Comments on: Diversifying Beyond Asset Allocation

By: DDFD at DivorcedDadFrugalDad

DDFD at DivorcedDadFrugalDad — Mon, 09 Feb 2009 12:00:03 +0000

Chiko–

Why are you promoting a penny stock here?

By: Chiko

Chiko — Mon, 09 Feb 2009 02:15:07 +0000

Stocks, yes, that’s my thing. I think this is the best time to invest, you can make a lot of short term profit from the instability of the market. Keep your eyes on DCGN ($0.28) this week.

By: Kristy @ Master Your Card

Kristy @ Master Your Card — Sun, 08 Feb 2009 22:37:06 +0000

I think these are all pretty standard suggestions that most investment bankers might make when considering what to do with funds outside of the stock market; with the possible exception of P2P lending. I’ve yet to get into this myself. I’ve found that Texas limits the interest rates that we can charge, so someone with a lower credit score that I might lend to at 17% won’t let me go any higher than 9 or 12%. That’s not a level of risk I’m willing to take when the individual has poor performance with others. Of course, this could be my background in underwriting rearing it’s head.

I like the CD ladder and do that frequently. Something else I do, and I only recommend this for those that have the means to do so, is arbitrage. I use my empty credit cards and 0% rates to my advantage. I usually only make a couple hundred a year off of this, but it’s still free money, so why not. It’s not exactly up there on the beaten path with what to do to diversify your portfolio, but it’s just something I add to the mix.

Thanks for the tips!

By: GFish

GFish — Sat, 07 Feb 2009 19:24:27 +0000

Instead of CDs see if there is a Rewards Checking account in your area.

http://www.money-rates.com/rewardschecking.htm

I recently opened one up in Iowa that is paying 4.5% interest, easily beating CD rates. These typically have some rules to them – like online statements only and a certain number of check card transactions per month. But nothing that I wasn’t already doing with my .2% checking account.

So I moved my 2.4% ING savings and my old checking account to my new 4.5% checking account, which will generate a decent amount more of income.

By: almost there

almost there — Sat, 07 Feb 2009 04:05:07 +0000

Pev, I have been investing the almost the max IRA contribution in growth mutual funds since 1984. Based on my 61K contribution, I took the income and figured out a 1.7% return over these past 25 years. My wife has been investing the almost the max since ’89. Her return is better, 2.7%. This does not count dividends added over the years. Just what was invest vs what I have today. I decided to invest out remaining IRA contributions into cds starting this year. a 4.39% apy for the next 7 years on this years contribution is better that I did listening than I have done listening to the wall street types. In hindsight I would have done better putting the money into cds from the start.

By: Sara at On Simplicity

Sara at On Simplicity — Sat, 07 Feb 2009 03:30:32 +0000

We’re CD laddering as well. The rates pretty much stink, but they’re better than savings accounts. We finally chucked our separate savings account when new fees kept getting tacked on each month. At least CDs are less punitive!

By: Pev

Pev — Fri, 06 Feb 2009 23:39:56 +0000

Please explain, I don’t understand how “cold, hard cash” is a way of diversifying an investment. If you just have cash stored away somewhere you’re not really investing so why would this be considered diversifying? Plus with inflation and the dollar devaluing – it doesn’t sound too good.

By: DD

DD — Fri, 06 Feb 2009 19:46:14 +0000

@ Dave

That is totally what I need to force myself to do. For some reason I get emotional with my investments and hold on to them way too long. Especially if it’s been a winner in the past.

Setting up a rebalance plan would fix that.

Thanks

By: The Personal Finance Playbook

The Personal Finance Playbook — Fri, 06 Feb 2009 16:23:34 +0000

I think TIPS are a good place to store some of your cash. They help deal with the essential problem associated with holding cash – inflation. Good post.

By: Suburban Dollar

Suburban Dollar — Fri, 06 Feb 2009 01:27:45 +0000

I have heard a lot lately about Lending Club. I am not quite convinced that it is what everyone says it is. Maybe I will win one of those $100 contests floating around and have some money to play with. Great post, CD Ladders are great way to increase the returns on you stagnant cash.