Withdrawal Strategy Variation

[MJ]

Don't forget my short term standby Corus bank

Right now 6 month cd 4.8 % or 1 year 5.09%

http://www.corusbank.com/

[MDW]

The five year plan has been my goal for several years. I don't remember reading about it anywhere, I think I decided one day that if the economy goes sour it will straighten itself out within five years.

My plan is a five year CD ladder with an emergency pool in MM. If the market does extremely well in one year I would add another year to the ladder as extra insurance.

[brewer12345]

Originally Posted by Rich_in_Tampa

Bankrate.com shows about 5.1% best rate this evening, as an example.

If you shop around, there are better rates. Check out www.penfed.org

There are also other alternatives, like OSM (stick that ticker into yahoo finance or similar). This is a bond issued by Sallie Mae that pays CPI + 2%. Could be less or more than 5.1%, but you avoid the risk that inflation eats away all your yield.

There are also I-bonds, which pay CPI plus something (1%?), wth no state tax on the interest and federal taxes deferred until you cash in the bond.

Or there are exchange-traded preferred stocks that pay attractive cooupons that are taxed as qualified dividends (15% federal tax). The ones issued by highly rated issuers have very little default risk, and you can even find some that are floating rate payers, so you don't take interest rate risk.

Or there are things like AHL's exchange-traded preferred. This thing pays 5% and change in yield, with the payouts taxed as qualified dividends. Att the end of 3 years, you get a new preferred stock worth par plus any appreciation in the issuer's equity over a set price. If the issuer's stock goes down over that time period, you don't take the hit.

As you can see, there are lots of flavors of bonds out there. Of the ones I described, some are riskier than others, but I do not regard as any of them as being as risky as a junk bond or an equity.

[cute fuzzy bunny]

Brewer - in the lower tax brackets, qualified dividends are taxed at only 5%. In 2007 it drops to zero unless congress makes any changes.

I can speak from personal experience that tweaking your income to get into one of the low brackets, and then taking your yields as qualified dividends is a very, very good thing.

[free4now]

This is a great thread... I really appreciate all the people describing actual bond-type investments they have found. As someone who is going to stop working soon I need to figure out exactly how to get my living income.

[brewer12345]

Originally Posted by fireme

This is a great thread... I really appreciate all the people describing actual bond-type investments they have found.* As someone who is going to stop working soon I need to figure out exactly how to get my living income.*

There is a very nice free (but must register) directory of income securities at http://www.quantumonline.com/Index.cfm

Lots and lots and lots of stuff there, ranging from defaulted/deep junk to Aaa-rated.