I need help with Investments - any finance experts here?

No that's exactly how banks make money.

lt man wrote:

I am saving up to buy a house. I have a substantial amount of money sitting in my general bank savings account. I'm still a few years away from being able to buy a house, but that money is earning basically no interest.

What should I do to maximize the earnings of that money without taking any risk like playing the stock market?

The system is broken when the bank charges you very high interest rates but you only earn less than .01% interest from them.

What are you talking about? For one, it’s the Federal Reserve that has made savings rates so low. For two, mortgage rates are incredibly low. It’s great for younger folks buying homes. It hurts old people who want a safe place to stash their retirement savings.

Discover, Ally and a few other online banks offer 1.0x% interest accounts. I am a long time customer of discover and they have great service as well.

As to your question there is no great answer. If you need access to the capital in the next 1-3 years there is no risk free place to park it and see what you would consider acceptable returns.

One comment, I have always felt that owning property as a financial milestone was a bit dumb. I would much rather give a compounding portfolio/asset time in the market. I also suspect you are quite young. Don’t underestimate how much home ownership complicates your life and ties you down.

lt man wrote:

I am saving up to buy a house. I have a substantial amount of money sitting in my general bank savings account. I'm still a few years away from being able to buy a house, but that money is earning basically no interest.

What should I do to maximize the earnings of that money without taking any risk like playing the stock market?

A five year Treasury bond yields 0.30% to maturity right now. There really isn't a no-risk way to get a higher yield. In my opinion, 0.30%/year isn't enough to fool with.

Why can't you buy a house now? Mortgage News Daily shows current 15-year mortgage rates at 2.43%. Put down 20% and buy a house. In 4 or 5 years, the appreciation of the house might be a better investment that 0.30%/year even if you wind up selling the house and buying another house.

Just don't be ignorant about buying a house. If you're not sure you're going to like it a few years from now, make sure it's a good investment, not just a house you like.

I bonds will give you between 2-3%, but you can only put in $10,000 per year and you have to leave it in a minimum of 1 year. Put in 10,000 now and 10,000 in January. If you’re married you can do the same with 20,000 in yours wife’s name.

I stick most of my emergency fund money in CDs. If you’re not going to touch it for a couple years, you’ll get 1%+, and it’s FDIC insured (zero risk). Check bankrate.com for the highest rates. It’s usually at an online bank like Ally or something.

The problem is paying 1000+ a month for rent. That money just goes away. I'd rather have my monthly payments go towards owning a home.

old news wrote:

I bonds will give you between 2-3%, but you can only put in $10,000 per year and you have to leave it in a minimum of 1 year. Put in 10,000 now and 10,000 in January. If you’re married you can do the same with 20,000 in yours wife’s name.

I bonds are yielding ~ 1% right now.

I follow Neil McCoy-Ward on YouTube. Even though he is British, he gives insightful opinions about the US, Canada, Australia, NZ, and Great Britain. He's great because he's not trying to sell you anything.

He's doesn't agree with buying a house until at least spring 2021. There's going to be a crash in all the countries mentioned above.

He also thinks bonds are a terrible idea right now.

You can put 10% into physical silver, 10% into physical gold, 10% into one good company in the stock market (such as Amazon), 10% into another good stock, etc. etc. Also keep some cash.

I'm up 70 percent in the market this year so far.

Ok... that is a completely irrelevant fact.

That said, glad you can finally afford to take the family to the Cheesecake Factory.

Plus I've never put money into bonds or into bank CDs.

dunes runner wrote:

I'm up 70 percent in the market this year so far.

How did you do Thursday and Friday?

Is gold really something people should consider? I always see commercials about buying gold on TV but I thought those are just scams.

I’m on my 4th house since 2001. I made money on all of them. No crazy returns, but better than renting. The current one only on paper. This is the first one that I’m doing a 15 year mortgage and paying an extra $1K per month. It will be paid off in less than 8 years at this point right before I turn 50. I don’t plan to move again so I don’t really care what my home value is.

The house does tie you down a bit if you need flexibility, it’s not for everyone. But if you think you want to go for it, rates cannot go much lower. I do think there may be a decline in home prices, but I’ve thought that since I purchased 4 years ago.

As far as investments, put some in the market if you already have a solid savings built up. If not, build the emergency fund. There’s nothing wrong with having a lot of cash. I’m still only ~60% invested in equities. I think the market is frothy right now, but I don’t need that money for another 20 years or so.

With basically 0% interest from the bank, I keep a lot of cash in my house.

In short, build a cash fund, pay down debt, invest what you don’t need anytime soon. Buy a house when you are ready to settle in.

lt man wrote:

The system is broken when t̶h̶e̶ ̶b̶a̶n̶k̶ ̶c̶h̶a̶r̶g̶e̶s̶ ̶y̶o̶u̶ ̶v̶e̶r̶y̶ ̶h̶i̶g̶h̶ ̶i̶n̶t̶e̶r̶e̶s̶t̶ ̶r̶a̶t̶e̶s̶ ̶b̶u̶t̶ ̶y̶o̶u̶ ̶o̶n̶l̶y̶ ̶e̶a̶r̶n̶ ̶l̶e̶s̶s̶ ̶t̶h̶a̶n̶ ̶.̶0̶1̶%̶ ̶i̶n̶t̶e̶r̶e̶s̶t̶ ̶f̶r̶o̶m̶ ̶t̶h̶e̶m̶.̶ NIM is at all-time lows due to extreme levels of Fed bond purchasing

Fixed it for you

Ghost of Igloi wrote:

dunes runner wrote:

I'm up 70 percent in the market this year so far.

How did you do Thursday and Friday?

Anyone with just a baby basic sense of investing knows that looking at 1 or 2 days of how an asset performed is ridiculous. That person doesn't have the slightest inkling about investing. With investing you always want to look how an asset does over the long haul.

Sorry for the snark, but spreads are ridiculously slim and banks aren't making that much money off of traditional lending right now. The 30-year and mortgage rates are still at ATLs.

If you have <2 years until your purchase you're better off just keeping your money in CDs and high-yield savings (the latter of which will give you 80bps at best).

If you have 3+ years you can buy some mutual funds or ETFs. No guarantee you'll have more money than when you started though.

Calamity Joe wrote:

Ghost of Igloi wrote:

How did you do Thursday and Friday?

Anyone with just a baby basic sense of investing knows that looking at 1 or 2 days of how an asset performed is ridiculous. That person doesn't have the slightest inkling about investing. With investing you always want to look how an asset does over the long haul.

But Igy’s been calling for a market crash since the DOW was at 15,000. Now that’s it nearly doubled, his only solace is the occasional down days.

That said, a real crash is coming eventually. But you miss a lot of opportunities waiting for it (I know from experience).