Advice on low-risk long-term strategy for extra cash?
I can think of three things you might do: Talk to a fee-only adviser. As the comments suggest, this would only be one or two sessions to lay out what all you have, establish what you want it to do, and write a plan that you are comfortable carrying out yourself. What do your 401k and Roth IRA look like? If you mean for this money to be long-term, then your retirement portfolio might be a good place to start. I don't currently own them, but one of my personally hobby horses is I-Series Savings Bonds, commonly called I Bonds. Even in the current low interest rate environment, they are a good deal relative to everything else out there. I summarized this more fully in my answer to another question. You can invest up to $10,000 per SSN per year, and the interest rate is the sum of a fixed rate plus a floating rate based on CPI. Currently the fixed rate is 0%, but the floating rate is better than what you can get from most other cash-like instruments. Congratulations on being in such good financial state.  You have a few investment choices. If you want very low risk, you are talking bonds or CDs. With the prime rate so low, nobody is paying anything useful for very low risk investments.  However, my opinion is that given your finances, you should consider taking on a little more risk. A good step is a index fund, which is designed to mirror the performance of a stock index such as the S&P 500. That may be volatile in the short-term, but is likely to be a good investment in the longer term. I am not a fan of non-index mutual funds; in general the management charge makes them a less attractive investment.  The next step up is investing in individual stocks, which can provide very big gains or very big losses.  The Motley fool site (www.fool.com) has a lot of information about investing overall. Look at a mixture of low-fee index funds, low-fee bond funds, and CDs. The exact allocation has to be tailored to your appetite for risk. If you only want to park the money with essentially no risk of loss then you need FDIC insured products like CDs or a money market account (as opposed to a money market fund which is not FDIC insured). However as others have said, interest rates are awful now.  Since you are in your early 30's, and expect to keep this investment for 10+ years, you can probably tolerate a bit of risk. Also considering speaking to a tax professional to determine the specific tax benefits/drawbacks of one investment strategy (funds and CDs) versus another (e.g. real estate). "So, you have $100k to invest, want a low-maintenance investment, and personal finance bores you to death. Oooohhh, investment companies are gonna love you.  You'll hand them a wad of cash, and more or less say ""do what you want.""  You're making someone's day.  (Just probably not yours.) Mutual fund companies make money off of you regardless of whether you make money or not.  They don't care one bit how carefully you look at your investments.  As long as the money is in their hands, they get their fee. If I had that much cash, I'd be looking around for a couple of distressed homes in good neighborhoods to buy as rentals.  I could put down payments on two of them, lock in fixed 30-year mortgages at 4% (do you realize how stupid low that is?) and plop tenants in there.  Lots of tax write-offs, cash flow, the works.  It's a 10% return if you learn about it and do it correctly. Or, there have been a number of really great websites that were sold on Flippa.com that ran into five figures.  You could probably pay those back in a year.  But that requires some knowledge, too. Anything worthwhile requires learning, maintenance and effort. You'll have to research stocks, mutual funds, bonds, anything, if you want a better than average chance of getting worthwhile returns (that is, something that beats inflation, which savings accounts and CDs are unlikely to do).  There is no magic bullet.  If someone does manage to find a magic bullet, what happens?  Everyone piles on, drives the price up, and the return goes down. Your thing might not be real estate, but what is your thing?  What excites you (i.e., doesn't bore you to death)? There are lots of investments out there, but you'll get out of it what you put into it." You can buy dividend stocks, just buy and hold. you will get cash or extra stock every quarter. You can also sell covered calls on your dividend stocks, this will give you even more cash. you can also... actually this rabbit hole goes very deep. just stick with my first sentence.
A lot of people here talk about shorting stocks, buying options, and messing around with leveraged ETFs. While these are excellent tools, that offer novel opportunities for the sophisticated investor, Don't mess around with these until you have been in the game for a few years. Even if you can make money consistently right out of the gate, don't do it. Why? Making money isn't your challenge, NOT LOSING money is your challenge. It's hard to measure the scope of the risk you are assuming with these strategies, much less manage it when things head south. So even if you've gotten lucky enough to have figured  out how to make money, you surely haven't learned out how to hold on to it. I am certain that every beginner still hasn't figured out how to comprehend risk and manage losing positions. It's one of those things you only figure out after dealing with it. Stocks (with little to no margin) are a great place to learn how to lose because your risk of losing everything is drastically lower than with the aforementioned tools of the sophisticated investor. Despite what others may say you can make out really well just trading stocks.  That being said, one of my favorite beginner strategies is buying stocks that dip for reasons that don't fundamentally affect the company's ability to make money in the mid term (2 quarters).  Wallstreet loves these plays because it shakes out amateur investors (release bad news, push the stock down shorting it or selling your position, amateurs sell, which you buy at a discount to the 'fair price'.) A good example is Netflix back in 2007. There was a lawsuit because netflix was throttling movie deliveries to high traffic consumers. The stock dropped a good chunk overnight.  A more recent example is petrobras after their huge bond sale and subsequent corruption scandal. A lot of people questioned Petrobras' long-term ability to maintain sufficient liquidity to pay back the loans, but the cashflow and long term projections are more than solid. A year later the stock was pushed further down because a lot of amateur Brazilians invest in Petrobras and they sold while the stock was artificially depressed due to a string of corruption scandals and poor, though temporary, economic conditions. One of my favorite plays back in 2008-2011 was First Solar on the run-up to earnings calls. Analysts would always come out of these meetings downgrading the stock and the forums were full of pikers and pumpers claiming heavy put positions. The stock would go down considerably, but would always pop around earnings. I've made huge returns on this move. Those were the good ole days. Start off just googling financial news and blogs and look for lawsuits and/or scandals. Manufacturing defects or recalls. Starting looking for companies that react predictably to certain events. Plot those events on your chart. If you don't know how to back-test events, learn it.  Google Finance had a tool for that back in the day that was rudimentary but helpful for those starting out. Eventually though, moreso than learning any particular strategy, you should learn these three skills: 1) Tooling: to gather, manipulate, and visualize data on your own.  These days automated trading also seems to be ever more important, even for the small fish. 2) Analytical Thinking learn to spot patterns of the three types:  event based (lawsuits, arbitrage, earnings etc), technical (emas, price action, sup/res), or business-oriented (accounting, strategy, marketing). Don't just listen to what someone else says you should do at any particular moment, critical thinking is essential. 3) Emotions and Attitude: learn how to comprehend risk and manage your trigger finger. Your emotions are like a blade that you must sharpen every day if you want to stay in the game. Disclaimer: I stopped using this strategy in 2011, and moved to a pure technical trading regime. I've been out totally out of the game since 2015. I think a larger issue is that you're trying to do market timing. Whether you had a large or small amount of money to invest, no one wants to put the money in to watch it go down.  You can't really predict if prices in a market or security will go up in six months (in which case you want to put all your cash in now), of if it will go down (in which case you'd want to wait until the bottom), or if it will skitter around (in which case you'd want to only buy at the bottoms).  Of course, if you're magic enough to nail all of those market conditions, you're a master finance trader and will quickly make billions. If you're really concerned with protecting your money and want to take some long positions, I'd look into some put options. You'll of course pay the fees for those put options, but they'll protect your downside.  Much of this depends on your time horizon: at the age of 35, someone can expect to see ~6 more recessions and perhaps ~30 more market corrections before retirement. With that big of a time range, it's best to avoid micro-optimizing since that tends to hurt your performance overall (because you won't be able to time the market correctly most of the time).  One thing that's somewhat reasonable, if you have the stomach for it, is to not buy at somewhat-obvious market highs and wait for corrections. This isn't fool proof by any means, but as an example many people realized that US equities basically were on a ~5 year up run by December 2014. Many people cashed out those positions, expecting that a correction would be due. And around late summer of 2015, that correction came. For those with patience, they made ~15% with a few mouse clicks.  Of course many others would have been waiting for that correction since 2010 and missed out on the market increases.  Boiled down: "Defining risk tolerance is often aided with a series of questions. Such as - You are 30 and have saved 3 years salary in your 401(k). The market drops 33% and since you are 100% S&P, you are down the same. How do you respond?  (a) move to cash - I don't want to lose more money. (b) ride it out. Keep my deposits to the maximum each year. Sleep like a baby.  A pro will have a series of this type of question. In the end, the question resolves to ""what keeps you up at night?"" I recall a conversation with a coworker who was so risk averse, that CDs were the only right investment for her. I had to explain in painstaking detail, that our company short term bond fund (sub 1 year government paper) was a safe place to invest while getting our deposits matched dollar for dollar. In our conversations, I realized that long term expectations (of 8% or more) came with too high a risk for her, at any level of her allocation. Zero it was." "As you've observed, when you're dealing with that amount of money, you're going to have to give up FDIC guarantees. That means that keeping the money in a bank account carries some risk with it: if that particular bank goes bust, you could lose most of your money. There are a few options to stretch the FDIC limit such as CDARS, but likely can't handle your hypothetical $800 million. So, what's a lucky winner to do? There are a few options, including treasury securities, money market funds, and more general capital investments such as stocks and bonds. Which one(s) are best depend on what your goals are, and what kind of risks you find acceptable. Money in the bank has two defining characteristics: its value is very stable, and it is liquid (meaning you can spend it very easily, whenever you want, without incurring costs). Treasury securities and money market funds each focus on one of these characteristics. A treasury security is a piece of paper (or really, an electronic record) saying that the US Federal Government owes you money and when they will pay it back. They are very secure in that the government has never missed a payment, and will move heaven and earth to make sure they won't miss one in the future (even taking into account recent political history). You can buy and sell them on an open market, either through a broker or directly on the Treasury's website. The major downside of these compared to a bank account is that they're not as liquid as cash: you own specific amounts of specific kinds of securities, not just some number of dollars in an account. The government will pay you guaranteed cash on specified dates; if you need cash on different dates, you will need to sell the securities in the open market and the price will be subject to market fluctuations. The other ""cash-like"" option is money market funds. These are a type of mutual fund offered by financial companies. These funds take your money and spread it out over a wide variety of very low risk, very short term investments, with the goal of ensuring that the full value will never go down and is available at any time. They are very liquid: you can typically transfer cash quickly and easily to a normal bank account, write checks directly, and sometimes even use ""online bill pay""-like features. They have a very good track record for stability, too, but no one is guaranteeing them against something going terribly wrong. They are lower risk than a (non-FDIC-insured) bank account, since the investments are spread out across many institutions. Beyond those two somewhat ""cash-like"" options, there are of course other, more general investments such as stocks, bonds, and real estate. These other options trade away some degree of stability, liquidity, or both, in exchange for better expected returns." "Buy term and invest the rest is something you will hear all the time, but actually cash value life insurance is a very misunderstood, useful financial product. Cash value life insurance makes sense if: If you you aren't maxing out your retirement accounts, just stick with term insurance, and save as much as you can for retirement. Otherwise, if you have at least 5 or 10k extra after you've funded retirement (for at least 7 years),  one financial strategy is to buy a whole life policy from one of the big three mutual insurance firms.  You buy a low face value policy, for example, say 50k face value; the goal is to build cash value in the policy. Overload the policy by buying additional paid up insurance in the first 7 years of the policy, using a paid-up addition rider of the policy. This policy will then grow its cash value at around 2% to 4% over the life of the policy....similar perhaps to the part of your portfolio that would would be in muni bonds; basically you are beating inflation by a small margin. Further, as you dump money into the policy, the death benefit grows. After 7 or 8 years, the cash value of the policy should equal the money you've put into it, and your death benefit will have grown substantially maybe somewhere around $250k in this example. You can access the cash value by taking a policy loan; you should only do this when it makes sense financially or in an emergency; but the important thing to realize is that your cash is there, if you need it.  So now you have insurance, you have your cash reserves. Why should you do this?  You save up your cash and have access to it, and you get the insurance for ""free"" while still getting a small return on your investment. You are diversifying your financial portfolio, pushing some of your money into conservative investments." "First of all, ""going risky"" doesn't mean driving to Las Vegas and playing roulette. The real meaning is that you can afford higher risk/return ratio compared to a person who will retire in the following ten years. Higher return is very important since time works for you and even several extra percent annually will make a big difference in the long run because of compound interest effect. The key is that this requires the investment to not be too risky - if you invest in a single venture and it fails you lose all the money and that's worse that some conservative investment that could yield minimum income. So you still need the investment to be relatively safe. Next, as user Chris W. Rea mentions in the comment funds and ETFs can be very risky - depending on the investment policy they can invest into some very risky ventures or into some specific industry and that poses more risk that investing into ""blue chips"" for example. So a fund or an ETF can be a good fit for you if you choose a right one." "At that sum, it essentially doesn't matter what you do, unless you just want to outright gamble the money.  Let's look at some options: ""High"" interest guaranteed savings.  A five year CD returns a sad 2% right now.  That means if you invest all $1,000 into a CD, by 2016 you will have earned $105.08 in interest.  Think about that:  About a hundred bucks over the next five years.  Of course, with 3% inflation, that $105.08 will be worth about $90.57.  In fact, the total amount will be worth $953.25.  Your ""doing something with your money"" did nothing. Stocks can return significantly more interest, but there is no guarantee.  Even if you made 20% year on year, you would only make maybe $1,500 in returns or so in the next 5 years, and 20% every year is like Warren Buffet territory--totally unrealistic.  That's also not taking into account inflation. And neither of these is taking into account taxes! However, if you go to a casino and gamble the $1,000, it is possible you could turn it into significantly more.  It's very much unlikely, and I do not advise it at all, but it's possible.   The point is, you need money to make money, and, in some sense, $1,000 is not money at all.  I recommend you work on your skills, knowledge, and preparation for making money in the future, and by 25 or so you can really be cooking with gas.  Don't waste your efforts trying to find a brilliant way to make a few hundred bucks over the next half decade.  Save the money and find ways to try to double it by earning money on small projects.  Then challenge yourself to double it again, and keep honing your skills." The reason that you are advised to take more risk while you are young is because the risk is often correlated to a short investment horizon. Young people have 40-50 years to let their savings grow if they get started early enough.  If you need the money in 5-15 years (near the end of your earning years), there is much more risk of a dip that will not correct itself before you need the money than if you don't need the money for 25-40 years (someone whose career is on the rise). The main focus for the young should be growth. Hedging your investments with gold might be a good strategy for someone who is worried about the volatility of other investments, but I would imagine that gold will only reduce your returns compared to small-cap stocks, for example. If you are looking for more risk, you can leverage some of your money and buy call options to increase the gains with upward market moves. Diversity of risk is always a good idea.  The cheapest equity-based investment (in terms of management costs) is some form of tracker or indexed fund.  They're relatively low risk and worth putting in a fixed amount for long-term investment. I agree with Ngu Soon Hui, you're going to need a lot of cash if you decide to start your own business.  You may have to cover a significant amount of time without an income and you don't want all your cash tied up. However, putting all your money into one business is not good risk management.  Keep some savings where they can be a lifeline, should you need it. If you are comfortable with the risk etc, then the main thing to worry about is diversity.  For some folks, picking stocks is beyond them, or they have no interest in it.  But if it's working for you, and you want to keep doing it, more power to you. If you are comfortable with the risk, you could just as well have ALL your equity position in individual stocks.  I would offer only two pieces of advice in that respect. 1) no more than 4% of your total in any one stock.  That's a good way to force diversity (provided the stocks are not clustered in a very few sectors like say 'financials'), and make yourself take some of the 'winnings off the table' if a stock has done well for you. 2) Pay Strong attention to Taxes! You can't predict most things, but you CAN predict what you'll have to pay in taxes, it's one of the few known quantities.  Be smart and trade so you pay as little in taxes as possible  2A)If you live someplace where taxes on Long term gains are lower than short term (like the USA) then try really really hard to hold 'winners' till they are long term.  Even if the price falls a little, you might be up in the net compared to paying out an extra 10% or more in taxes on your gains.  Obviously there's a balancing act there between when you feel something is 'done' and the time till it's long term.. but if you've held something for 11 months, or 11 months and 2 weeks, odds are you'd be better off to hold till the one year point and then sell it.   2B) Capture Losses when you have them by selling and buying a similar stock for a month or something.  (beware the wash sale rule) to use to offset gains. "Can you easily stomach the risk of higher volatility that could come with smaller stocks? How certain are you that the funds wouldn't have any asset bloat that could cause them to become large-cap funds for holding to their winners? If having your 401(k) balance get chopped in half over a year doesn't give you any pause or hesitation, then you have greater risk tolerance than a lot of people but this is one of those things where living through it could be interesting. While I wouldn't be against the advice, I would consider caution on whether or not the next 40 years will be exactly like the averages of the past or not. In response to the comments: You didn't state the funds so I how I do know you meant index funds specifically? Look at ""Fidelity Low-Priced Stock"" for a fund that has bloated up in a sense. Could this happen with small-cap funds? Possibly but this is something to note. If you are just starting to invest now, it is easy to say, ""I'll stay the course,"" and then when things get choppy you may not be as strong as you thought. This is just a warning as I'm not sure you get my meaning here. Imagine that some women may think when having a child, ""I don't need any drugs,"" and then the pain comes and an epidural is demanded because of the different between the hypothetical and the real version. While you may think, ""I'll just turn the cheek if you punch me,"" if I actually just did it out of the blue, how sure are you of not swearing at me for doing it? Really stop and think about this for a moment rather than give an answer that may or may not what you'd really do when the fecal matter hits the oscillator. Couldn't you just look at what stocks did the best in the last 10 years and just buy those companies? Think carefully about what strategy are you using and why or else you could get tossed around as more than a few things were supposed to be the ""sure thing"" that turned out to be incorrect like the Dream Team of Long-term Capital Management, the banks that were too big to fail, the Japanese taking over in the late 1980s, etc. There are more than a few times where things started looking one way and ended up quite differently though I wonder if you are aware of this performance chasing that some will do." First thing to know about investing is that you make money by taking risks. That means the possibility of losing money as well as making it.  There are low risk investments that pretty much always pay out but they don't earn much. Making $200 a month on $10,000 is about 26% per year.  That's vastly more than you are going to earn on low risk assets. If you want that kind of return, you can invest in a diversified portfolio of equities through an equity index fund.  Some years you may make 26% or more.  Other years you may make nothing or lose that much or more.  On average you may earn maybe 7%-10% hopefully. Overall, investing is a game of making money over long horizons.  It's very useful for putting away your $10k now and having hopefully more than that when it comes time to buy a house or retire or something some years into the future.  You have to accept that you might also end up with less than $10K in the end, but you are more likely to make money than to use it. What you describe doesn't seem like a possible situation.  In developed markets, you can't reliably expect anything close to the return you desire from assets that are unlikely to lose you money.  It might be time to re-evaluate your financial goals.  Do you want spending money now, or do you want to invest for use down the road? When it comes down to it, long-term investments pay better than short-term ones.  If nothing else, there's less administration and less financial risk for the provider.  That's why 2, 3 or 5 year savings accounts pay better than instant access ones. Higher-risk investments pay more interest (or dividends) than low-risk ones.  They have to, or nobody would invest in them. So by locking yourself out of any long term and/or risky investments, you're stuck with a choice of low-interest short term ones. There are plenty of investment funds that you can sell at short notice if you want to.  But they are volatile, and if you cash out at the wrong time, you can get back less than you invested.  The way you lower risk is either to invest in a fund that covers a broad range of investments, or invest in several different funds. "Your plan already answers your own question in the best possible way: If you want to be able to make the most possible profit from a large downward move in a stock (in this case, a stock that tracks gold), with a limited, defined risk if there is an upward move, the optimal strategy is to buy a put option.  There are a few Exchange Traded Funds (ETFs) that track the price of gold.  think of them as stocks that behave like gold, essentially.  Two good examples that have options are GLD and IAU. (When you talk about gold, you'll hear a lot about futures.  Forget them, for now.  They do the same essential thing for your purposes, but introduce more complexity than you need.) The way to profit from a downward move without protection against an upward move is by shorting the stock.   Shorting stock is like the opposite of buying it.    You make the amount of money the stock goes down by, or lose the amount it goes up by.   But, since stocks can go up by an infinite amount, your possible loss is unlimited. If you want to profit on a large downward move without an unlimited loss if you're wrong and it goes up, you need something that makes money as the stock drops, but can only lose so much if it goes up.   (If you want to be guaranteed to lose nothing, your best investment option is buying US Treasuries, and you're technically still exposed to the risk that US defaults on its debt, although if you're a US resident, you'll likely have bigger problems than your portfolio in that situation.) Buying a put option has the exact asymmetrical exposure you want.   You pay a limited premium to buy it, and at expiration you essentially make the full amount that the stock has declined below the strike price, less what you paid for the option.   That last part is important - because you pay a premium for the option, if it's down just a little, you might still lose some or all of what you paid for it, which is what you give up in exchange for it limiting your maximum loss. But wait, you might say.  When I buy an option, I can lose all of my money, cant I?  Yes, you can.    Here's the key to understanding the way options limit risk as compared to the corresponding way to get ""normal"" exposure through getting long, or in your case, short, the stock: If you use the number of options that represent the number of shares you would have bought, you will have much, much less total money at risk. If you spend the same ""bag 'o cash"" on options as you would have spent on stock, you will have exposure to way more shares, and have the same amount of money at risk as if you bought the stock, but will be much more likely to lose it. The first way limits the total money at risk for a similar level of exposure; the second way gets you exposure to a much larger amount of the stock for the same money, increasing your risk. So the best answer to your described need is already in the question:   Buy a put.  I'd probably look at GLD to buy it on, simply because it's generally a little more liquid than IAU. And if you're new to options, consider the following: ""Paper trade"" first.  Either just keep track of fake buys and sells on a spreadsheet, or use one of the many online services where you can track investments - they don't know or care if they're real or not. Check out www.888options.com.  They are an excellent learning resource that isn't trying to sell you anything - their only reason to exist is to promote options education.   If you do put on a trade, don't forget that the most frustrating pitfall with buying options is this:  You can be basically right, and still lose some or all of what you invest.  This happens two ways, so think about them both before you trade: If the stock goes in the direction you think, but not enough to make back your premium, you can still lose.  So you need to make sure you know how far down the stock has to be to make back your premium.  At expiration, it's simple: You need it to be below the strike price by more than what you paid for the option. With options, timing is everything.  If the stock goes down a ton, or even to zero - free gold! - but only after your option expires, you were essentially right, but lose all your money.  So, while you don't want to buy an option that's longer than you need, since the premium is higher, if you're not sure if an expiration is long enough out, it isn't - you need the next one. EDIT to address update: (I'm not sure ""not long enough"" was the problem here, but...) If the question is just how to ensure there is a limited, defined amount you can lose (even if you want the possible loss to be much less than you can potentially make, the put strategy described already does that - if the stock you use is at $100, and you buy a put with a 100 strike for $5, you can make up to $95.   (This occurs if the stock goes to zero, meaning you could buy it for nothing, and sell it for $100, netting $95 after the $5 you paid).   But you can only lose $5. So the put strategy covers you. If the goal is to have no real risk of loss, there's no way to have any real gain above what's sometimes called the ""risk-free-rate"".  For simplicity's sake, think of that as what you'd get from US treasuries, as mentioned above. If the goal is to make money whether the stock (or gold) goes either up or down, that's possible, but note that you still have (a fairly high) risk of loss, which occurs if it fails to move either up or down by enough.  That strategy, in its most common form, is called a straddle, which basically means you buy a call and a put with the same strike price.  Using the same $100 example, you could buy the 100-strike calls for $5, and the 100-strike puts for $5.  Now you've spent $10 total, and you make money if the stock is up or down by more than $10 at expiration (over 110, or under 90).   But if it's between 90 and 100, you lose money, as one of your options will be worthless, and the other is worth less than the $10 total you paid for them both." I think small sums invested regularly over long-term can do good for you, things to consider:  I would go with an index fund and contribute there there regularly.