Best place to invest small amount of money

amother

Green

Sun, Mar 05 2017, 2:20 pm

I don't have large amounts but I have a small amount (around $40,000) for a few years
I don't want to take big risks.
now it's just sitting in the bank making very small interest.

what is the best thing to do with it?

doctorima

Sun, Mar 05 2017, 2:55 pm

Put it in a Vanguard/Fidelity/Schwab index mutual fund. The most common is an S&P 500 index fund, though that may be too risky for you. They also have bond index funds, which are a well-diversified balance of stocks and bonds that would probably best suit your situation.

amother

Mint

Mon, Mar 06 2017, 1:56 am

You need a financial adviser. Who ever you work with should be doing a risk profile with you to determine what investments makes most sense for you. Personally - I would trust anyone who works for a bank. This isn't someone who is going to be making investment decisions for you, or moving around your money without your permission, just someone who can give you a little education and can open an investment account. (they should also be able to addess whether there are any tax efficient strategies for you).

Very common right now, and 'low fee' are ETFs. they are like classic 'mutual funds' in many ways, but have a cheaper fee structure. Which ETF to invest in is a question of your risk comfort level. You may not be comfortable to invest in a ETF or mutual fund at all. However, there are other investments, like TBills to consider.

doctorima

Mon, Mar 06 2017, 10:38 am

I would say not to trust the people who work for the banks, because they have strong incentive to put you into very high-fee, high-commission load funds that will take a larger chunk of your money than necessary and put it straight into their pockets.

You can just go to the website of Fidelity/Schwab/Vanguard and open an account, send in a check or electronically wire the money, and then put it into index funds. If you're uncomfortable doing this, since it can seem scary and overwhelming, you want an independent investment advisor who doesn't get paid by anybody but you, and will therefore have no biases other than what's in your best interest. Feel free to PM me for the name of somebody great who I recommend highly.

amother

Periwinkle

Wed, Mar 08 2017, 8:48 am

amother wrote:

Personally - I would trust anyone who works for a bank.

NOW WAY!

doctorima wrote:

I would say not to trust the people who work for the banks.

YES!!!!

Ive heard of many people who have lost major money taking bank employees advice on investments. These people are not getting the greatest salaries and are not that experienced. Theyre out for the banks good. They talk you out of FDIC insured accounts and then its too late.

SixOfWands

Wed, Mar 08 2017, 11:14 am

amother wrote:

If you're going to invest money, you have to accept the fact that you may lose it. Your investment strategy should take into account how risk averse you are. If this is money that you absolutely need in the near future, then your investment strategy should be very conservative. If this is money you're saving towards retirement, and you're 30, it can be riskier ... riskier than if you're 60, at which point you need to be conservative.

You can leave all of your assets in FDIC insured accounts. But the current interest rate is much lower than the rate of inflation, meaning that you are losing money.

There are excellent financial advisers at banks. There are probably bad ones as well. Same everywhere else. Get recommendations and talk to a few. Make sure that they are taking into account your goals and your comfort with market volatility. And that they're not just going for the commission.

Although if it were me, with such a modest sum, I'd just put it into a market index account with Vanguard. Not intended as financial advise.

amother

Ecru

Wed, Mar 08 2017, 11:55 am

I agree with the posters who have recommended vanguard. personally that's where we invest and it's more money then that but 40,000 is great, when you said small I thought you meant a lot less then that. We also invest the money that we set aside for our kids there which is less then that. There's a form to fill out that based on your answers they tell you what type of mutual funds to invest in- meaning how much risk you are willing to take etc...

doctorima

Wed, Mar 08 2017, 2:58 pm

Their web page says that they have a minimum investment of 50k, and to be eligible you must either have $1M besides your house, or make $200K+ per year, which won't help OP.

Their performance info also shows that they've only been around for about 1.5 years, which would make me nervous. I've also never heard of their auditors. They may be completely legit, but there have been enough horror stories in the frum community that I would be very cautious.