Income from cash...where to invest?

[justplainbll]

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Originally Posted by NYEXPAT I am sorry, I thought you were living in Greece!

Touché

[justplainbll]

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Originally Posted by NYEXPAT You need to do due diligence on the banks/caja with the ratings agencies, be familiar with inflation rates (i.e Brazil 7.6%)

Things go up and down but over the past 3 years the $US cost of the $R (Brazilian Real) has risen by > 30%.
Coupling that with a 30% emigration tax would imprison many people.

[NYEXPAT]

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Originally Posted by MichaelB Would you care to reference your post on a new tax on foreign transfers?

H.R. 2847, Commonly referred to as the HIRE Act was signed into law in March of last year.

[MichaelB]

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Originally Posted by NYEXPAT H.R. 2847, Commonly referred to as the HIRE Act was signed into law in March of last year.

Got it. Thanks. This is not a new tax, though. It's just withholding on transfers to foreign financial institutions that refuse to provide information to the IRS on US citizens with overseas accounts. This is to reduce tax evasion and should not affect most people. It also affects non-US entities transferring money out of the US when they might owe tax.

As related to the topic of this thread it should be a non-issue.

[justplainbll]

U.S. corporations earning income overseas do not have to pay US income tax on those earnings if they are not repatriated but U.S. citizens earning and keeping that income overseas have to pay U.S. income tax?

[MichaelB]

Lets try to stay on topic and away from issues that lead to politics.

[MichaelB]

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Originally Posted by GregLee I have a small investment in T. Rowe Price PRELX, Emerging Markets Local Currency Bond fund.

This is a fine alternative for anyone thinking about rates in Brazil or other emerging countries, with the added benefit of an experienced fund manager, diversified portfolio and available at most brokerages. TRP has a pretty decent EM team. PIMCO has a couple of similar offerings, Fidelity has one as well that are also good options.

[steelyman]

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Originally Posted by Animorph I parked my spare cash in FGMNX, a GNMA bond fund. Less volatility than most of the other options I looked at (particularly 2007-2009) and a decent current yield. Up a few percent in price from when I bought it, plus dividends. Much better than the 0% I was trying to beat. But I'm no bond investor, so maybe someone has a better current recomendation.

I have a pretty sizable amount of money that has been sitting (flatlining) in Fidelity's Select Money Market Porfolio within my 403(b) account and have been slowly transferring portions over to FGMNX in order to get a higher return. So far, so good although I would be interested in hearing what the risks are that are inherent in this approach. This is money I don't anticipate needing for about 6 years.

[clifp]

If you don't need the money for a couple of years. The two year Greek bonds are yielding 83% . Just think all you need to do is invest in the bonds for a week and you'll come out of most yields we have been talking about.

Now of course there is always the potential of defaulting but what are the odds they default the one week you own them.

[steelyman]

Coincidentally, I stumbled across an article (which I am not sure has been posted before) that offers some comments that relate to my questions about GNMAs a few posts back in this thread.

Here's a quote from early on in the article:

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"I like [Ginnie Maes] because they are backed by the full faith and credit of the U.S. government," says George Hahn, a 77-year-old retired stockbroker in San Diego. "It seems like a lead-pipe cinch to me." Even after the U.S. lost its triple-A credit rating from Standard & Poor's last month, U.S.-government-backed obligations generally are seen as among the safest investments. But Ginnie Mae funds—the name refers to the federal Government National Mortgage Association—do have risks investors should consider.

Using Ginnie Mae Funds as a Cash Stash - WSJ.com

Quote:

Originally Posted by steelyman I have a pretty sizable amount of money that has been sitting (flatlining) in Fidelity's Select Money Market Porfolio within my 403(b) account and have been slowly transferring portions over to FGMNX in order to get a higher return. So far, so good although I would be interested in hearing what the risks are that are inherent in this approach. This is money I don't anticipate needing for about 6 years.

[Mulligan]

Obviously, any type of guaranteed rate will be very low. It seems like, I have read on many forums that the term "when rates return to their normal level" is used concerning these measurements such as government bonds and CD's. I wonder if maybe this assumption is wrong and perhaps we will have to live with these rates for at least 10 years? Japan's 10 year bond has been extremely low for over 10 years and they have had similar problems we have had economically. Is it realistically possible we are just going to have to deal with this for an extended period of time such as a decade?

[NYEXPAT]

or 2?

[clifp]

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Originally Posted by NYEXPAT or 2?

or 3 decades as all the baby boomers retire.

[arebelspy]

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Originally Posted by clifp or 3 decades as all the baby boomers retire.

Seriously. I was reading a financial book last weekend written in 99, and it was talking about 2010 being the first year the baby boomers are retiring and expecting the market to be bad for awhile after that due to them selling to withdraw from their retirement accounts, and I thought man, if it is supposed to be bad for the next five years due to this recession, plus the wonderful baby boomer retirements on top of it... yikes. Hold on to your hats, will be a fun few decades.

[Hamlet]

I'm buying equities as fast as the money comes in.

But I have a pretty high tolerance for fluctuation.

I am essentially 100% equities beyond my emergency fund. I haven't exactly enjoyed the last few years, but it didn't keep me awake at night.

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Originally Posted by tightasadrum Anyway, here's my question: where are you guys putting cash these days?

[GregLee]

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Originally Posted by Hamlet I am essentially 100% equities beyond my emergency fund.

I'm 95.5% equities. I don't have an emergency fund; with pension money coming in and good credit, I don't see the need. I don't like keeping cash.

[brewer12345]

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Originally Posted by GregLee I'm 95.5% equities. I don't have an emergency fund; with pension money coming in and good credit, I don't see the need. I don't like keeping cash.

I keep a large e-fund, but I also view it as a substantial portion of my fixed income allocation. Having I bonds and CDs as part of the mix is not a bad thing, although one gives up the possibility for capital gains.

[Mulligan]

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Originally Posted by GregLee I'm 95.5% equities. I don't have an emergency fund; with pension money coming in and good credit, I don't see the need. I don't like keeping cash.

That's why I enjoy reading comments for other ideas. Greg, you and I are exactly the same as far a having a good pension with plenty of incoming cash flow. However, you treat your capital exactly the opposite that I do. I have my excess in CD's and now moving up into the high flying investment world of I Bonds. I did start adding $300 a month into the Vanguard total stock index last year, to force myself into equities. I'm definitely not criticizing or even necessarily happy with what I am doing, though. If memory serves me, you said you are in your 60's, I am in my 40's. The humor I find in it is a traditional financial planner might say we should switch portfolios

[Alan]

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Originally Posted by Mulligan That's why I enjoy reading comments for other ideas. Greg, you and I are exactly the same as far a having a good pension with plenty of incoming cash flow. However, you treat your capital exactly the opposite that I do. I have my excess in CD's and now moving up into the high flying investment world of I Bonds. I did start adding $300 a month into the Vanguard total stock index last year, to force myself into equities. I'm definitely not criticizing or even necessarily happy with what I am doing, though. If memory serves me, you said you are in your 60's, I am in my 40's. The humor I find in it is a traditional financial planner might say we should switch portfolios

I think this is why an individual's risk tolerance is so important in financial planning. Greg has a secure pension and knows that if the worst happens he should always have that, so he feels confident to have a very high equity ratio.

I also have have pensions but they are non-COLA and only covered 70% of post-retirement expenses when we ER'ed at age 55. My (our) personal risk tolerance means we have only 35% in equities with a lot of dividend producing funds to avoid, hopefully, having to sell off equities to meet our needs. Our e-fund will soon be 100% I-bonds after the last 2 of our 5% CD's mature in December. Our "cash" buffer is the VG short term bond fund that we tap from time to time through the year, and into which the quarterly and annual fund distributions go.

[GregLee]

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Originally Posted by Mulligan If memory serves me, you said you are in your 60's, I am in my 40's. The humor I find in it is a traditional financial planner might say we should switch portfolios

I'm almost 70. That advice from a financial planner only makes sense, in my view, when an older person is nearing the time when he must start spending down his investments. Volatility is no problem if you won't have to sell stocks for a while (and I don't think I'll have to). I keep mostly stocks because I dislike the idea of losing out on profits just as much as I dislike market losses. An investment mistake is when you wind up with less money than you would have had, had you not made the mistake.