Investing Personal Finances

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Investing Personal Finances

The best ways to invest personal cash for 3 to 5 year time horizon include dividend stocks, index funds, P2P lending, bond ETFs, and certificate of deposit.

All the required information has been entered into the spreadsheet here. The research methodology and an overview of our findings have been presented below.

Research methodology

We began our research by examining various media sources such as Forbes, WSJ, Business Insider, Reuters, Live Mint etc; investment portals such as Bloomberg Quint, Capital IQ, and FT Blog. We also looked into research reports on the personal investment sector from Deloitte, McKinsey, Market Intelligence, and Forrester and personal investment blogs such as Enterprising Investor, Vanguard Blog, and InvestmentWatch. We were able to garner a few relevant articles regarding the best passive investment options, ranked based on risk, liquidity, and return profiles. We selected the most mentioned and recommended investment options among the rest. We also tried to have an optimum mix of high/medium/low risk investment options and made sure that the liquidity of any investment is not beyond five years.

Risk determination has been classified as low, medium, and high based on asset class (Equity/Bonds etc) and its nature (secured vs unsecured). In cases where the cash flow or return is guaranteed by some federal agency such as FDIC, we segregated the asset class to be 'low risk'. In case of equity investments which are exposed to vagaries of market fluctuations or P2P involving unsecured third party lending, we have classified these to be 'high risk'. Finally, asset classes with market exposure but regular cash flow stream have been deemed to have 'medium risk'.

Overview

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