for my fiancé’s birthday I would like to open her an investment or savings account with a small amount of capital (~$500/1000) to be used as a short term investment account. The goal would be to reach ~$5000/6000 sometime in the next 3 - 4 years (she would like to have dental work done). We both plan to contribute regularly. I just started a new job and I can probably afford to pay for the dental work upfront immediately, but I would like this to be a learning experience for her (and me) in investing, since when she’s done with graduate school in two years I will want to get serious about saving and investing.

Since I would have enough to pay for the dental work upfront if need be, I am ok with more volatile positions since if anything went wrong we could just treat the account as a long term account.

Looking for advice on investment positions, and accounts for short run w/ mid to high volatility and risk.

closed as primarily opinion-based by Pete B., Nathan L, Victor, MD-Tech, JoeTaxpayer Jul 9 '18 at 9:51

Many good questions generate some degree of opinion based on expert experience, but answers to this question will tend to be almost entirely based on opinions, rather than facts, references, or specific expertise. If this question can be reworded to fit the rules in the help center, please edit the question.

  • 2
    "We both plan to contribute regularly." How much? The more you contribute, the less return you require, so that amount is necessary to determine how risky you can be, – D Stanley Jun 22 '18 at 16:02

I have mixed emotions about your question.

Investing is definitely a learning experience but doing it to learn is putting the cart in front of the horse. You should determine your risk profile as well as obtain some financial literacy before plunking down the cash. Getting serious about saving and investing when your fiancé is done with graduate school in two years is half right. Get serious now so that in two years when you have more discretionary income, you'll be better prepared to invest wisely.

You can easily find mid to high volatility, high risk investments. FINVIZ.com offers a free screener. It has 70+ criteria to choose from. Select their "Technical" screener and use the Volatility. The maximum time period is one month so if you want a longer view, find a Beta Screener.

I don't think that it's a wise idea to select a higher risk investment, regardless of your current ability to pay for the dental treatment. Pretend that it's 1997 or 2005 and you have invested incrementally for 3+ years to reach your target of $5-6k. With some growth, you're almost there. Now it hits the fan (2000 and 2008) and 50% of your investment disappears. Oh wait, you chose higher beta stocks/funds so maybe it's down 60% or 70%. Am I predicting this? Hardly. But very much possible since it has already happened twice in your lifetime. And FWIW, many conservative Blue Chip investments went bankrupt in 2008.

Perhaps instead, you choose a more conservative investment that's going to lose the same or less than the market, should it correct or collapse. Are you market savvy enough to pull the plug and salvage the money targeted for a specific expenditure or will you be the deer in the headlights wondering, where did my money go to?

The short answer? Concentrate on becoming financially literate and invest in something conservative. If it works out, fine. If it doesn't, you'll pay for some portion of the dental treatment down the road. You have the wherewithal to do it anyway. And with two incomes in two years, you might end up choosing not to cash out due to the tax bite. Either way, you're not betting the farm and you'll have begun the long road of investing for retirement.


Here's a couple things for you to consider, because apart from you asking about specific positions, I think this is a great question even though specific advise is off topic.

Volatility just means the value of the asset isn't stable from day to day, to some extent that means your outcome is not predictable. The whole stock market is volatile. Sure, there are volatility measures to track the past volatility of a given security against another security or group of securities, but that doesn't really say much about will happen tomorrow than a price chart.

Risk is really, will this asset even have any value at all tomorrow? What is the likelihood my $1,000 becomes $0?

So, now there's just math.

Say you put $500 in to an account and add $50 each month for 4 years, your contributions = $2,850. Add in an attainable 1.6% interest rate and you end up with $2,960.

Now lets add in some volatility and risk, looking at the S&P500 the average 4 year return is 12.4%, pretty good! The maximum 4 year return is 31.9%, really good!! The minimum though is -21.5%. So respective 4 year account balances are approximately $3,865, $6,457, and $1,779. This is the S&P500, the 500 largest large cap companies. Are you looking for more risk than this? More volatility? The "safest" way to invest in the stock market is many orders of magnitude more volatile and risky than a savings account.

Now you just get in to fees and your expected contributions and really, the only logical conclusion is an extremely low expense ratio, no-commission, no-fee mutual fund. If you have to pay even a low commission of $5 on your trades you'll give up $240 of your $2,850 just to buy these assets.

Even though it's probably off topic, and assuming that you have some kind of core assets in an emergency fund, you should find a solid brokerage (Vanguard, Schwab, Fidelity) open your taxable brokerage and buy shares of a fund like SWTSX. Buy the mutual fund because you can buy fractional shares, so your whole $50 can go in to the market every month and you'll only pay 0.03% to expenses every year.

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