so if you had some $$ to invest

[mzteris]

and you couldn't afford to lose it, and you needed to have access to some of it every few months for the next year -

what would you do with it?

[A HERETIC I AM]

1. If yield is not important and safety is, 90 to 180 day treasuries.

Short term CD's will yield slightly higher and you can ladder maturities so that you have redemptions occur regularly but be careful to read the provisions of the CD.

With short term Treasury paper, liquidity is essentially instant - they settle same-day if you need to liquidate early. The downside is the yield is basically a pittance.

http://www.bloomberg.com/markets/rates/index.html

Here's what a .20% yield on 90 day paper means;
Buy $1000.00 face value of these notes and if you rolled them out for a year, you would earn a grand total of TWO DOLLARS on your thousand bucks in interest. Nothing. But, you WILL get your money back and they are about the most liquid security in the world.

[mzteris]

2. thanks -

I would like to get as much "bang for my buck" as possible. I only know a little about CD's and Money Market Accounts and I was wondering if there was anything "better".

I need to sit down and do some figuring exactly about the whole "debt thing" and see what's left (and I've got the kid's summer stuff coming up.) I was thinking about staggering the CD's - 3 mo/6mo/9/mo type thing and putting my next 3 mos living expenses in a Money Market.

[A HERETIC I AM]

3. The higher the yield, the higher the risk, plain and simple.

As far as anything better, sure there are plenty of higher yielding, liquid securities but they all have risk you probably aren't willing to take on. You mentioned in your OP an investment that you wouldn't lose on. Currently there are only two;

Short term Treasury paper and short term CD's.

Money Market funds invest in short term, mid term and even long term paper, but it is only held for 180 days or less, essentially long enough to be paid an interest payment and then it is sold. So if you place cash in a money market fund, you have really just bought CD's, short term Treasuries, Foreign Government debt and Corporate paper, it's just all packaged together. Yields on money markets are really low compared to 18 months ago because the fund manager has to go to the same market place you do, basically. Nothing really safe yields squat these days, unfortunately.

[rhett o rick]

4. How would a person prepare for a possible hyper-inflation? nm

[A HERETIC I AM]

5. I did some research on the relationship between inflation, Gold and long Treasuries....

and found these three tables;

Historical rates of inflation, monthly 1914 - 2009;

http://www.usinflationcalculator.com/inflation/historical-inflation-rates/
Note that the furthest right hand column is the average for that year.

Unfortunately, I couldn't find a table of data that exactly compared, so here is a list of the 30 year Treasury yield from February of 1977 to April of 2009, monthly;

http://federalreserve.gov/releases/h15/data/Monthly/H15_TCMNOM_Y30.txt


Here's a table of historical Gold prices, 1968 - 2009 monthly;

http://goldinfo.net/londongold.html

The last two times we had double digit inflation in this country began in the 1970's. Early 1974 thru mid '75 and again beginning early 1979 thru late 1981. For the sake of simplicity, let's concentrate on the longer of the two periods, '79 thru '81.

By February of 1979, inflation was at 10%, gold was at $245 and the long Treasury was yielding 9.00%. By the end of the year, inflation was at 13.3%, Gold was $455 and the Treasury yield was 10.12%. Inflation had increased by 33%, Gold was up 85% and yield was up 12.4% over the February figure.

According to the inflation table I linked above, inflation peaked in March of 1980 at 14.8% but Gold didn't peak until September at $673 and yield continued to rise well into 1981, finally peaking at 14.68 in October.

So how do you take advantage of a similar scenario, should it present itself?

Keep in mind that when bond yields rise, prices of the bonds fall. The US Treasury has regular auctions and the coupon rate of the 30 year has changed twice since the first of the year. They lowered it from a 4.5% coupon to a 3.5% in January and just raised it again back to 4.25% just a few weeks ago. If you bought a 3.5% coupon 30 year at or near "par" in late 2008, your bond is now priced somewhere in the neighborhood of $900.00. So buying and holding long bonds when yields are likely to rise is risky unless you plan on holding them to maturity. So how do you take advantage of this particular scenario? There are ETF's that do it for you.
iShares has one and ProShares has two. (scroll down to "Short Fixed-Income") The thing is, one has to know when to stop shorting and go long. At some point, yields on long (and short, for that matter) Treasuries will become so desirable that demand will again rise and yields will fall. Buying those bonds if their yields get up above 8 or 9% could be very profitable if we were to see yields cycle back down to current levels in coming decades. Yields got to this current low because demand was very high. As appetite for risk returns, Treasuries will rise in yield as a natural extension of the forces of the bond market.

The other potential benefit is precious metals and their producers. There are several Gold and Silver ETF's as well as other commodity funds. Again, go to the Proshares page and scroll down to "Ultra Commodity". There are numerous others, so check out the websites of the various firms that market ETF's.

Another instrument to consider are "TIPS" or Treasury Inflation Protected Securities. You can learn about them at http://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm">Treasury Direct. I heartily recommend you carefully read their "TIPS in Depth" page. These are a unique type of bond in which the principal fluctuates along with the CPI. The interest rate stays the same, but since the amount you are paid is tied to the principal, your interest payments will go up and they can go down, based on inflation.

So basically, short Treasuries, consider TIPS and go long precious metals and their producers. This is not my "advice", rather a strategy that has been employed in the past and as such I provide this information merely as illustration.

The biggest question of course, is how bad will inflation get (if at all), how soon and for how long. One should be very careful in placing too much of a given portfolio into one particular strategy.

There is another method one could employ that puts all of this into one single package - a Unit Investment Trust or UIT. A UIT is basically a buy and hold instrument where the manager has purchased specific securities with a particular purpose in mind, holds them for a specific length of time then sells.

First Trust Portfolios has an Inflation Hedge Trust in which they are holding 12 securities. The list of which appears on the preceding link. The trust has a duration of 2 years.

As with any investment, one should thoroughly read the prospectus where applicable and attempt to fully understand the instrument before buying.