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Thanks in advance.....situation: 60 years old, retirement in 5 years
-- For a while now, have had 8 years' living expenses in an emergency fund (credit union MMA). I've known it's way too much, but just left it in place as a great psychological cash cushion. Everything else is in the market, in retirement accounts (401k/IRA/Roth IRA, etc) with a 70% stocks/30% bonds split.
-- MMA is now down to paying just .20 percent. .50 was bad enough. But at .20. That's just too much to leave at that rate. CD's don't appeal to me. It would have to stay in taxable accounts. No way to get it into my Roth or TradIRA (which I already max out.)
Options I'm close to deciding:
-- Move all of it to another credit union MMA earning .50 (It's one of the top rated national CUs known for servicing military personnel. I'm not, but family members are.)
OR move half to the new credit union -- and take 4 of the 8 years' money and go conservative -- 50/50 in Vanguard's:
YTD. 1YR 5YR 10YR. since inception
1) Vanguard PA LT Tax-Exempt Investor - 5.75% 5.45% 4.60% 4.85% 5.87%
2) Vanguard Target Retirement Income - 9.52% 9.24% 6.30% 5.84% 5.56%
There's also:
3) Tax-Exempt Bond Index Admiral Shares - 4.93% 4.63% 3.74% — 3.84%
Even this is more than the MMA's .20
4) Vanguard Select FundsShort-Term Tax-Exempt - 1.81% 1.88% 1.41% 1.10% 3.74%
It's taken the .20 to get me to think of moving it to make more. (Friends have thought I was crazy to leave so much in cash for years now.)
Aren't all of these "safe enough" for my situation?
Which of the above would you choose and why?
Considerations?
Keep no more than 12 months for savings and deploy the rest into investments and leave it there. Less than 12 months is totally fine too. 6 to 9 months would work.
I posed a similar conundrum to sages at Vanguard some years ago. The complaint was, that beyond truly emergency cash, I didn't want to have everything in the stock market... something that accepts reduced (but not zero!) returns, in exchange for low (but admittedly not outright zero) risk. And taxes are very consequential. Their response was: intermediate-term tax-exempt bonds. They averred that short-term bonds pay too little, and long-term bonds are too volatile.
This decision wasn't entirely felicitous. In March, the bond-fund wobbled, to say the least. I wasn't tracking it (or anything else), and only learned of the wobbling a few weeks ago. Blissful ignorance etc. I am not a fervent cheerleader for this fund. But it is something to consider.
NOBL Dividend Aristocrats; Pays 2.4%
Dividend aristocrats are companies that have increased their dividend payouts for 25 consecutive years or more, proving they have a great pedigree as income stocks. It also hints at a commitment to raising dividends over the long term, since this is not a static title and demands continued increases every 12 months or else stocks fall off the list.
NOBL Dividend Aristocrats; Pays 2.4%
Dividend aristocrats are companies that have increased their dividend payouts for 25 consecutive years or more, proving they have a great pedigree as income stocks. It also hints at a commitment to raising dividends over the long term, since this is not a static title and demands continued increases every 12 months or else stocks fall off the list.
you keep seeing just invest in this group and call it a day .
however what constitutes this group changes all the time so get ready for lots of selling trying to keep up as they get bumped and replaced AFTER THE FACT THEY DID NOT LIVE UP TO EXPECTATIONS . you could be behind the curve here very easily .
these dividend aristocrats are not somehow immune to all the things that effect company's and stocks . Just like other companies, their outcomes change.
in 2009 there were 52 stocks that met the group’s strict criteria.
As of 2012, there were 51.
But of those 51, 13 were different than the original set. So over the course of just 3 years, there was a 27% change in the group’s composition.
in fact going back to 1989's list :
Of those 26, seven are still on the list today, ten were removed because they either cut or froze their dividend, four were removed for an unknown reason, and the remainder were aquired at some point. So at least ten of the 26 had an outcome that is different from the assumption of dividend growth every year through thick and thin.
Keep no more than 12 months for savings and deploy the rest into investments and leave it there. Less than 12 months is totally fine too. 6 to 9 months would work.
I take it you're saying I can afford to be -- or should be -- more aggressive with these monies.
I'm already in the market with a 70 stocks / 30 bonds split. (Much of it already in the S&P 500)
I was hoping for something "safer" than stocks for this money. I am retiring in 5 years.
I'd be happy with a steady or dependable 2%.
It's the POINT-2 percent I just can't accept.
What makes the options I was considering a wrong choice? (considering that I want it "safe" and making more than .20%.)
YTD. 1YR 5YR 10YR. since inception
1) Vanguard PA LT Tax-Exempt Investor - 5.75% 5.45% 4.60% 4.85% 5.87%
2) Vanguard Target Retirement Income - 9.52% 9.24% 6.30% 5.84% 5.56%
There's also:
3) Tax-Exempt Bond Index Admiral Shares - 4.93% 4.63% 3.74% — 3.84%
Even this is more than the MMA's .20
4) Vanguard Select FundsShort-Term Tax-Exempt - 1.81% 1.88% 1.41% 1.10% 3.74%
you keep seeing just invest in this group and call it a day .
however what constitutes this group changes all the time so get ready for lots of selling trying to keep up as they get bumped and replaced AFTER THE FACT THEY DID NOT LIVE UP TO EXPECTATIONS . you could be behind the curve here very easily .
these dividend aristocrats are not somehow immune to all the things that effect company's and stocks . Just like other companies, their outcomes change.
in 2009 there were 52 stocks that met the group’s strict criteria.
As of 2012, there were 51.
But of those 51, 13 were different than the original set. So over the course of just 3 years, there was a 27% change in the group’s composition.
in fact going back to 1989's list :
Of those 26, seven are still on the list today, ten were removed because they either cut or froze their dividend, four were removed for an unknown reason, and the remainder were aquired at some point. So at least ten of the 26 had an outcome that is different from the assumption of dividend growth every year through thick and thin.
Why would anyone care about all that?
2 years ago they were at 64$, today they are at 80$.
2 years ago they were at 64$, today they are at 80$.
Because there really is no such thing because the make up of the group is always changing ..stocks are an aristocrat until they aren’t.. like any index if an etf tracks it ,it just buys what is currently in but that make up changes.
It isn’t some group of stocks immune to all the things that effect business
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