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Best short term investment?

4,347 Views | 23 Replies | Last: 7 yr ago by AgBank
Goose06
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AG
I have a chunk of cash that is like to have earn more than my mortgage interest but would also like to have the ability to make it liquid somewhat painlessly. Id prefer something safer than equities for this money and don't want to take interest rate risk and invest in a bond fund that will move with interest rates. If I could buy 5% yielding municipal bonds with 6, 12 and 18 month maturities that would be great, but I have no idea how to do that or if that is an option.

Suggestions?
SparkE
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Invent a time machine.
grd89
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AG
If you're looking for municipal bond investments, then there are many ETFs you could invest in (i.e. MUB, SHM, HYD)
Goose06
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AG
quote:
If you're looking for municipal bond investments, then there are many ETFs you could invest in (i.e. MUB, SHM, HYD)


Are there ETFs that have set maturities? I'm guessing no. I'm guessing you can't hold an etf to an 18 month maturity, and therefore you have interest rate risk, right?
Old Buffalo
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AG
Wouldn't a 5% coupon at the short of maturity issue at a low rate (premium)? I don't think you're going to get an on the run bond at face value.
Goose06
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AG
I suppose it would take a higher coupon if current rates are lower. Your bond math is accurate. Doesn't mean a 5% yield isn't available on a short term maturity, it just is default risk instead of interest rate risk.

Is there a way to spread that risk across multiple bonds like you do in a fund but still hold all of them to maturity?
Bayou City
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Copp
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I have private lenders for real estate projects. These are single family homes we flip. I buy about 50 houses a yea, so this is not a side job. We are real estate professionals. Anyways, the lender gets a note and deed of trust against the property to secure their position, and the term of the loan is 12 months. The rate on the note is fixed and exceeds the rate you are seeking. We have a number of private lenders we borrow money from, but we are always interested in more. Let me know if you are at all interested.
Business Time
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AG
Copp, I'm interested in private lending. Where are you investing? Send me an email info@Maroonspiderllc.com

Thanks
Hanrahan
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AG
Also interested in your hard money lending.

centerpoleproperties@gmail.com
Flogi
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Non existent interest rates sucks. And with the massive credit expansions, increasing rates will crash everything.

Gamble away folks!
SnowboardAg
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AG
Nm
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by user
Goose06
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AG
quote:
What you are seeking does not exist. All bond ETFs have some level of interest rate risk. If you invested in a single muni bond with a 12 or 18 month maturity you would get no where close to a 5% return. 1 year CDs are about 1.25% best case.


This was what I figured... Will have to decide how I value principal risk vs liquidity vs other factors with this particular money and go from there.
Waltonloads08
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AG
quote:
What you are seeking does not exist. All bond ETFs have some level of interest rate risk. If you invested in a single muni bond with a 12 or 18 month maturity you would get no where close to a 5% return. 1 year CDs are about 1.25% best case.


jake is right. that being said, investing in a combination of short term corporate and govt bond etfs will at least give you better than cash yield with relatively low principal risk. vanguard is the ticket there. that plus TIPS is what i do with my cash savings. that being said, rates are unlikely to go much lower, so now isnt a great time to buy for you..
Bayou City
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If corpus preservation is the key, NO Muni ETF will provide the downside capture ratio that is equivalent to physical paper. When you hunt yield, you set yourself up to get burned.

Roll 3-6-9-12-18 months muni's, preserve any NOL's for a higher interest rate environment, and capture an adjusted yield of 1.2-1.4%. That's not a bad cash strategy to tread water until the markets become a little clearer.

I build muni ladders and trade muni's on a daily basis, and MYD, MUB, etc all have a lot of yield chasing under the hood. Last time I checked, their duration was in the mid teens with significant maturity dates in the 2040s+.

I've been getting 1.29-1.75 on AAA TX 2017s and 2018s. Ive been getting about 5 bps lower on pre-refunded.

I don't go into IL unless it's O'hare airport, no PR, no MA, no DC, no CT, no NY, limited CA. When you take those states out, the yield curve falls dramatically.

Another aside, use YTW not YTM on muni's.
khkman22
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AG
VWINX has worked out pretty well for me over the past 16 months. About a 9% total return. The first 6 months or so were not good and I barely broke even after dividends, but I think it's a pretty good option if you are looking at about 5% return.
Waltonloads08
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AG
I've never spent much time on Muni's, though later on in life my tax bracket (if i do well) will make them very attractive.

You seems pretty well versed, what exactly do you do? This a job?

Bayou City
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Portfolio Advisor
Bayou City
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With a lot of people chasing income, one space that is providing a little more juice for the same product is the zero coupon space. Purchase at a discount, no amortization of premium, and the interest portion of the appreciation is tax free so its not a potential tax headache. Good choice for people wanting to fund education target dates without submitting everything into a 529 with expenses, A/C class shares, and limited investment options. Plus, the funds aren't required to be used for education expenses.
treetop flyer
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Copp what's the loan to value?
Copp
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70%
ktownag08
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AG
Copp,

Please shoot me an email. Interested in the hard money lending. TexAgs handle @ yahoo dot com
remko12
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AG
Copp - could you shoot me the info as well? Email is rhinloopen at gmail.

Thanks.
AgBank
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AG
Quote:

TIPS

You invest in TIPS? Yikes. I got out of those years ago. I didn't realize people were still investing them.

Do you know something that I don't?

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