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Old 02-25-2021, 04:09 PM   #1
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Investment advice

I have $100,000.00 cash in a savings account I want to invest. I am looking for 2% - 3% return and want a conservative investment..I'm thinking intermediate term corporate bond fund but I don't know how to research them..Are there other options? What funds are good and what are their symbols?
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Old 02-25-2021, 04:55 PM   #2
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I have $100,000.00 cash in a savings account I want to invest. I am looking for 2% - 3% return and want a conservative investment..I'm thinking intermediate term corporate bond fund but I don't know how to research them..Are there other options? What funds are good and what are their symbols?


Interest rates are rising rapidly, so a bond fund may not be the best place at this time. Maybe a few short term individual bonds that you hold to maturity would be a better option, so youíd get your principal back. Iíll be doing that in April when a number of CDs are maturing.
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Old 02-25-2021, 04:58 PM   #3
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Interest rates are rising rapidly, so a bond fund may not be the best place at this time. Maybe a few short term individual bonds that you hold to maturity would be a better option, so youíd get your principal back. Iíll be doing that in April when a number of CDs are maturing.
Would that be better than a short term ETF?
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Old 02-25-2021, 05:26 PM   #4
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Would that be better than a short term ETF?

Thatís up to you. A short term bond fund may not have drastic moves, but may lose a bit as you can see in this graph. Holding investment grade individual bonds will likely return all your principal when they mature. If you create a ladder, you can replace the maturing bonds with higher interest bonds if rates continue to climb.

IMG_3258.JPG
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Old 02-25-2021, 05:37 PM   #5
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What a fund with only about 30% equities, like Vanguard Target Retirement Income fund (VTINX). The return has been 8% over the last decade. If this is too high, just heavily salt with cash (online savings account, money market fund). The basic idea is to use 15-30% equities to give your yield, then bonds and cash so you sleep at night. Obviously, can be implemented in other ways, like 15% total market, then the rest in bonds and cash.


I think it's great you can live with 2-3% yield. You don't have to swing for the fences!
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Old 02-25-2021, 05:38 PM   #6
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Is there a specific purpose for this money or is it part of your overall portfolio?
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Old 02-25-2021, 05:38 PM   #7
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Thatís up to you. A short term bond fund may not have drastic moves, but may lose a bit as you can see in this graph. Holding investment grade individual bonds will likely return all your principal when they mature. If you create a ladder, you can replace the maturing bonds with higher interest bonds if rates continue to climb.

Attachment 37889
Individual bonds scare me..I worry about default. I owned Enron stock.
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Old 02-25-2021, 05:44 PM   #8
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I have $100,000.00 cash in a savings account I want to invest. I am looking for 2% - 3% return and want a conservative investment..I'm thinking intermediate term corporate bond fund but I don't know how to research them..Are there other options? What funds are good and what are their symbols?
Put limit orders on corporate notes below par. I posted a short list of some of the notes that I bought last March in the Preferred Stock thread today. I always buy when there is panic selling by bond funds. I'm looking at 1 to 3 year notes (maturities from 3/21 through 4/24). The coupons range from 4.25% to 7.5%. I always buy well below par with limit orders so my yields are much higher. Avoid bond funds but use them to time your purchase. Bond fund yields are far too low. Most of bond funds are down YTD, but my individual corporate notes are up YTD. Bond funds have been loading up with low yield corporate notes over the past 6 months and those notes are the first ones to sink when rates move up.
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Old 02-25-2021, 05:46 PM   #9
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Individual bonds scare me..I worry about default. I owned Enron stock.


Muni bonds are another option, and government/municipal entities that are investment grade rarely default.
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Old 02-25-2021, 05:49 PM   #10
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Is there a specific purpose for this money or is it part of your overall portfolio?
This is a good question, as it helps understanding of what this $100K is intended for.
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Old 02-25-2021, 06:01 PM   #11
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You might be able to get a private placement annuity with an insurance company for about 2%. I think the minimum term I've seen is 3 years. The only risk is default risk, so pick a good insurer.
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Old 02-25-2021, 06:03 PM   #12
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Is there a specific purpose for this money or is it part of your overall portfolio?
No..I don't plan to spend it however since I have capital gains in all my older investments this would be the one I would use should I need funds..
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Old 02-25-2021, 06:39 PM   #13
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No..I don't plan to spend it however since I have capital gains in all my older investments this would be the one I would use should I need funds..
So it's just part of your fixed income allocation. I'm a three fund boglehead so my canned answer would be BND.

But last year I moved from TBM and put all my fixed income into my 401k Stable Value Fund (SVF) that is currently paying 2.2%.

If you don't have access to an SVF, and you don't need the money right away, just put it in BND and don't worry about it. Everyone hates low rates AND they don't want bond yields to increase because their bond funds/ETFs would go down. That's silly. Bond funds may go down, but they will recover. If you definitely need the money in less than 3-5 years, just put it in a savings account or CD.
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Old 02-25-2021, 06:44 PM   #14
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So it's just part of your fixed income allocation. I'm a three fund boglehead so my canned answer would be BND.

But last year I moved from TBM and put all my fixed income into my 401k Stable Value Fund (SVF) that is currently paying 2.2%.

If you don't have access to an SVF, and you don't need the money right away, just put it in BND and don't worry about it. Everyone hates low rates AND they don't want bond yields to increase because their bond funds/ETFs would go down. That's silly. Bond funds may go down, but they will recover. If you definitely need the money in less than 3-5 years, just put it in a savings account or CD.
What about IGSB?
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Old 02-25-2021, 06:46 PM   #15
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I'm heavy invested in bond funds..I"ve been wishing for higher rates for many years..I love it when my bond fund share price goes down as that gives me hope that interest rates will soon go up...
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Old 02-25-2021, 06:49 PM   #16
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What about IGSB?
Sounds like you are chasing yield. That's ok but it comes with risk. IGSB is yielding 3% and BND is yielding 2.57%. IGSB dropped 11% in Mar 2020 and BND dropped 5%. Not sure what you gain with IGSB other than volatility and 0.43% yield.
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Old 02-26-2021, 12:17 AM   #17
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I'm heavy invested in bond funds..I"ve been wishing for higher rates for many years..I love it when my bond fund share price goes down as that gives me hope that interest rates will soon go up...
Then you will love BND, as it's dropping like crazy. Seems like 1/2% per day

Eight months of this and it'll be at zero
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Old 02-26-2021, 05:27 AM   #18
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Individual bonds scare me..I worry about default. I owned Enron stock.
You can't get the 2-3% with stable principle with a fund. Pick a company you are not worried about with a good credit rating.
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Old 02-26-2021, 08:32 AM   #19
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You can't get the 2-3% with stable principle with a fund. Pick a company you are not worried about with a good credit rating.
I researched bonds on my Schwab account... All I found was bonds yielding much less than 1% on three year bonds..
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Old 02-26-2021, 08:54 AM   #20
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I researched bonds on my Schwab account... All I found was bonds yielding much less than 1% on three year bonds..
Call the bond desk with your question.There are good guys there and they aren't paid on commission.
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