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Your opinions for investing money needed in 2 years
03-09-2012, 05:35 AM
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#1
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Full time employment: Posting here.
Join Date: Oct 2006
Posts: 783
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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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My motto is.... "a dollar saved is better than a dollar earned. I don't pay tax on the dollar I saved."
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03-09-2012, 06:42 AM
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#2
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Full time employment: Posting here.
Join Date: Mar 2008
Posts: 968
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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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03-09-2012, 07:48 AM
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#3
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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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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"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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03-09-2012, 07:52 AM
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#4
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: May 2005
Posts: 17,239
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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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03-09-2012, 11:55 AM
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#5
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: May 2006
Location: west coast, hi there!
Posts: 8,809
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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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03-09-2012, 07:59 PM
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#6
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,860
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 Quote:
Originally Posted by Lsbcal
VFSUX
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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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Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
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03-10-2012, 01:50 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
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This would be my choice also. One more reason why I love CDs.
Quote:
Originally Posted by brewer12345
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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__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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03-11-2012, 11:17 AM
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#8
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Recycles dryer sheets
Join Date: Oct 2008
Posts: 295
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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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03-11-2012, 02:47 PM
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#9
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Aug 2004
Location: Laurel, MD
Posts: 8,327
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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.
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
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