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Best investment vehicle for timeline of 5-10 years?
02-04-2016, 10:12 PM
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#1
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Dryer sheet wannabe
Join Date: Feb 2016
Posts: 21
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Best investment vehicle for timeline of 5-10 years?
I want to start contributing to a pot of money that I want to keep very liquid. I may tap into it anywhere between five to ten years from now for any type of expenses like down payment, health care, etc. What investment vehicles do you suggest I use?
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02-04-2016, 11:01 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,455
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money market fund or short-term bond fund.
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02-05-2016, 07:09 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
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5-10 years is a long time. I like the Fool's recommendation.
Quote:
Rule 1: If you need the money in the next year, it should be in cash.
Rule 2: If you need the money in the next one to five (or even seven) years, choose safe, income-producing investments such as Treasuries, certificates of deposit (CDs), or bonds.
Rule 3: Any money you don't need for more than five to seven years is a candidate for the stock market.
Rule 4: Always own stocks.
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Fool's Rules for Asset Allocation
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02-05-2016, 07:47 AM
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#4
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Dryer sheet wannabe
Join Date: Feb 2016
Posts: 21
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Spanky and Senator, thanks for your suggestions!
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02-05-2016, 09:07 AM
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#5
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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A balanced fund....so VBINX or......psst Wellesley or Wellington
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“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
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Income from pension and rent
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02-05-2016, 09:39 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,371
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CDs or target maturity bond funds. Or if you're less sensitive to what it earns or want more liquidity, perhaps an online savings account.
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02-05-2016, 09:57 AM
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#7
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Moderator
Join Date: Jul 2010
Posts: 7,941
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If income taxes are a concern, a limited-term tax-exempt fund might work. I use VMLTX for this - the share price has varied in a 2.5% range over the last 5 years ($10.95-11.22) so the principal is pretty stable. I get the interest in cash as part of our normal budget and the principal is there for spending as needed.
__________________
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute." William Feather
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ER'd Oct. 2010 at 53. Life is good.
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02-05-2016, 02:01 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2015
Location: Michigan
Posts: 5,003
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Quote:
Originally Posted by Senator
5-10 years is a long time. I like the Fool's recommendation.
Quote:
Rule 1: If you need the money in the next year, it should be in cash.
Rule 2: If you need the money in the next one to five (or even seven) years, choose safe, income-producing investments such as Treasuries, certificates of deposit (CDs), or bonds.
Rule 3: Any money you don't need for more than five to seven years is a candidate for the stock market.
Rule 4: Always own stocks.
Fool's Rules for Asset Allocation
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+1 Another vote for Senator's post.
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"The mountains are calling, and I must go." John Muir
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02-05-2016, 04:17 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Jul 2006
Location: Denver
Posts: 3,519
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I can give you the correct answer in 5-10 years.... till then..
It depends on what you need. Will you need a portion of the money or the entire amount for one expense within that 5-10 year period? Or will you need portions throughout the 5-10 year period. What volatility can you tolerate on the funds? ie. will you be okay if the funds are 10% less at the moment you want them? 20% 30%?
There are so many variables that it is hard to have a definite answer.
I think any money you need in 5 years belongs in a very safe investment like an FDIC insured CD.
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02-06-2016, 05:56 AM
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#10
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Recycles dryer sheets
Join Date: Apr 2013
Location: Humble
Posts: 188
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I'd stick to my asset allocation and drop this money into that pool. This is assuming that you have an emergency fund etc. You didn't say what % of your net worth this money represents. This, obviously, wouldl change the decision.
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02-09-2016, 05:45 PM
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#11
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Dryer sheet wannabe
Join Date: Feb 2016
Posts: 21
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Quote:
Originally Posted by MBAustin
If income taxes are a concern, a limited-term tax-exempt fund might work. I use VMLTX for this - the share price has varied in a 2.5% range over the last 5 years ($10.95-11.22) so the principal is pretty stable. I get the interest in cash as part of our normal budget and the principal is there for spending as needed.
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MBAustin, does VMLTX's interest get deposited in your bank account as cash? Is it on a monthly basis?
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02-10-2016, 08:26 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Jul 2013
Posts: 1,884
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Quote:
Originally Posted by Moleskin Moyer
MBAustin, does VMLTX's interest get deposited in your bank account as cash? Is it on a monthly basis?
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You can have them treat the dividends howevery you want - reinvest or send them to your bank account. And yes, it's monthly.
At this moment, I'd prefer VFSUX over VMLTX. Even after taxes, the VFSUX dividend is higher.
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02-10-2016, 11:00 AM
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#13
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Moderator
Join Date: Jul 2010
Posts: 7,941
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Correct, we get our dividends deposited monthly directly into our bank savings account.
__________________
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute." William Feather
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ER'd Oct. 2010 at 53. Life is good.
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