What Would You Do?

[kannon]

Afternoon All - Happy "Labor" Day. This is my first labor day since retiring - definitely a different feel.

Would appreciate your advise.

So far almost 9 months into ER it looks like our pensions are able to keep up with our basic living expenses. Our investment style is conservative to say the least - 30%/40%/30% (stocks/bonds/cash).

We have a nice five year CD coming due next month and would like to lower our cash % but still keep our conservative investment style. Thinking of moving the money into a Intermediate Term Bond Fund with Vanguard.

With interest rates probably going up, I want to keep bonds to a lower term.

Is this a sound strategy? Still want to maintain a low stock % just cause we don't need to speculate with a solid pension.

Thanks

Kannon

 

[travelover]

Do you have access to a Stable Value fund in a 401(k)?

 

[Mulligan]

If you have a sound investment strategy that you are comfortable with why would you want to change it? If I had a dollar for every post that mentioned rates are going up the past 6 years I wouldn't need my pension that I live on. The Fed possibly tossing out a few gratuitous 25 basis bones may not change the landscape much.
Have you checked yields on intermediate bond bonds? Are they appreciably different than another 5 year CD that can be had for 2.25%?


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[LOL!]

I would wait until after the FOMC meeting. You might miss a big run-up in the stock market on the day that meeting finishes, but I think you won't mind. You will also know what to invest in on that day very very easily.

This should be very easy to do since your CD matures after the FOMC is concluded, so twiddle your thumbs until then and post again if the way forward is not clear.

 

[pb4uski]

I've been buying Guggenheim target maturity bond funds as a CD and bond fund substitute. They have interest rate risk like a bond fund but you will get a terminal distribution at the end of the maturity year like a CD maturing. It is sort of like owning a participation in a diversified portfolio of corporate bonds that mature in a specified year.

 

[W2R]

What would I do? Well, before I retired I worked very hard at coming up with a written personal financial plan that included a planned asset allocation for retirement. My plan includes a specific percentage to be allocated to cash, and another for bonds.

So, I wouldn't be changing my asset allocation to lower my cash %; instead, I would follow my planned asset allocation in determining what to do with the money from the CD's.

That is what I am in the process of doing right now with the cash I recently received from the sale of my house. Following the plan.