August 27, 2008 • June Walbert
Q: Yes, I'm trying to see what’s the best thing to invest in that will provide me a quick and large return. I currently have about $10,000 to $20,000 to invest. I would like to invest in something for less than 4 years and without any chance of losing money.
-Timothy
A: Isn’t that what everyone wants? Big returns and no risk. I’m sorry to tell you that it just doesn’t work that way. Wish it did, but it doesn’t. In fact, the higher the returns, the more risk you have to take (read: bigger chance of losing money). That’s especially true in the short term like, in your case, a less than four-year time horizon. So, for short-term savings I would strongly recommend you err on the side of being conservative and invest in something like a Certificate of Deposit or a high yield savings or money market account. No, the returns aren’t huge, but you minimize risk to the degree possible! Investing in the capital markets is a long-term proposition of at least five to seven years. The longer you have, the better your chances are to make a decent return, minimize losses and realize your goals.
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June Walbert is a CERTIFIED FINANCIAL PLANNER TM practitioner with USAA Financial Planning Services, one of the USAA family of companies.
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