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Author: JEFF68005 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35367  
Subject: Poll: 5 year investment - Where? Date: 2/1/2008 2:31 AM
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You have just received an unexpected $10,000.00 prize.
You decide to invest it for at least 5 years.
... but how?
Bank or Credit Union Account - Savings or CD
Mutual Bond Fund
Individual Bond
Stock Mutual Fund
Stock(s) Which ones?

Click here to see results so far.

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Author: PCScipioA One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22916 of 35367
Subject: Re: Poll: 5 year investment - Where? Date: 2/1/2008 9:13 AM
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Go with a bank CD or "high-yield" savings, but on CD don't lock in long term. Eventually, the Fed will be done bailing out the banks and interest rates will start to rise to deal with inflation.

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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22917 of 35367
Subject: Re: Poll: 5 year investment - Where? Date: 2/1/2008 9:39 AM
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Go with a bank CD or "high-yield" savings, but on CD don't lock in long term. Eventually, the Fed will be done bailing out the banks and interest rates will start to rise to deal with inflation.

People who tried this last time around lost out, because rates stayed down too long and the yield curve was too steep. What probably works better if taking the CD/Savings route is to get the best 5-year CD rate you can with a minimal penalty for cashing out early (usually 6 months interest), then cash out if rates do go up enough. I did do that with a couple of CDs last time around. This can all be done with cold calculations: how much higher and for how long would you need rates to be for staying short to work.

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Author: PCScipioA One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22918 of 35367
Subject: Re: Poll: 5 year investment - Where? Date: 2/1/2008 9:44 AM
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You may be right, Loki, we could be in for a long stint of trouble in housing/financials.

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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22919 of 35367
Subject: Re: Poll: 5 year investment - Where? Date: 2/1/2008 10:23 AM
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(Loki:)People who tried this last time around lost out, because rates stayed down too long and the yield curve was too steep.
________________________________
I was one of those people. I was CONVINCED rates were headed back up. And of course, I was right eventually. But I was thinking months, and it turned into a lot of months.

Contrary to advice I got here, from Loki and some other folks, I hung in there with the money market, when I would have been better off with a CD or T-note ladder.

Bill

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Author: KingOfTown Three stars, 500 posts Old School Fool Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22920 of 35367
Subject: Re: Poll: 5 year investment - Where? Date: 2/1/2008 10:51 AM
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I voted for stock.
Probably BAC but certainly a dividend paying large cap.
BAC current yield is about 5.75% and I'm confident they will be still here and at least one of our largest banks in 5 years.

Regards,
Les

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Author: ngcpa Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22921 of 35367
Subject: Re: Poll: 5 year investment - Where? Date: 2/1/2008 11:22 AM
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<<< BAC current yield is about 5.75% and I'm confident they will be still here and at least one of our largest banks in 5 years. >>>

If Countrywide doesn't do them in.
Norm

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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22922 of 35367
Subject: Re: Poll: 5 year investment - Where? Date: 2/1/2008 1:21 PM
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I think the fundamental problem with a poll like this (and most polls) is there is no context. The choices are not comparable (like choosing between a CD and Treasury or even short term versus long term). For someone early enough in an accumulation phase or in need of better than 1% plus over CPI-U returns (10-year TIPS), stocks over bonds/fixed income would certainly make sense, though picking individual stocks is a whole different department than trying to understand bonds or asset allocation.

For someone like myself, who doesn't need or want to risk more in the stock market, the question remains what the optimal choice in the bonds/fixed-income universe at this moment. Sometimes this choice is easy. Right now it is not. There is a steeper yield curve, so short term only makes sense if you're convinced rates will go back fairly quickly and fairly steeply, and I definitely do not see rate cuts and politically correct "stimulus" (i.e., tax cuts instead of WPA) ramping up the economy, though I suppose Microsoft buying Yahoo may do it (NOT!).

It is possible to get more yield on bonds with more risk. The question then is how much risk is it worth for how much yield. I'm far from convinced the risk premium on low investment grade bonds, let alone junk, is sufficient, though careful bond picking may be worth considering. (Unfortunately, both Jack and Charlie, our resident picking experts of yesteryear, have long gone).

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