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What asset class is my Cash Balance Fund?
Old 06-06-2018, 10:29 AM   #1
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What asset class is my Cash Balance Fund?

My state government employer offers a guaranteed cash balance fund of 5% ....
Members who participate in
Cash Balance do not make investment

choices
for either member or employer contributions. The rate of return for

Cash Balance accounts is not tied to investment performance. Cash Balance
participants are guaranteed a rate of return (“Interest Credit Rate”) on their
accounts based on the federal mid-term rate plus 1.5%. When the federal
mid-term rate falls below 3.5%, members receive a 5% minimum credit rate.....

It also can provide for dividends based on performance, 2017 dividend yield is 5.46%. I am 63 and can keep this fund until I am 70.
I would like to included this fund amount in portfolio asset allocation tools, Flexible Retirement Planner, Portfolio Visualizer, etc. It is 20% of our nest egg. What do I call it?
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Old 06-06-2018, 10:37 AM   #2
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Fixed income.
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Old 06-06-2018, 10:38 AM   #3
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Sounds similar to a stable value fund, only better. I designate my stable value fund as cash in my asset allocation.
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Old 06-06-2018, 10:42 AM   #4
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Originally Posted by LOL! View Post
Fixed income.
+1... with no interest rate risk and an attractive yield.
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Old 06-06-2018, 11:15 AM   #5
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Originally Posted by MuirWannabe View Post
Sounds similar to a stable value fund, only better. I designate my stable value fund as cash in my asset allocation.
Agree sounds like a better version of a SV fund, but better.
However, I classify my SV fund as Fixed Income. The rate is 3.84%, which is more in line with composite type CD rates which many use as a fixed income allocation.
I could see it either way though.
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Old 06-06-2018, 12:29 PM   #6
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+1.... I think of it as fixed income rather than cash.
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Old 06-06-2018, 01:10 PM   #7
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Agree sounds like a better version of a SV fund, but better.

However, I classify my SV fund as Fixed Income. The rate is 3.84%, which is more in line with composite type CD rates which many use as a fixed income allocation.

I could see it either way though.

I see the point. I’ll consider adjusting how I view it in my AA.
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Old 06-06-2018, 01:29 PM   #8
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Cash suggests complete liquidity to do anything that one wants to with the value. Fixed income suggests less liquidity than cash. I think the OP's money in this fund is less liquid than cash.

OTOH, this fund won't go down in value I think. So if one is using those allocation tools, see if they allow a fixed annuity as an option for input.
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Old 06-06-2018, 03:29 PM   #9
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Per Wikipedia:
The "traditional" asset classes are stocks, bonds, and cash:

Stocks: value, dividend, growth, or sector-specific (or a "blend" of any two or more of the preceding); large-cap versus mid-cap, small-cap or micro-cap; domestic, foreign (developed), emerging or frontier markets

Bonds (fixed income securities more generally): investment-grade or junk (high-yield); government or corporate; short-term, intermediate, long-term; domestic, foreign, emerging markets

Cash and cash equivalents (e.g., deposit account, money market fund)

Since stocks and bonds both the risk the value of the invested amount, I tend to consider all guaranteed principal investments as cash. So I would consider the OP's "cash balance account" as cash. In my mind, cash is what I can access, with no losses, and without selling on the secondary market, if TSHTF. (yes, I know some CD's, if sold shortly after purchase, can result in a minor loss in principal, but at least that is defined amount, not a market risk)

Not that it really matters, as long as YOU know how you are accounting for it.
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Old 06-06-2018, 03:59 PM   #10
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Does OP care about the classification in terms of how it would be classified for example in various retirement calculators, where one can segregate Fixed Income vs. Cash allocations?
Edit - I see this is the main reason for the request.
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Old 06-06-2018, 06:31 PM   #11
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Quote:
Originally Posted by RHONDAVE View Post
My state government employer offers a guaranteed cash balance fund of 5% ....
Members who participate in
Cash Balance do not make investment

choices
for either member or employer contributions. The rate of return for

Cash Balance accounts is not tied to investment performance. Cash Balance
participants are guaranteed a rate of return (“Interest Credit Rate”) on their
accounts based on the federal mid-term rate plus 1.5%. When the federal
mid-term rate falls below 3.5%, members receive a 5% minimum credit rate.....

It also can provide for dividends based on performance, 2017 dividend yield is 5.46%. I am 63 and can keep this fund until I am 70.
I would like to included this fund amount in portfolio asset allocation tools, Flexible Retirement Planner, Portfolio Visualizer, etc. It is 20% of our nest egg. What do I call it?
I would call it a blessing!! Keep it as long as you can and call it fixed income.

Congrats,

VW
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