$350k in Money Market Funds

[wallygator69]

Hey,


Bailed out on two of my IRA's and now have $350k in each and in Vanguard Federal MM fund VMFXX. Yes I am a Dirty Rotten market Timer....I'd rather not make $500k now than lose $100k....



I am a little concerned about FDIC insurance and being over the limit.


Not sure Bond fund is smart now.


I have no need for the money for 10 years.



Any thoughts on a safe haven considering the debt ceiling crap going on


Thx


Wally

[mrfeh]

Quote:

Originally Posted by wallygator69 I have no need for the money for 10 years.

Invest it and ignore the news.

https://www.bogleheads.org/wiki/Bogl...g_start-up_kit

[pb4uski]

^^^ Agree that if your time horizon is 10 years then bonds will go down as interest rates rise but then recover over their duration as a result of the higher rates. You could also buy individual bonds... the value will decline as interest rates rise but you'll get par value at maturity... another option is target-maturity bond ETFs like BulletShares or iBonds... these are portfolios of bonds that all mature in a stated year and the ETF makes a terminal distribution of cash at the end of the stated year and that is the end of that ETF. There are typically ETFs for each year so you can easily build a ladder similar to a CD or bond ladder.

Or if you definitely don't want bonds, then you could split it into two FDIC insured online savings accounts at different banks... they currently pay as much as 0.5%.

Another cash like investment that provides better returns are programs like Dominion Energy Reliability Investment Notes (up to 1.25%), Toyota IncomeDriver Notes (1.35%) and GM RightNotes (1.5%)... they operate similar to an online savings account in that you can deposit or withdraw at any time and there is no interest rate risk...obviously not FDIC insured so credit risk of the issuers.

Or a some of each.

[DayDreaming]

Just curious - what do you mean that you bailed out of 2 IRA's? Did you withdraw the money and pay taxes, or did you just move the money from other funds into VMFXX within the 2 IRAs?

[Another Reader]

I assume you left the money in the Vanguard IRA's but took it out of equity funds and moved it to the money market fund.

Vanguard recently changed its' treasuries only MMF to a plain treasury MMF. The plain treasury MMF's all play the yield juicing swaps and repurchase agreements game, which expose you to some finite risk if they blow up. I recently took most of my money out of VUSXX, which I opened probably 40 years ago, and moved it to the Fidelity treasuries only fund because Vanguard changed the fund strategy to include the riskier yield enhancing games. My objective in a treasury fund is the security of the principal, not a few pennies of yield.

This may be the last straw with Vanguard for me. They are just no longer customer oriented. For the OP, the small but finite risk is something to evaluate.

[VanWinkle]

Quote:

Originally Posted by pb4uski ^^^ Agree that if your time horizon is 10 years then bonds will go down as interest rates rise but then recover over their duration as a result of the higher rates. You could also buy individual bonds... the value will decline as interest rates rise but you'll get par value at maturity... another option is target-maturity bond ETFs like BulletShares or iBonds... these are portfolios of bonds that all mature in a stated year and the ETF makes a terminal distribution of cash at the end of the stated year and that is the end of that ETF. There are typically ETFs for each year so you can easily build a ladder similar to a CD or bond ladder. Or if you definitely don't want bonds, then you could split it into two FDIC insured online savings accounts at different banks... they currently pay as much as 0.5%. Another cash like investment that provides better returns are programs like Dominion Energy Reliability Investment Notes (up to 1.25%), Toyota IncomeDriver Notes (1.35%) and GM RightNotes (1.5%)... they operate similar to an online savings account in that you can deposit or withdraw at any time and there is no interest rate risk...obviously not FDIC insured so credit risk of the issuers. Or a some of each.

Maybe a MYGA(Multi Year Guaranteed Annuity) from an A rated insurer would fit into this thread also. It also acts like a CD with much higher interest at this time. I am assuming that the MYGA can be held in the IRA.

[OldShooter]

Quote:

Originally Posted by wallygator69 ... Any thoughts on a safe haven considering the debt ceiling crap going on ...

Probably that depends on your definition of "safe." If a guaranteed loss in buying power is "safe" then there are a lot of options. TIPS maybe the best. If you recognize that volatility is not risk, though, and given your time horizon, a total market fund is probably the safest.

IOW:

Quote:

Originally Posted by mrfeh Invest it and ignore the news.

[donheff]

We do this debt ceiling dance every few years. If it precipitates a crisis it will be short lived. Certainly not 10 years. More likely, it will get suspended or raised through a reconciliation budget bill.

That's not to say something else won't whack us for ten years. Maybe Covid will evolve and start all over again, or the eruption at Las Palmas will kick loose the Cumbre Vieja mass and cause a 500 meter global tsunami, or the Yellowstone super volcano will blow and eradicate life as we know it. Yikes, there are a lot of bad possibilities..

[ERD50]

Quote:

Originally Posted by wallygator69 .... Yes I am a Dirty Rotten market Timer.... ... Any thoughts ... Thx Wally

See if you can find a 12 step program for that?

-ERD50

[pb4uski]

Quote:

Originally Posted by VanWinkle Maybe a MYGA(Multi Year Guaranteed Annuity) from an A rated insurer would fit into this thread also. It also acts like a CD with much higher interest at this time. I am assuming that the MYGA can be held in the IRA.

Yes, that would be another good option.

[wallygator69]

Quote:

Originally Posted by DayDreaming Just curious - what do you mean that you bailed out of 2 IRA's? Did you withdraw the money and pay taxes, or did you just move the money from other funds into VMFXX within the 2 IRAs?

Yes I sold everything in a ROTH and a TIRA no taxes.



We have no heirs and are living on less the 3% SWR.



We will have SS and 2 pensions worth 4% SWR in 2 and 6 years.


Won the game and not wanting to play anymore. So MYGA may be the way to go but was thinking to keep it simple with VG. I don't think they do MYGA's yet.


Thanks,


Wally

[pb4uski]

Please clarify... using the Roth as an example... did you sell all your equities and now have a big wad of cash in your Roth account or did you sell equities and take the money out of the Roth as well and it is now in a taxable account?

Same questions for the tIRA.

[pb4uski]

Quote:

Originally Posted by wallygator69 ....I don't think they do MYGA's yet. ...

And they probably never will.... they used to sell annuities but stopped cold turkey for income annuities and then phased out their VA business to Transamerica.

You could buy a MYGA and have it held in an IRA with the issuer.

[OldShooter]

Quote:

Originally Posted by pb4uski ... You could buy a MYGA and have it held in an IRA with the issuer.

You can buy them at Schwab but I haven't comparison shopped the rates. If Schwab sells them, Fido almost certainly does too.

[CRLLS]

I'm not sure how Vanguard handles it, Fidelity will automatically sweep some funds into separate banks keeping each account under 250,000. It might be worth checking with Vanguard.

Quote:

Fidelity's FDIC Insured Deposit Sweep Program details In utilizing the Program, your uninvested cash balance is swept to a program bank where the deposit is eligible for FDIC insurance. If you have more than $245,000 in uninvested cash in your account, the Program maximizes your eligibility for FDIC insurance by systematically allocating this uninvested cash across multiple program banks. At a minimum, there are generally five banks available to accept customer deposits, making customers eligible for nearly $1,250,000 of FDIC insurance.2

[pb4uski]

What are the yields like?

[wallygator69]

Quote:

Originally Posted by pb4uski Please clarify... using the Roth as an example... did you sell all your equities and now have a big wad of cash in your Roth account or did you sell equities and take the money out of the Roth as well and it is now in a taxable account? Same questions for the tIRA.

I sold the equities and now have a wad of cash in both ROTH and TIra..


Thx

[Luvtoride]

Quote:

Originally Posted by pb4uski What are the yields like?

This should show you the rates for MYGAs from 3 to 10 years.

https://www.annuityadvantage.com/lp/...e%20Report.pdf

Not great, but sure meets most alternatives. I have an Oceanview MYGA which I invested in about a year ago. Rate at that time was 3% and I’m glad I got in then.

[GravitySucks]

Quote:

Originally Posted by OldShooter You can buy them at Schwab but I haven't comparison shopped the rates. If Schwab sells them, Fido almost certainly does too.

FIDO will be very happy to sell you a MYGA, look under Annuities/deffered-fixed-annuities.

Recent rate for NY based 3 year jumbo 1.45%

[Dtail]

Quote:

Originally Posted by VanWinkle Maybe a MYGA(Multi Year Guaranteed Annuity) from an A rated insurer would fit into this thread also. It also acts like a CD with much higher interest at this time. I am assuming that the MYGA can be held in the IRA.

True it belongs, but probably more similar to the Investment programs that PB4USKI mentioned, rather than CD's due to the credit risk involved vs. typical FDIC insured CD's.