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How invest for short medium time prospects?
Old 05-02-2022, 02:05 PM   #1
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How invest for short medium time prospects?

I retired a couple months ago (66 yrs old) and just accepted an offer on my house. I plan to slow-travel semi-frugally for maybe one and a half years (more if I enjoy it, less if staying one month at a time in different US areas is not as fun as I expect, or if anything goes wrong with my health).
My original retirement plan had been to continue living in my paid-off house and I'd kept enough money in cash for the 1st year and enough money for the second year in a Stable Value Fund in my 401k.

Now that my plan changed to being house-less and traveling, I will need to spend twice as much per year as I'd planned for at least the first year and a half (or potentially for 2.8 years if I really enjoy slow-travel). And slightly extra after that (but my plan had already anticipated that I would sell and have higher mortgage/rent budget in approx 6 yrs so I still hope to be okay long term, particularly because my house sold for way more than I'd have expected, even surprised my real estate agent).

Before all the inflation etc I would have expected to keep the money for an upcoming year or two in money market or high interest savings, but now I'm not sure what to do with money (from selling the house) that I won't need for a half a year or a year or two years. Also I don't want to use the 401k now because I'd owe more taxes at the new higher level of spending that I'm planning for travel.

For people who have barely enough (i.e., not like a person who can afford to leave 5 yrs of money in cash, I can't afford that), what is the best way for the current market conditions to have their money working as hard as possible without undue risk for the sum needed this year, next year, the following year, and then the remainder longer term (remainder of life, say 22 years except a webinar I attended said people need 5 extra years of money so they feel secure about spending in early retirement).

I know I should know all this or be able to find it, but my stress level is too high right now for me to think very well (gotta pack up/dispose/sell all my stuff within the next three weeks).

Also I'm not sure what to do with the 401k, I really want to move it from MerrillLynch to Fidelity (to have everything in one place), but it seems like none of the money can move 'in kind' so everything would have to be sold and then it could take two or three weeks before the money would be available to invest. So I'm not sure if I should leave it in the 401k investments until the market is recovered, or sell it all now at miserable low prices and hope the market is still in a slump in three weeks when it has rolled over to a traditional IRA at Fidelity when it will be available to re-invest. I suppose it would be a faster process to roll it over from a 401k to tradIRA at ML, but when I talked to them it sounded like it still couldn't go 'in kind' due to being currently in some special category stuff related to my old employer.
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Old 05-02-2022, 02:18 PM   #2
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For relatively short term money, up to 2-3 years, I’d look at brokered CDs or Treasury bills.
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Old 05-02-2022, 03:18 PM   #3
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Short term money calls for short-term investments. There are many recent threads cussing and discussing short term options, most of which have similar returns. So trying to make the perfect decision is not necessary.

Do not talk yourself into taking extra risk in order to chase fixed income returns. Stick with the crowd you know, like t-bills and notes, CDs, and MYGAs. Avoid things like junk, foreign bonds, and anything using leverage.

Re 401K, don't worry about marking timing of the transfer. You'll either get lucky, be unlucky or, more likely it will not have a major impact. Five or ten years from now you will not even remember.

We are in a somewhat similar situation in that last summer we decided to build a house, so I immediately sold a chunk of equities getting ready for the negative cash flow days. Time horizon for that money was 6 to 14 months. We have been using VUBFX and SWVXX, choosing laziness over optimization that would probably not result in much gain anyway.

Do not rush. A delay of a month or two defining a strategy won't be remembered in five years but if you hurry and make a mistake you will remember it for life.
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