investments. For some (perhaps many) continuing with CDs might be the most appropriate avenue - we outlined five investment ideas on the radio show- here they are (from least risky to most ):
1. CDs- OK, the rates are not what you want but inflation is muted too. Stick with the CDs if you want a GUARANTEED rate of return and are unwilling to accept any risk of princiapl and want to know exactly when your investment matures. Disregard the relatively low rates.
2. Rates are low and you have (or want) to get better returns but want minimal risk. We did a morningstar search for funds and came up with 5 that have had no losing years since before the year 2000. Sprinkle some of these in with a guaranteed CD — some names include Payden GNMA, Pimco Total Return and Vanguard GNMA.
3. If you are willing to take a bit more risk then consider other fixed income mutual funds. Some names that have done well (remember past performance is no indicator of future results) include Loomis Sayles Bond, Oppenheimer International Bond and Janus Flexible Income. These have all experienced down years over the past decade and might possess some high yield or emerging market debt.
4. Consider some broad based stock market alternatives. The S&P500 etf (symbol spy) or the Schwab 1000 fund (symbol SNXFX) might make some sense if this is longer term money and you are willing to endure the ups and downs of the stock market. The stock market can be rewarding for long term investors but it can try your patience. (witness late 2008 and march of this year)
5. For even more risk, volatility and potential for reward investors might consider managed mutual funds - a couple of names that we favor include Baron Asset (symbol BARAX) and Oakmark (symbol OAKMX).
Surely investos can mix and match these categories and MOST definitely consult your investment advisers before committing any money. Generally speaking, the potential for greater return is met with more risk NOT less!