Expert: Paul Henneman - 7/25/2006

Question
I would like to invest $5,000 in a safe vehicle, but I would like the highest return for my money.  I don't mind not being able to access it for 1 - 5 years.  What would you suggest?

Answer
Mary,
   Thank you for your question! I think that a certificate of Deposit (CD) would be your best bet. These can be purchased for one year, two year, or longer terms and you should be able to get just over 5% annual return on the CD. Interest rates do change over time, but once you purchase a CD that rate is locked in. Rates also vary depending upon where you get the CD, so I would suggest shopping around a little. I bank online at www.NetBank.com and their two year CD rate is currently 5.4%, to give you a benchmark for your comparisons. I think that is a relatively good rate. Be sure to ask if there are any fees associated with buying the CD before you act if you decide to do it.
  Realize that 5% is not much in overall returns. Inflation will take out as much as 2 or 3 percent a year. But this is really the highest yield safe investment that is available. Anything that can offer higher returns, such as bonds, mutual funds, or stocks will have risk involved.
   I do recommend the book "Investing for Dummies". While not exactly a flattering title, this text does give a good general overview of almost all forms of investing. Additional resources are mentioned should you wish to research specific investment types in more detail.

I hope this helps! Please do not hesitate to follow up with me if I can be of any additional service,

Sincerely,
Paul Henneman
President
ValuEngine inc

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