Searching for low risk, high yield, low timeframe investments.

September 21, 2006 5:56 PM

I'm trying to get some decent, low risk investment income in the short term, as I am in a state where I may need access to my funds as early as 6 months to a year from now. Where should I put my money?

I'm a Canadian, so I've heard that PC Financial has a 4% yearly interest savings account (processed daily I think), which gives you free access to finances. I would be OK tying it up for up to a year, provided the yield would be better, though 6 months would be a bit more ideal. Any ideas for good places to put my funds with minimal risk?

Some side questions - what are the best long term bond rates available now? Do you know any good general websites that have high yield bonds listed?

Sorry if this is too similar to some other AskMeFi questions floating around...but my piggy bank thanks you.

posted by evadery to work & money (10 comments total)

I don't know whether Canadian markets different, but in your situation in the U.S., I would buy a six-month CD. If it's worth it for a higher yield, check out the rates for a one-year CD, too. (Do they have CDs or something like them in Canada?)
posted by Airhen at 6:37 PM on September 21, 2006

For short terms like this I recommend a Money Market fund. They have decent interest rates and are pretty flexible in terms of taking your funds out whenever you want. As a student I would always dump my semester dispersion into a Money Market Fund and then take a monthly withdrawal.
posted by caddis at 7:09 PM on September 21, 2006

Depends what you mean by high yield bonds. High yield bonds are often referred to as junk bonds because they have higher risk (and higher yields).

You can see some long term bonds/yields at this site.

If you need the money in 6-12 months, bonds are probably a bad idea because of risk and transaction charges.

You might try the PayPal money market fund if Canadians are eligible - 5.03%.
posted by powpow at 7:14 PM on September 21, 2006

There are also money market savings accounts with rates up to 5% or so. I have one from GMAC Bank that I've been happy with. The nice thing about money market accounts (as opposed to money market funds) is that they're nice and simple, they're FDIC insured so there's no risk, and you have all the access to your money you would in a savings account.

For comparing rates on MMAs, CDs, and such you might want to look at bankrate.com, though I'm not sure if they include Canadian banks.
posted by musicinmybrain at 8:33 PM on September 21, 2006

As a Canadian, are you not eleigible for ING / HSBC / Emigrant Direct online savings accounts? they are all around 5% right now, which is higher than my real bank's (Wells Fargo) CDs.
posted by misterbrandt at 8:36 PM on September 21, 2006

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posted by misterbrandt at 8:36 PM on September 21, 2006

There is a Canadian ING (www.ingdirect.ca). It's currently paying 3.5% interest on their no-fee savings account. Or you can get short Term GIC's from them at better rates (180 Days 4.00%, 270 Days 4.25% currently). They're secure because they're Guaranteed Investment Certificates, backed by Canadian Deposit Insurance Corp (CDIC) just like all major banks in Canada. major bonus: there are no minimum balances in order to get these rates.

My only affiliation with them is that I've been a happy customer for about 4 years. Funds are deposited to your ING account by transferring them from an existing chequing account at another institution, and the only way to withdraw them is to transfer them back to the linked chequing account. It does mean there's a 2 or 3 days delay on getting your money, but that's pretty liquid & it's enough of a barrier that you won't be able to spend it all on a momentary impulse. Their GIC's are redeemable, but you forfeit the interest if you redeem them early. So if you know that you won't need the money for 6 months, I'd go for a GIC. If you might need it sooner, I'd put it in the savings account.

For comparison, with RBC for a 180 day GIC, you must deposit a minimum of $5000 and it only pays 2.35%. That's a big difference.
posted by raedyn at 8:32 AM on September 22, 2006

Emigrant Direct is not available to Canadians, otherwise I'd be all over that.
posted by Big Fat Tycoon at 12:44 PM on September 22, 2006

It's too bad that the US rates are significantly better than the Canadian rates...it looks like ING Direct is the way to go for me right now (though PC has the most flexibility, and the rates are pretty close to ING's).

Thanks for your help, everyone...
posted by evadery at 3:28 PM on September 22, 2006

PayPal is not FDIC insured, but my balance there is returning more than 5% APR *and* giving me 1.5% cash back on any purchases where I use as my PayPal debit card (which is free) as my credit card of choice. Obviously, that's about as liquid as a 5%-plus investment gets...

I am very aware of the anti-pp sites out there, but pp has treated me perfectly for 4+ years (including on the two occasions when I needed their help with an external problem).

If you wanted to set up a pp account where you only buy things from places you already know/trust, and you NEVER accept payments from strangers (i.e., never use this pp account as a payment method for selling on ebay/etc.), that seems like it would be the safest plan for a large balance in pp.
posted by allterrainbrain at 6:04 PM on September 22, 2006