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How would you handle the cash?

X

Xsorovan

Senior member
Hey everyone,
I'm curious if you were given 25,000 USD and told at the end of 3 years you could keep anything you made by investing that money, but had to give the 25k back at the end of 3 years, what would you do with it to maximize the amount of cash you'd have at the end of the three years?

 
The low-risk method would be to buy US Treasury bonds. Or for more high-risk you can invest in mutual funds, then maybe low-cap mutual funds, and finally you can try to milk the stock market yourself.

I'm conservative so I'd go for the bonds.
 
If you end up with less than $25K do you have to pay back the difference? The answer to this questions makes all of the difference in the world.
 
Originally posted by: timswim78
If you end up with less than $25K do you have to pay back the difference? The answer to this questions makes all of the difference in the world.
Click to expand...



That's what I was thinking.


Tom
 
buy $25k worth of gasoline, then resell when the prices skyrocket. if you buy the good stuff at $2.50 a gallon and sell at $3 a gallon, you can make a cool $5k
 
Originally posted by: bonkers325
buy $25k worth of gasoline, then resell when the prices skyrocket. if you buy the good stuff at $2.50 a gallon and sell at $3 a gallon, you can make a cool $5k
Click to expand...
Gasoline has a shelf life of approximately 6 months to 1 year, depending on storage conditions.
 
Originally posted by: bonkers325
buy $25k worth of gasoline, then resell when the prices skyrocket. if you buy the good stuff at $2.50 a gallon and sell at $3 a gallon, you can make a cool $5k
Click to expand...


That's actually a really good idea. However, I think you would need a licsense to hold onto something like 10k gallons of gas. And then you would need to invest in everything to hold that much gas. (Unless Ford has come out with that 10k gallon SUV yet...)

 
Stocks and mutual funds involve risk of short-term loss. Even the safer stock based investments like an S&P 500 index mutual fund (such as VFINX) can lose money over 3 years even though over 10 years you'll almost certainly earn an average of 8% or more.

So a CD at ING Direct for around $2800 profit with zero risk.

In my own brokerage account I have S&P 500 fund shares, a small-cap value fund from Royce, a worldwide index fund from Vanguard, and will be adding another small-cap fund soon from probably Vanguard or Dreyfus. But my investments are long-term not just 3 years.
 
Originally posted by: Eli
Originally posted by: bonkers325
buy $25k worth of gasoline, then resell when the prices skyrocket. if you buy the good stuff at $2.50 a gallon and sell at $3 a gallon, you can make a cool $5k
Click to expand...
Gasoline has a shelf life of approximately 6 months to 1 year, depending on storage conditions.
Click to expand...

It'll work far longer than that though, just won't be as potent.... As long as whoever is buying doesn't know... 🙂
 
If you are willing to risk breaking even, you could work the math so that you invest a very small amount in riskier stuff and put the rest into a CD or similar so that the small amount was covered by the CD payoff in the event that it didn't pan out.
 
if you spread it over large cap, small cap, international and short term bond funds, the risk would be minimal since only one of those sectors would realistically take a dive in the near future. Over 3 years that risk is even smaller.
The general consensus now is that large cap growth funds are undervalued and small cap is about at the end if its run. I would do 1-2 large cap index funds, 1 midcap/small cap index funds, 1 international and a bond fun. Index funds have smaller expense ratios and are generally less riskier than managed funds.
Try finance.yahoo.com and look for top rated funds by category. However I would stick with Fidelity or Vanguard.
 
You can still make a profit, especially if they build around you, and you hold out for 3 years. You could probably turn your dinky $25,000 lot into $100,000
 
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