What to do with US$1m in today's climate

[robm3]

Hypothetically speaking, if you had liquidity of $1,000,000 what investment would work best and still retain some safety (aside from any George Best strategies). Here in Oz you get 6% on bank term deposits so consider this the best but are there any others?

[ringram]

Capital preservation is tops at present, hence why govt bonds are number 1 at present. Look at Japan for reasons why.

[robm3]

ringram said:

Capital preservation is tops at present, hence why govt bonds are number 1 at present. Look at Japan for reasons why.

Really? They yield around 4% You need to pay a fee to purchase and if you need to liquidate prior to maturity you lose again. Compared to a savings account yielding 5.9%, that's protected up to$ 250k, has no set up fee or exit penalty (if you choose the monthly interest payment option) I'm failing to see the attraction.
Or have I missed something in that government bonds will rise on inflation?

Rampant Inflation is the only real threat I can see against keeping all the cash in a savings account.

Edited by robm3 on Tuesday 27th September 22:04

[R11ysf]

I presume he is talking about the UK where inflation is high. For us to put savings into AUS savings accounts we are taking on a currency risk. There's no point getting 6% a year if you lose 10% on the currency exchange.

[Beardy10]

ringram said:

Capital preservation is tops at present, hence why govt bonds are number 1 at present. Look at Japan for reasons why.

Govt bonds are eroding your capital in real terms.

If you are willing to take some risk there are corporate bonds out there yielding 10% over the next 5 years which I reckon are the best way of preserving capital in real terms. You need to know what you are looking at and I wouldn't but any of the managed funds as most of the fund managers are ste and the funds generally track an index which in corporate bonds makes absolutely zero sense.....you need to buy individual bonds of companies you know and understand.