Spencer Sherman and The Cure For Money Madness

Question and Answer

Posted on February 25th, 2009 in Investing, Tips

1. I have some money in an e*trade savings account that was going to be invested, but decided to wait and research best investment strategy for these times. Where is the safest place to keep cash reserves right now?

The safest place for short-term money is in Treasury money market funds like the one that Vanguard offers.  The safest place for long-term money (money you know you won’t spend in the next 5 years) is in a diversified portfolio of domestic and international equities along with high quality bonds.  The big risk to investing long-term money in treasury bonds is inflation; this means that your money may have less purchasing power over time.

2. If you had a sum of money to invest right now and had to choose between real estate and a diversified investment portfolio, which direction would you go?

Always do the diversified portfolio as long as it includes 14 asset classes and not just the usual 5 asset classes.  This is the money madness mistake that we all have made, including the Wall Street know-it-alls.  Never put all your eggs in one (or even several) baskets.  Nobody can predict the future, so the diversified strategy is the best, albeit, the most boring strategy.  Boring is looking really good right now!

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  1. Susanne Wilson posted the following on March 25, 2009 at 10:55 pm.

    I would just like to comment that I had a terrible time getting my money out of an E-trade account. It took nearly three months. The customer service was atrocious. The only way I could get anything to happen was by writing letters and then following up my letter with a phone call. I opened the account by completing the form that was posted on the E-Trade web-site. After two months or so, they refused to do anything until I completed a new application form because I had completed the “wrong” form before – of course, nobody had informed me of this for weeks. Some of their customer service reps were based in Manila – while they were terribly polite, they were completely ineffectual.

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