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Old 10-02-07, 05:13 PM
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skinny
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Originally Posted by tombailey View Post
For simplicity I would go with a 5 year CD. Or, especially if you might need to access the money, a savings account at an internet bank (e.g. 5.05% available at the bank I work for).

5 years may work out with stock/property, but might not.
Best advise here. Any money that you NEED at the end of 5 years is best invested in a secure vehicle like cds or possibly a bond fund, maybe a bond index fund like Vanguard's Total Bond Index fund. Stocks are generally at a high price to earnings ratio at the moment and are not a particularly good value right now. Plus, while historical trends for the long term predict stocks will produce the highest return, 5 years isn't really long term.

The S&P 500 is at the exact same level right now it was at in March 2000, and it is still overvalued when compared to historical averages. Between 3/2000 and now it has been almost 40% lower than it is now. So if you had bought $1000.00 of stock in an S&P 500 index fund in 3/2000 at some point you would have been down close to 600.00 and after 5 years, in 3/2005, you still wouldn't have been back to the level you paid for it.

Last edited by skinny; 10-02-07 at 05:33 PM.
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