Any investment tips to help save for a long-term RTW trip

So I'm just finishing up a nine month RTW trip that was supposed to be one year long, but is ending now because I spent too much time in Europe. Lesson learned, but still an amazing experience.

It got me thinking about how I could have planned my RTW better. I was wondering how I could invest my money while I'm saving it (as well as my money while I travel that I used upon my return home) so that it makes even more money. I'm not talking about saving tips like sacrificing meals out and stuff like that. I'm asking the advice of people who smartly invested their money instead of just letting it sit in a low-yield savings account. Any advice would be great.

Some ideas I came up with were putting money in CDs and reinvesting when they are done. How about saving enough money to add to my 401K to make up for the year I was gone. But what about other ideas?

Thanks for reading!

Right now, I doubt you'll get anything. I guess I would say just try to save as much as possible now so that once interest rates go back up you can start to earn some interest on CDs. We had hoped to fund most of this journey with the interest from our savings, but the interest rates are so low now we aren't getting hardly anything!

Now, if you are an American, there is some financial planning advice here that maybe helpful.

regular saver accounts are worth looking at, they have huge interest rates (4-6%) even in this climate you must save regularly once a month, another downside is they rarely let you pay in more than £500 per month (that might not be a problem though) also if you take any money out you lose all or most of your interest.

I've been looking at fixed equity stock bonds, you save about £5000 at a time and it's linked to the stock market for a fixed term. Best case of the stock market going up is you gain upto 35% of your investment worst case is no improvement.

Changing the way you consume, living simply and working 20 more hours / week will allow you to save more money faster than any type of investment choices you make since interest rates are so low and stocks so risky and volatile.

A RTW trip is a short term savings goal. This means you want to maximize your interest, but you don't want to risk your investment going down. So stick to interest bearing savings accounts, CDs and similar products. Bonds can be higher interest, but are usually a poor consumer investment because banks take big chunks on the sale - no central and transparent market like stocks. They can also go down in value, and likely will if interest rates rise (bond prices are based on present value, so they inversely track interest rates). While stocks may give great returns over your 3-year period, they may also give terrible returns and the gamble could cost you your trip.

If you want to get fancy and believe the stock market is going to keep going up during your savings period, I recently encountered this article, which explains how you can link your interest rate to the stock market without the downside risk, using a combination of zero-coupon bonds and call options (put options are an alternative if you expect the market to decline...either way the zero-coupon protects your investment). Doesn't work very well for incremental savings, but if you've already got a chunk and want to try to get more than the 1-1.5% that is currently on offer most places, it may be an option...the worst case scenario is a 0% return.

On balance, though, I think I'd be focusing on getting a good rate on a CD.

A RTW trip is a short term savings goal. This means you want to maximize your interest, but you don't want to risk your investment going down. So stick to interest bearing savings accounts, CDs and similar products

I agree with this. And it's certainly great advice for people who don't want to travel and have other short term ambitions for their money. However, for travelers in this current market, if you are only holding these type accounts in your home currency then you holding quite a bit of risk. There are significant movements in the currency markets these days and you could easily see your purchasing power dropping 25%.

i would suggest buying gold, its not going to make you anything huge, but its a pretty safe bet, and over time it won't go down, if you look at a graph of the historical prices it has climbed significantly recently. Personally, i have bought some and I'm using it more as a savings account, and then i'll either sell it or else hold onto it for my rtw, probably get someone to sell it for me while i'm gone... just a thought

if you look at a graph of the historical prices it has climbed significantly recently.

This is your argument!!!????

A couple years ago, every idiot with a computer was writing about how you should be getting into the housing market because "if you look at historical prices they have climbed significantly recently," and so everyone KNEW that the future was rosy and the way to get rich was to own a house. Know what that climb meant? It meant that houses were overvalued.

There are good reasons to think that gold will continue to rise, and I have bet some money on that. But there's also perfectly good reasons to think that gold is overvalued and will decline in the future. It's not to say that people shouldn't take risks and choose their investments based on what they expect for the future. But your post suggests that gold is a low risk investment "you won't make much, and over time it won't go down..." It is by no means a low risk investment. It's a bet.

Gold is fairly volatile. If the economy recovers without any high inflation, it could be worth very little (like $300 or so) within the 2-3 year timeline that keifer is looking at. He doesn't have time to wait for it to recover in retirement and I honestly don't know that over the long term gold will offer a positive real return. If you'd bought during its last peak in the '70s you'd still be waiting for your chance to sell at a profit, adjusted for inflation. It is a risky investment and if you don't expect returns that reflect that risk premium, or if you have a short time horizon for withdrawal, you shouldn't be playing with it.

First off it wasn't an arguement, if you can read the title it says investment tips. This was my tip, i am not claiming to be a investment guru by any means, however the little that i do know has served me well so far. True there are some risks involved, but Gold isn't by any means high risk. Your drawing back to the 70's???? really? come on. Could it crash, sure, so could any stock. But investors generally buy gold as a hedge or safe haven against any economic, political, social or currency-based crises. These crises include investment market declines, currency failure, inflation, war and social unrest. The USA is printing more money, logic would say that that means every dollar will be worth less relative to what it used to be worth. The way that i see gold is as a savings account that will adjust for inflation, because it is tied to the dollar.

Look, I'm a gold bull to some extent, so it's not like I disagree that there are good reasons to believe that gold will go up. But suggesting that gold is low-to-no risk over 3 years is just kind of irresponsible as tips go. That's all I'm saying.

(Also, the '70s is the most recent historical run-up of gold to anything close to current levels. You can't ignore it just because it was 30 years ago. Gold won't go up forever, nothing does, so it's important to have some idea of what a top looks like and therefore when to get out.)

True it wont go up forever, however the overall trend is positive over time- This obviously isnt inflation adjusted. But the good thing about Gold is that it cant go bankrupt Gold will always be worth "something" and while it can happen a large price flux, up or down, is quite unlikely to happen.

Well, if we're talking about gold.

I've been following a pretty decent financial blog that a friend clued me into about a year ago. I highly recommend it. Anyway, he offered his thoughts on gold just today here

Gold does go down

I would take my money and put it in an indexed mutual fund for the next 2 years. Then when your trip is about a year away, look for a good time to sell the mutual funds and hold it in a savings account.

I like Buffett on Gold —

“It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”
—Warren Buffett

I'd personally stay away from Gold. Although. I'm terribly overweight in stocks right now, so who am I to dispense advice?

As for the short-term savings goal, I'm currently seeking good rates on a CD.