Where to stash $10,000

Walter Updegrave is a senior editor with Money Magazine and is the author of "How to Retire Rich in a Totally Changed World: Why You're Not in Kansas Anymore" (Three Rivers Press 2005).

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NEW YORK (Money) -- Question: If you had $10,000 to invest for short-term growth, what would you invest it in? My wife and I feel that our everyday savings are sitting stagnant. Our hope is that there is a wise financial adventure to be had by allocating a portion of this account to something new. Any suggestions? --Stuart, Trussville, Alabama

Answer: Nothing would please me more than to lead you on an excellent adventure during which you could earn much loftier gains on your ten grand than it's getting now in traditional secure savings vehicles like money-market funds, savings accounts and CDs.

But I would be misleading you if I told you that I, or anyone else, could pull off such feat.

In fact, as an investment strategy I consider the phrase "short-term growth" an oxymoron, like "Congressional deliberation." The words make sense individually, but put them together and they're meaningless.

That's not to say that you can't shoot for capital growth over the short term. All you've got to do is invest your ten thousand bucks into something incredibly volatile -- say, micro-cap emerging market stocks or those "leveraged" ETFs that are designed to move two to three times as much on a daily basis as the indexes they follow. Or if you really want to get on the inside track to fast gains, you could open a margin account and use your $10,000 plus a loan from your broker to as much as double the amount you plow into the investment you choose.

You may very well end up with an exhilarating short-term gain. Or suffer a heart-wrenching loss. Either way, I think such an exercise would be more a matter of speculating than investing.

I don't mean to suggest that you shouldn't be willing to take some risks with your money. If you want to earn higher returns than you can get in CDs and such, you've got to be willing to invest in a mix of bonds and equities. But I'm talking about the investing portion of your assets -- that is, the money you're willing to take prudent risks with in hopes of achieving superior returns.

Even then, however, your mix of stocks and bonds should have some relation to the amount of time you intend to keep that money invested and how much and how often you may need to draw from it -- the longer your investment and less your need to dip into the cash, the more you can afford to put in stocks.

The ground rules are different, though, when it comes to your everyday savings, the money you need to cover 12 to 18 months of living expenses or that you just want on hand to cover large expenses, emergencies and such. For this money, security is your paramount concern. You want to be sure that the money will be there when you need it. You're not, or shouldn't be, concerned about maximizing your return on this portion of your assets.

It's easy to lose sight of this distinction. I'm sure that many people, lulled into a false sense of security by the attractive returns in the five years between late 2002 and late 2007, felt quite comfortable investing more of their money in stocks than they should have in the time leading up to the market's crash. They then paid for that lapse in judgment when the stock market fell some 56% from its October 2007 high to its March 2009 low.

So you know what? As bad as it may feel to have your everyday savings earning a paltry 1% to 2% in a bank money-market account or short-term CD, it's a lot better than watching the value of your savings plummet because you bought investments that simply weren't designed to hold their value over the short term.

My advice: if you want adventure from your everyday savings, use the money to kayak in Antarctica or enter the Iditarod or join a mountain-climbing expedition.

But don't look for excitement by going big-gain hunting with your savings stash. You might have an adventure all right. But it may not be wise or profitable.