If you had 200k?

Question

in the bank making 5% interest a year would you leave it there or would you put some into funds and stock or are these risky i dont no much about them. How much do they make

Answer 1

I would invest it in forex trading. Forex trading is challenging and fun. It gives great return on any investment.

Answer 2

disregard that answer above.

5% is a decent rate.  Although I would consider splitting that asset.  Now there are certain factors that need to be taken into consideration, risk tolerance, liquidity, etc...  however I would leave an annual replacement salary in the bank.

If you make 75k/yr leave 75k in the bank.

The rest I would diversify slowly over the next 6 months, using dollar cost averaging strategies to position myself across mutual funds, stocks, bonds etc.

Remember that your 5% bank account, you are not making money.  You have to pay taxes on that money (lets just say you are in the 25% tax bracket).

This makes your total return on this investment 3.75%.

But you did not take into consideration inflation this year.  Forcasted at 4.25%-5.00%  Lets just call it 4.5% for the math.

After all was done between taxes and inflation, you guaranteed yourself a loss at the bank of about -.75%  not such a good deal anymore, right?

Answer 3

Get your money out of the bank.  There are mutual funds out there that pay a conservative 7% (I'm not telling which ones, but i have a portion of my money there) and it's not taxed at income tax rates.  Dividends are a beautiful thing, and they get taxed at dividend tax rates (15%).  Remember the purpose of banks. It's not an investment house, they loan money.  If you give them 200k and they're paying you 5%, what do you think they're making on your 200k?  I'd guess around 7%.  How do you think they're doing it?

Answer 4

I'd put it in a variety of mutual funds - diversify - some index funds, growth funds, euro-pacific emerging markets, etc.