Out at the peak

Friday, December 09, 2005

Where to stash your money

So you are out of the housing market. Perhaps you sold in time to realize gain and are now renting. You have cash that you are sitting on and want to invest, but you are scared of the stock market and real estate.

Here are some options:
  • 6.73% I Bond from TreasuryDirect (minimum 12mo commitment, maximum $60K)
  • 4.25% Savings Account from HSBC (type in 'start' for $25 promo!)
  • 4.0% Savings Account from Emigrant Direct
And several options from Everbank:
  • Gold MarketSafe 5yr CD (100% protection, 100% upside)
  • S&P 500 MarketSafe 3.5yr CD (100% protection, 100% upside)
  • 8.24% Icelandic Korna 3mo CD
  • 5.88% New Zealand Dollar 3mo CD (Warning: The Daily Pfennig and interview on MarketWatch believe this currency will weaken later on in 2006)
  • 5.88% South African Rand 3mo CD
  • 6.66% Mexican Peso 3mo CD
(Warning: World Currency CDs are subject to exchange rate increases and decreases. If USD goes down, then you benefit.)

These are somewhat low yield investments if you are use to 12%-24% returns. However, it might be time to be cautious and just hope that your nest egg doesn't decrease in nominal value.

Here are some high risk opportunities to consider:
  • PVX, PGH, PTF -- Canadian oil trusts that have about a 10% dividend (taken from another blog comment)
  • FDG (Fording Canadian Coal Trust) -- 15% dividend (taken from another blog comment)

posted by Out at the peak at 6:40 PM

9 Comments:

  • love the concept of your blog - now go for it. focus on the 'what do you do with your cash' aspect

    here's the scenario - now give me your advice

    sold house in August($130,000 profit in 24 months). put cash in 4% savings account.

    have $80,000 in COP options, have $40,000 in fidelity minerals fund. have $5000 in apple, $5000 in SIRI, $4000 in EBAY, and $4000 in SBUX.

    Bought $15000 in EWJ and $5000 in CX today, and have march 2006 puts on FNM.

    Have around $60,000 more cash looking for a home

    Age 38, single. Thinking of moving full time to london and then italy, so worried about the dollar

    advice please - thanks

    Keith (of http://housingpanic.blogspot.com)

    God, I LOVE BEING OUT AT THE PEAK!!!!!!

    By Blogger blogger, at 11:02 PM  

  • Congratulations on getting out, Keith! I guess I don't have any more advice than what I already put in the original post.

    Maybe other readers can help you out.
    BTW: Your blog has been on my top 5 for weeks.

    By Blogger Out at the peak, at 3:14 AM  

  • perhaps you could post your top 5 currencies (that will hold their value or appreciate against dollar)

    thanks!

    By Blogger blogger, at 7:48 AM  

  • Everbank does has FDIC for their foreign CDs if you can believe it. It will protect you from bank deliquency, but it will not protect you from currency exchange rates. (Check out Everbank's world currency CD tour.) I don't know any other bank so far that offers these products, and that could be one of the reasons why it is rated #1 by Forbes.

    BTW: Since I have opened my foreign currency CDs ($65K), I'm netting a $900 gain just on the exchange rate thus far in a month.

    You are subject to income or captain gains tax with these foreign investments just like with regular savings account. It would be nice to be able to write off any loss. I'm honestly not sure about how it will be taxed.

    I Bonds look like they have good returns because the inflation rate is very high now. The base fixed rate is very low. If inflation stops its pace, I Bonds can start to dive.
    http://www.publicdebt.treas.gov/sav/sbirate2.htm

    By Blogger Out at the peak, at 6:50 AM  

  • I get mixed messages about which currencies are the best hedges against the dollar.

    You could say Asian currencies should benefit the most from a USD decline. But since Asian exports rely on the US consumption, the Asian currencies might be pulled down with it. Yen's rate has been 0% for a long time, but next year they might start increasing it to 0.25%. The yields are really bad, but the currency strength might go up.

    And supposively Icelandic krona is historically strong against USD, but as soon as I got in it, it was my only currency that went down. It has recovered half the loss so far.

    Australia and UK are already in their RE down cycle, but my AUS is up. I don't have anything in Euros because the CD yield is too low, so I don't watch that.

    New Zealand is supposively in a bad bubble too, and S&P 500 doesn't like their debt raking (regardless of its peanut size compared to US). They've been cranking their interest rate up to stop inflation. My NZD is still up, but I have to be cautious.

    I hear Peso is stable right now, so I'm going to buy that in 2mo after my Net Checking promo rate of 4.5% is over.

    By Blogger Out at the peak, at 7:05 AM  

  • I'm thinking canadian dollar - #2 trade surplus with US (after China), good economy, good leadership, stable

    thoughts?

    By Blogger blogger, at 10:58 AM  

  • The Canadian dollar is not a bad choice. I do own this as well indirectly with Everbank's Commodity CD. It is 1/4th Canadian. If you get a currency CD independently, the interest is only 2% 6mo CD and 2.25% 12mo CD.

    The Commodity is a really good choice as it is 1/4th AUD, 1/4th CAD, 1/4th NZD, and 1/4th ZAR. The over all yield is currently 4.32% on top of the USD fluctuation.

    By Blogger Out at the peak, at 3:09 PM  

  • JT: If your money market and CDs are 4%+, you are in good shape. The options mentioned here are risky, and I find myself checking up on every account more often than I thought I was going to.
    My current estimation is that I'm breaking even. I'm hopeful that 2006 shows a clear trend.

    My biggest winner is an unmentioned stock, GBVS. They make my favorite new product: EON Water (structured bottled water). It is up 45%. My problem is exit strategy.

    By Blogger Out at the peak, at 12:57 AM  

  • I never updated on GBVS. I got out after 50% profit. They've gone down past my entry point since. I really enjoyed their product, but it is so expensive.

    By Blogger Out at the peak, at 7:02 PM  

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