Just to let you know, I am NOT an investing specialist. But I have
done my own research on this in the past. For your short term
investing needs I would suggest the following two options.
1) Money Market Funds - These provide very ready access to cash and
have a very good return (for a short term investment). Interest rates
are variable and you may need to shop around a little bit. I do not
believe that they can lose money (I have never actually seen a money
market fund that loses money). I could recommend Netbank
(www.netbank.com) for money market investment as they have a very nice
(2.35%) APY (as of today). You may be able to find a nice return at
your local bank or credit union as well.... shop around and be wary of
Keep at least the minimum balance in a money market fund and you will
normally not incur fees (NetBank's minimum is around $100, but the
minimum balance that does not incur fees is $250). Generally you get
to make up to 6 transactions per month on this type of account without
incurring fees. Beyond that you pay a fee of approximately $5-10 per
2) Mutual Funds - A lot of these are losing money right now, so be
very careful. I would only recommend these if you will be keeping
money in them for at least 3 months or more. You can get money out of
these pretty readily (but not immediately, like the money market fund)
because they operate just like a regular investment account. Getting
money out in about a week is possible. You buy and sell shares using
a broker such as E*Trade, AmeriTrade or others.
The following is a good site that can educate you regarding mutual
Mutual funds are a much more complex animal that are money market
funds. You definitely stand a chance of losing a lot of money in this
ecomony by investing in mutual funds, but there are some that can give
you substantial gains nonetheless. Compared to money market funds,
mutual funds can earn returns of 12 to 20% at the high end and -12 to
-20% at the low end. Like the old saying goes, with greater risk lies
greater reward... but the risk is what you need to balance.
Perhaps you would be more comfortable by investing a little bit (say
$10,000) in mutual funds and the rest in a money market account. The
more you diversify and spread out the risk, the lower your chances of
losing money. Investing in real estate would definitely help in
spreading out the risk.
I hope that this answers your question, please request a clarification
if you need it. Don't forget to rate the answer.