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Again the OP is risk averse, he is fine making 3% not fine at all with any decline of his original money. And there is nothing wrong with that.
Agree!
Plus, it's better than the monies sitting in a checking account or simple savings account or stuffed in a mattress. In addition, one is not tied to CDs forever. A CD can buy some time until the person decides on a different course of action (if they want to do something else). Interest rates will go up over time, so a 3% CD today may at some point down the road be a 4% or higher, though inflation will rise too.
Of course there are trade-offs no matter what you do in life, including what you do with your monies. In investing you need to do whatever will allow you to sleep at night, because if you're staying awake worrying or obsessing about your money, that's really no way to live.
however op did say "he wants it to grow a bit" cd's are behind the curve . they generally have negative real returns after inflation and taxes so there is no growth .
so while the op talks about not losing principal , in effect he is with cd's .
in either case he risks real return losses and those are the ones that count . nominal returns mean little except on paper .it is only what that money can buy that matters.
remember op is talking about retirement , real returns are very important in order to pay those expenses . .
the real question is what kind of income draw does the op need in retirement ? that determines what he needs to do vs what he wants to do .
i would love to have all my money in cd's . but the people i owe money to each month would be most unhappy when i can't generate enough income safely to pay them .
so it is not about what you want to do as far as investing , it is about what your needs dictate you need to do .
Wait a second here though. CD's are only behind the curve if the market does BETTER than 3%. You are assuming this market will continue to give big returns. May well happen..or it may not and a 3% return beats having to crawl out of a 20 or 25 percent correction AS LONG as you are ok with a steady small return.
Take the 200k and either pay off a mortgage you already have or upgrade to something bigger than your current house. The other option is to put the dollar bills in coffee cans and bury it in the backyard.
Do you have a truck at all? I would suggest getting a truck with a large U-Haul trailer behind it, go to somewhere like Nevada where cans don't have any return value, and try to collect from as many neighborhoods as you can. Offer them like 2 cents a can. Then drive those cans up to OR where the can rate is 10 cents. There's some good money to be made there on arbitrage. Granted, by the time you pay for gas and the trailer, don't expect to make much money, but it's worth a shot.
Wait a second here though. CD's are only behind the curve if the market does BETTER than 3%. You are assuming this market will continue to give big returns. May well happen..or it may not and a 3% return beats having to crawl out of a 20 or 25 percent correction AS LONG as you are ok with a steady small return.
over time markets have a better chance beating inflation with a comfortable cushion than cd''s do .cd's are for short term money not longer term. you are betting against the house over the long term . .
Wait a second here though. CD's are only behind the curve if the market does BETTER than 3%. You are assuming this market will continue to give big returns. May well happen..or it may not and a 3% return beats having to crawl out of a 20 or 25 percent correction AS LONG as you are ok with a steady small return.
don't forget looking at all the rolling 30 year periods since 1871 , 118 of them , cd's have failed to last more than 60% of them , they failed 64 cycles at a 4% draw . a 50/50 mix failed to last 6 cycles . which is really the riskier bet ?
Logic and emotion are two very different streams
Normally a person can't step in both at the same time
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