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07-10-2017, 02:20 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Mar 2005
Location: yonder
Posts: 2,851
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Earn 2% kind of safely?
There's this fellow I know who owns his own business (and apparently is doing quite well). He maxes out his tax-advantaged account(s) and puts a bunch of money into an S&P ETF. However, it seems he has about $1M floating around in a fund or two that exist mainly just to hold money. He makes very little interest in these funds. He'd like to put about $400K into
a fund that could earn him about 2% (or a bit more). Safety (as in let's not try to lose principal) is a concern. Any ideas?
__________________
When the people shall have nothing more to eat, they will eat the rich--philosopher Jean-Jacques Rousseau
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07-10-2017, 02:29 PM
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#2
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Recycles dryer sheets
Join Date: Aug 2013
Posts: 437
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Ally 11 month no penalty CD's are 1.5% ... what term does he need?
if you can find something at 2%, but less safe, would you take that?
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07-10-2017, 02:44 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Jul 2002
Posts: 1,587
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Vanguard short term investment grade corporate bond fund, VSUX,, just under 2% yield but with some interest rate risk. It's where I park brokerage account money but need fairly quick access.
Edit to correct typo
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07-10-2017, 02:58 PM
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#4
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Recycles dryer sheets
Join Date: Jun 2013
Location: Chattanooga
Posts: 499
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It's VFSUX. I also use this to hold "cash". There is interest rate risk, but historically the risk is small. It lost 7% of its value during the 2008 crash but recovered in less than a year.
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07-10-2017, 03:40 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Southern Cal
Posts: 4,032
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VCSH lost about 4% in 2008. I think it's best to put in CDs.
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07-10-2017, 03:48 PM
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#6
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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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Either CDs or if it must be easily tradeable in a brokerage account something like IBDL. This is a 2020 investment grade corporate fund that turns into cash in 2020. Not very exciting, but a small amount of interest rate risk is about the only material risk.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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07-10-2017, 03:59 PM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2017
Location: City
Posts: 10,351
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Looks like the 5-year treasuries are running about 2%. TIPS, though the rate is a little less certain, will probably turn out even better.
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07-10-2017, 05:14 PM
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#8
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Recycles dryer sheets
Join Date: Apr 2016
Location: Bay Area
Posts: 188
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Quote:
Originally Posted by brewer12345
Either CDs or if it must be easily tradeable in a brokerage account something like IBDL. This is a 2020 investment grade corporate fund that turns into cash in 2020. Not very exciting, but a small amount of interest rate risk is about the only material risk.
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Note the Ally CD running at 1.5% is a "No Penalty" CD that you can withdrawal at any time after 6 days of opening it. So it basically is easily tradeable if you need quick access to the money. The only downside would be the entire CD must be liquidated. But when opening them you can decide to open multiple (minimum balance $25K) if you want ultimate flexibility.
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07-10-2017, 05:51 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Mar 2005
Location: yonder
Posts: 2,851
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Quote:
Originally Posted by jetpack
Ally 11 month no penalty CD's are 1.5% ... what term does he need?
if you can find something at 2%, but less safe, would you take that?
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I don't know what sort of term he's looking for. I'll ask. I'll also ask about the "less safe" option (which is hard to define).
__________________
When the people shall have nothing more to eat, they will eat the rich--philosopher Jean-Jacques Rousseau
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07-10-2017, 05:58 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Location: Southern California
Posts: 3,999
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A five year CD yields 2.25% FDIC insured. If he needs it before five years, he only pays 6 months interest to terminate early. Just make sure he goes with a bank that caps the early term penalty at six months.
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07-10-2017, 05:58 PM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,244
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I think that 5% safe investment that you can get back within a day with a phone call on the other thread is the best....
Only if he would tell us what it is!!!!
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07-10-2017, 06:32 PM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,899
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Quote:
Originally Posted by Texas Proud
I think that 5% safe investment that you can get back within a day with a phone call on the other thread is the best....
Only if he would tell us what it is!!!!
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If he ever comes back! Hasn't been that long, but he has been MIA.
I still think he is/was a "pay off the mortgage" troll.
-ERD50
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07-10-2017, 06:42 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2017
Location: City
Posts: 10,351
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Quote:
Originally Posted by redduck
... I'll also ask about the "less safe" option (which is hard to define).
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SAMBX has been yielding 3% for us over the last three years. Buy and sell any time.
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07-10-2017, 07:43 PM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2016
Posts: 9,526
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Interesting information and thanks.
This may sound stupid but if I was guaranteed 2% clear every year for the next 20 years I would be happy. Lol
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07-10-2017, 07:49 PM
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#15
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Recycles dryer sheets
Join Date: Aug 2013
Posts: 437
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If you're looking at 20 year, a US EE series savings bond earns 3.5%
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07-10-2017, 07:51 PM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,244
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Since he is only putting in 40% I would assume that he would not need it on a moments notice...
If so, then read up on the preferred investing thread... there are many very high rated preferred shares that would yield 5% to 6%.... some are high volume trading...
Having a mix of them would likely mute any price swings.... I just looked at my holdings and my principal is .24% different than what I invested... some are higher and some are lower...
Then again, my weighted avg is a B+ rating and an 8% yield... but I replaced my high yield fund with these so I am OK with the rating.... and on about $90K invested that is pretty good...
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07-10-2017, 09:22 PM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2016
Location: Northern Virginia
Posts: 7,591
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mwcrx. 2.18% yield. 1.66 duration
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07-12-2017, 02:47 AM
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#18
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Recycles dryer sheets
Join Date: Jul 2012
Posts: 407
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Quote:
Originally Posted by street
Interesting information and thanks.
This may sound stupid but if I was guaranteed 2% clear every year for the next 20 years I would be happy. Lol
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Stupid may be a bit strong, but that doesn't sound too ambitious with inflation at 1.9% and (IMO) likely rising. Or did you mean 2% in real terms?
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I am willing to perform services in exchange for currency. For now.
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07-12-2017, 06:51 PM
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#19
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Thinks s/he gets paid by the post
Join Date: Oct 2012
Location: Reno
Posts: 1,338
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I have about 20% of my bond allocation in the Fidelity Floating Rate Fund and am fine with the risk. But I would note that SAMBX (and the Fidelity fund was similar) was down about 20% in 2008 and also had a 6-7% down hiccup a few years back.
The Fidelity Fund has done what I bought it for, however; yield at the price of risk and will do better if the Central Bank keeps raising (I bought it as an interest rate hedge in part).
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07-12-2017, 07:17 PM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
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Quote:
Originally Posted by street
Interesting information and thanks.
This may sound stupid but if I was guaranteed 2% clear every year for the next 20 years I would be happy. Lol
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Quote:
Originally Posted by RISP
Stupid may be a bit strong, but that doesn't sound too ambitious with inflation at 1.9% and (IMO) likely rising. Or did you mean 2% in real terms?
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And then, you may have to pay income tax on that. So, you are not even keeping up with inflation.
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"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
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