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Thank you for all the responses, much appreciated!
To clarify any confusion, the $500K cash I have saved and was intending on using for housing is completely separate from my Thrift Savings Plan (TSP). The TSP is the government's version of a 401K it provides for its employees. To be honest, I'm uncertain at this point how and when I'll begin withdrawing from my TSP.
oldsoldier1976, I'm in a 6C covered law enforcement position and will be retirement eligible when I turn 50. I will be collecting the FERS supplement you mentioned until age 62, at which time I'll begin collecting social security. I have always had 100% of my TSP holdings in the C fund.
So, the question remains...what to do with my cash savings for the next six years? I'm really relying on that money to be there when the times comes for me to retire, relocate, and purchase a home. It'd sure be nice to have it safely appreciate in the meantime, though.
Here’s a non-callable 2.5% CD; I have been buying mine using the Merrill Edge screening tool. Typically there are better market rate CD’s found through this method (Brokers) than just going to a bank.
949763LR5
Product code: CDWG5. (This is a Wells Fargo product)
Offer Price. 100.000
Yield to Maturity. 2.5%
Maturity Date. 12/08/2022
Coupon
2.500%
1,000Minimum Offer Quantity
1,000Trades in Multiples
MonthlyCoupon Frequency
SIOUX FALLS, SDLocation
2.50%
6 years sound about right for an investment-grade corporate bond fund with moderate duration (< 7 years). Look for a yield to maturity of around 3 to 4%. Above 4% is junk territory with credit risk, below 3% is Treasury territory with interest rate risk.
This would be my recommendation as well, except I think it's totally fine to buy below investment grade stuff if you do the due diligence on the company and bond series and think it's safe (my own bond portfolio has coupons of 5-6% and I've generated another percent or two from buying stuff slightly below par and calls above par).
Vanguard Wellesley isn't a bad call if you are willing to take a bit of market risk and don't want to put much research effort in. Fees are low and management is very conservative.
I would avoid CDs at current interest rates. Also would avoid longer term treasuries. 1 year treasuries yield 1.6% tax free, which is equivalent to 2% on something you have to pay taxes on. Why would you take 4 additional years of interest rate risk for an extra 0.5% post-tax yield? Get the 1 year treasury instead if going this route.
Quote:
Originally Posted by CoastieTX
Thank you for all the responses, much appreciated!
To clarify any confusion, the $500K cash I have saved and was intending on using for housing is completely separate from my Thrift Savings Plan (TSP). The TSP is the government's version of a 401K it provides for its employees. To be honest, I'm uncertain at this point how and when I'll begin withdrawing from my TSP.
oldsoldier1976, I'm in a 6C covered law enforcement position and will be retirement eligible when I turn 50. I will be collecting the FERS supplement you mentioned until age 62, at which time I'll begin collecting social security. I have always had 100% of my TSP holdings in the C fund.
So, the question remains...what to do with my cash savings for the next six years? I'm really relying on that money to be there when the times comes for me to retire, relocate, and purchase a home. It'd sure be nice to have it safely appreciate in the meantime, though.
Given you have other money for proper retirement savings and sound super risk averse, 1-year treasury is probably your best bet and then do another cycle of looking for options a year from now.
Thank you for all the responses, much appreciated!
To clarify any confusion, the $500K cash I have saved and was intending on using for housing is completely separate from my Thrift Savings Plan (TSP). The TSP is the government's version of a 401K it provides for its employees. To be honest, I'm uncertain at this point how and when I'll begin withdrawing from my TSP.
oldsoldier1976, I'm in a 6C covered law enforcement position and will be retirement eligible when I turn 50. I will be collecting the FERS supplement you mentioned until age 62, at which time I'll begin collecting social security. I have always had 100% of my TSP holdings in the C fund.
So, the question remains...what to do with my cash savings for the next six years? I'm really relying on that money to be there when the times comes for me to retire, relocate, and purchase a home. It'd sure be nice to have it safely appreciate in the meantime, though.
That’s good because to me it was unclear. So my advice then is a brokerage account with Vanguard in 2 or 3 mutual funds that are in the 50/50 range plus or minus 10%. Target date funds or conservative funds. You choose. You will have some swings up and down but essentially will be fairly secure.
My Target 2025 has been beating Wellington over the past 10 years. But there are much smarter people here in investing than me. They have awesome advice.
Get yourself a copy of the Value Line Investment Survey; this newsletter analyzes about 2500 widely-held stocks on a 90-day rotating basis, ranking for both timeliness and safety. It's pricey, but libraries at most colleges, or in upscale neighborhoods have a subscription. Stick with the safest issues at first, but also pay attention to which stocks pay a good dividend, hopefully, one with a record of regular increases. If the blue chips decline with a cycle, but show no other signs of anything wrong, it's a good time to "double down" your bets. You don't have to go "whole hog" on common stocks, but thee stable blue chips have a great track record over the long run.
while in nominal returns down turns and flat markets do not seem to last long , the real deal is not nominal returns but real returns .
we have had far longer periods of time before markets recovered once inflation is considered .markets have had poor , flat and down years for a whole lot longer than just nominal returns would indicate . anything not in blue are poor stretches of years where cd's would have out likely performed better over the shorter terms ..
you can see that short term investing in longer term assets really is not such a great idea or as fool proof as just nominal returns make it look .
just going back to 1970 and looking at markets ,actual recovery time in real return , which is all that counts was far greater .
to put things in to perspective , it takes at least a 2% real return over the first 15 years to maintain a 4% draw inflation adjusted over a 30 year retirement and that 2% real return only means you could have 1 dollar left in year 31 so real returns are very important , not just nominal returns .
1970 took 16 years to get a head
1971 12 years
1972 13 years
1973 15 years
1974 11 years
1977 6 years
1978 4 years
1998 5 years
1999 14 years if you exclude just 2 years where things popped up
2000 almost 17 years
2001 12 years
2006 5 years
2007 6 years
2008 5 years .
even 60/40 had lots of extended recovery time needed too .
Last edited by mathjak107; 11-24-2017 at 03:04 AM..
but it is still more gamble short term than should be taken if short term money is what you need .
there are loads of more successful retirement time frames than ones that failed but a 90% success rate is still the minimum acceptable rate so more blue than red does not mean it is something you should do after 8 years of a bull market . .
mismatching equities which are pretty much long term investments with short term needs for money can be not the best idea .
To clarify any confusion, the $500K cash I have saved and was intending on using for housing.
at today's rates, why would you put all that cash into a house when you could get low interest loan while the money could be earning higher rates.....? Some advisers discourage paying off a house and having access to the money for other needs.....https://www.edelmanfinancial.com/edu...-long-mortgage Mortgages, in fact, are the cheapest money you will ever be able to borrow
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