checking

TIPS, savings bonds offer safety

Don TaylorQuestionDear Dr. Don,
I have $2,000 to invest and would like a secure, long-term investment. Any suggestions?
-- Glennie Govies

AnswerDear Glennie,
You've identified your investment horizon -- long term. You've indicated your attitude toward risk by saying you want a secure investment. That generally means you don't want to risk the investment losing value.

But you haven't discussed what you want to accomplish with this money.

Are you investing for retirement? Looking to fund a college education? Planning to take a trip around the world? For any of these investment goals, a $2,000 investment is the start of an investment program, not enough to fund the goal by itself -- regardless of how the money is invested in a low-risk investment.

Speaking of starting points, if this $2,000 represents not just your investable assets, but also your sole source of ready cash, consider establishing an emergency fund. The Bankrate feature "Creating an emergency fund" will help you decide if that's the best place to hold this $2,000.

If you've already funded an emergency fund, we're back to your original goal to invest in a secure, long-term investment. To my mind, the best vehicles for that are either Series I savings bonds or Treasury Inflation-Protected Securities, both of which can be bought directly from the U.S. government by setting up a TreasuryDirect account.

These investments are secure and protect the purchasing power of your long-term investment because they are indexed to inflation. The TreasuryDirect Web page "Comparison of TIPS and Series I Savings Bonds" can help you decide between the two investments.

Ask the adviser

To ask a question of Dr. Don, go to the "Ask the Experts" page, and select one of these topics: "Financing a home," "Saving & Investing" or "Money." Read more Dr. Don columns for additional personal finance advice.
 

Bankrate's content, including the guidance of its advice-and-expert columns and this Web site, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this Web site is governed by Bankrate's Terms of Use.

News alert Create a news alert for "savings"

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

Ask Dr. Don

Best investment for grandkids?

Dear Dr. Don, I am a grandmother of four and want to start a life savings for my grandchildren. Their ages range from 2 to 8. Should I get savings bonds or certificates of deposit? Thank you, -- Nanna Notes Dear Dr. Don,... Read more

advertisement
Partner Center
advertisement

Connect with us