What Should I Do With Money I'm Waiting To Invest

[firehawkocean]

I have heard that putting money into a money market is a good idea if I am waiting around for a drop in the market and then invest. Any thoughts?

[bUU]

That is no longer the case. The best money market deposit accounts (excepting come-on rates) are only paying 0.86% these days: Barclays offers 0.90% on regular savings accounts, without any of the small-but-not-zero differences between money market deposit accounts and regular savings accounts.

[dczech09]

Personally, I do not like the idea of trying to time the market. But it is your money, so do as you wish.

I would apply the same principle to someone who got a large inheritance and wants to invest. Park the money in a savings account until you are ready to invest. Savings account rates are not much, but as long as you find one with no fees and no minimum balance requirements, then you should be alright.

The whole idea is to park the money for the short-term until you are ready to jump in the market. You should not be looking to get rich here; just look for a safe place to store it while you wait.

[kork13]

I don't see anything wrong with keeping money intended for investing in a money market account. That's what most brokerage firms use as their sweep accounts anyway. Personally, I send a small amount of money every month to my money market, which I will occasionally draw from to purchase a few ETF shares. Admittedly, it's only a couple hundred dollars at any given time, so I'm not anxious about not earning a decent return on the money... But the intent of it is to have the money readily available in an accessible account that can easily be used for purchasing investments. They have accounts for that sort of thing -- they're called money markets.

[feh]

Personally, I do not like the idea of trying to time the market.

Neither do I. Assuming the money is being invested for the long term, there's no better time to invest than today.

[YLTL_Dan]

If you're nervous about investing at the wrong time, try dollar cost averaging and treat it much like a 401k. Keeping in mind transactions costs from purchasing, you might break it into 4 chunks and buy a month or two apart - regardless of what the market is doing.

[bjl584]

How much money are you talking about?

The difference between getting an interest rate of .75% or 1% won't matter much if you only have it parked for a short time and it isn't very much money.

[BrianaWalker]

Re: What Should I Do With Money I'm Waiting To Invest

I am not much involved into the investing.
but I wonder what will you do with your money till the drop in the market happens.

[FrugalSensei]

MMAs and savings accounts are pretty close in percentages these days. I don't know how you intend to trade in the market but you should look into the online services like TD Ameritrade, e-Trade or Scott Trade. I know that with TD Ameritrade you can arrange a MMA. Probably the others too but I only know TDA for sure. I am pointing this out because, if you choose to trade via the online services, it will take time to set up the account and have the funds transferred and verified for trading.

Timing when to jump in to the market is very difficult and often just a guess but when you're ready to do it, it is really maddening to wait a few days while things are processed. If you are set up with an online brokerage ahead of time then shifting funds over from the MMA to trading is quick.

You just missed a big drop (aka buying opportunity) in the market. There will be other drops but it's tough to catch the big ones. Good luck to you.

[BrianaWalker]

Re: What Should I Do With Money I'm Waiting To Invest

Investment for me is the secured use of money if done with all the appropriate knowledge of the field field you are investing in.

[CandaceKroslak]

Re:What Should I Do With Money I'm Waiting To Invest

One invest to earn more money. You can invest in real estate, bonds, stocks etc. But before investing in any field you must have idea about that field.

[MatthewC]

firehawkocean,

I have to say this right away. People have a horrible history when they try to time the stock market. I have never seen any study that said anything differently other than people who try to time the market do worse than those that don't. And you're definitely trying to time the market. If you want to make more in the stock market, invest your money in the stock market and then keep it in. Don't be like those who want to wait for a good time. The time to invest is now. If you have extra to put in when the market slumps, great. But waiting around is costing you money.