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My Opinion -- I would question any recommendation of a Bond Fund, and especially an International Bond Fund, at this time. For a sanity check -- take a look at the charts of his recommended Bond Funds over the past 6 months. There's really too much turmoil in Europe and Asia to put any money in those arenas at this time.
The best advice you got on this thread is the CD Ladder approach. Electronic Transfer from your local checking to the Money Market in the large Fund Family where you have your 401K. Keep the minimum in local checking and ACH transfer the rest as it builds up. When you hit $10K in the MM, Buy a 12 month CD. Rinse and Repeat as necessary. Roll them over as the mature....perhaps the Interest Rates will be higher in a year.
The Vanguard recommendation may be useful when you get to $100K, but not at this point in time.
Last edited by FiveLoaves; 11-02-2016 at 09:10 AM..
Reason: spelling
CD ladders? Very old school. They were a hot idea a few decades ago, when you could actually get some decent interest paid out. Not so much now.
Best advice is to get a good, reputable book on investing, read it and develop a strategy that works for you.
There are many approaches to investing. Some work, some not so much. Some are based on sound economic and financial principles. Some not so much. You need to be armed with enough information to find what's best for your risk tolerance, and what will keep you away from the approaches that are much better for the promoters/advisors than for you.
If you want to be very conservative you can put the money into a 5-Year MYGA. This is basically a CD at an insurance company. There is no commission taken from your deposit. It will be trapped in the MYGA until the MYGA matures. There is a surrender fee if you break the MYGA (just like at a bank CD) and it is substantial. You will earn interest (usually on a daily basis). Unlike a CD you don't pay income tax when the interest is earned. You pay the tax on all of the interest when the MYGA matures. So the taxes are deferred. When the MYGA matures you have the option of (1) taking your money and paying income taxes on the interest, (2) rolling the money into another similar MYGA and continuing to defer the interest, (3) Annuitizing the MYGA so that you receive monthly payments instead of a lump sum.
The contracts are extremely simple. They were created to be pretty equivalent to CD's but they pay higher interest. I am seeing one now that is a 5 Year MYGA with a B++ AM Best rating that is paying a guaranteed 3% for 5 years.
Buy a rental house? It works in some areas not so good in other areas and you gotta be extremely picky about who you rent to.
Give out loans to folks buying houses so you'll have a mortgage backed security if they default? That should net about 6% and it can be amortized. It works for banks, why not do what they do?
Jasper mentioned "safe" a couple of times in his OP. The International Bond Market is not what I'd call a safe haven right now. Those MYGA bonds lock up your money for 5 years -- all for 3% and no early withdrawal. A rental property, with jasper holding the Mortgage.....I'll pass on that one.
A 12 month CD is paying around 1.1% these days. Using his newly available Mortgage payment, he should be able to buy one every 3 months. Renew as they mature. While that may seem paltry to some folks, at least it has a Plus Sign in front of the yield. As jasper builds up his total savings, he may be interested in some of these exotic products.
CD ladders? Very old school. They were a hot idea a few decades ago, when you could actually get some decent interest paid out. Not so much now.
Best advice is to get a good, reputable book on investing, read it and develop a strategy that works for you.
There are many approaches to investing. Some work, some not so much. Some are based on sound economic and financial principles. Some not so much. You need to be armed with enough information to find what's best for your risk tolerance, and what will keep you away from the approaches that are much better for the promoters/advisors than for you.
Bada Bing. Reading Bogle and the little book on investing never hurt. He already has a portfolio
Bada Bing. Reading Bogle and the little book on investing never hurt. He already has a portfolio
I am happy with the retirement portfolio I have and continue to build. I am thinking now I might go half and half with CD laddering and the other half in Vanguard Wellington Roth that is already started.
Always good to get others input and hopefully don't offend anyone but I don't think I need to talk to a financial adviser.
I am happy with the retirement portfolio I have and continue to build. I am thinking now I might go half and half with CD laddering and the other half in Vanguard Wellington Roth that is already started.
Always good to get others input and hopefully don't offend anyone but I don't think I need to talk to a financial adviser.
I am 55 years old and have 10 to 12 years to go until retirement and have below listed goals to accomplish before retirement. Some have already been accomplished.
1) Have house and vehicles paid for. Done
2) Build up 401K - working on it
3) Build up Roth IRA -working on it 4) Have 100K available upon retirement in very accessible account. Needs work
#4 is the one I am not sure where to park the money. A savings account or CD's won't yield much but is safe.
I am batting around the idea of adding to already started Roth IRA and add to that aggressively to reach the 100K mark. The fund I am considering is T Rowe Capital Appreciation. Fairly moderate risk and some growth potential.
Am I better off to contribute to a savings account or CD's which are very safe or go with a Roth in the T Rowe account or open another low risk fund? As always the original money contributed to a Roth is accessible.
Thoughts appreciated.
Don't put anything in just one fund! I have my retirement $$ in a variety of funds, some low, some medium and some high-risk, in all kinds of areas (healthcare, foreign, domestic, utilities, growth, income, technology, commodities, bonds, you name it) and sit on them. That's what makes your money grow -- diversification.
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