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Your opinions for investing money needed in 2 years
Old 03-09-2012, 06:35 AM   #1
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Your opinions for investing money needed in 2 years

I am starting to build a plan for funding my ER that will start by the end of 2013. I currently have about $100,000 that is in 5% CDs maturing this month. I will need this money in approx. two years for living expenses. I checked PenFed this morning and see that a two year CD is paying only .99% APY.

I am considering dumping this money into Vanguard Short-Term Bond Index Fund instead of renewing into CDs. Any opinions on this?

If you have other suggestions on where to park the money that would be relatively safe please speak out.
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Old 03-09-2012, 07:42 AM   #2
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ING regular savings is where we keep our short term. Currently paying .80 and can be moved easily if CD's start going higher. For us, anything that is absolutely needed within 18 months gets a very safe place to rest!
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Old 03-09-2012, 08:48 AM   #3
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Do the math on cd rates. If you take pen fed 4 year CDs and surrender early, you will earn a higher rate even after paying the penalty.
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Old 03-09-2012, 08:52 AM   #4
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I am one that would put it in the ST fund.... the rate fluxuations are not that big.. plus, you probably are not going to need all the money right away...
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Old 03-09-2012, 12:55 PM   #5
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Current yields (current distribution divided by NAV) on ST funds:
Vanguard ST index (VBIRX) = 1.6%
Vanguard ST investment grade (VFSUX) = 2.6%

These yields have been dropping as (I guess) older higher yielding bonds are replaced with newer lower yielding ones.

Durations are 2.7 years for VBIRX and 2.3 years for VFSUX.

FWIW, our short term bond money is in VFSUX but we move between VBIRX and VFSUX.
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Old 03-09-2012, 08:59 PM   #6
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Quote:
Originally Posted by Lsbcal View Post
VFSUX
I can't believe that ticker made it past the marketing staff.

I guess they were distracted by the ticker for the short-term emerging-market bond fund...
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Old 03-10-2012, 02:50 AM   #7
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This would be my choice also. One more reason why I love CDs.
Quote:
Originally Posted by brewer12345 View Post
Do the math on cd rates. If you take pen fed 4 year CDs and surrender early, you will earn a higher rate even after paying the penalty.
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Old 03-11-2012, 12:17 PM   #8
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Well, Been In VBSIX/VBRIX for yrs..
Longer term $ in VBIIX/VBILX
Only Exception was 50% In EDV for 9 mos..for 08' & 11'.

And I wouldn't give some Bank the Satisfaction of buying their Con game CD's..I'd rather Put it in my Matteress instead.
They give you <1%, while they go make +6% on it.....Bunch of Crooks!
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Old 03-11-2012, 03:47 PM   #9
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Navy Federal has a 20 month CD@ 3%. It has some add'l limitations like IRA/ESA only and $18k max.
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