Low risk investment advice

[lawman]

I am self directed and have two large corporate bond funds I am considering exchanging for something with less risk. I am considering the ETF "SHY"..Is there anything else that safe that pays more? Thanks

[pb4uski]

I just opened a Capital One online savings account that pays 1.5% and is FDIC insured and no interest rate risk. The cherry on top is a 1% bonus ($100 for each $10,000 up to $50,000) so if the 1.5% rate holds then my yield for a year will be 2.5%.

[lawman]

That sounds like a pretty good deal

[brewer12345]

I hold two merger arbitrage funds as a low risk fixed income alternative, namely merfx and arbfx.

[Gill]

You are exchanging corporates for US Treasuries and it doesn't get any safer than that. However, are you sure you want to take such an extreme position? Except for TIPS and I-Bonds, my entire fixed income portfolio is corporates and I'm quite comfortable with that.
Gill

[lawman]

Quote:

Originally Posted by Gill You are exchanging corporates for US Treasuries and it doesn't get any safer than that. However, are you sure you want to take such an extreme position? Except for TIPS and I-Bonds, my entire fixed income portfolio is corporates and I'm quite comfortable with that. Gill

I too have I-Bonds that have done well the past 20 years..I have the aggressive part of my portfolio in equities that I don't ever plan to sell unless I lost my pensions and S.S... I fear the default risk of my bond mutual funds even though it is Vanguard corporate investment grade fund..The other bond fund is higher risk but only holds about 10% junk.. I want to be reasonably sure I can maintain my lifestyle in the event of real financial economic catastrophe..

[lawman]

On a side note I also need to get my taxable income down to avoid higher Medicare premiums..What is safe fund or ETF that is federally tax exempt?

[MikeTN]

i'm pretty sure that you can't avoid Medicare penalty by using tax exempt bonds. Remember to count only 85% of SS income. If still close to Medicare penalty income level then why not consider an intermediate term treasury bond account: low .rate of return but very good during recessions

[OldShooter]

Quote:

Originally Posted by lawman ... I want to be reasonably sure I can maintain my lifestyle in the event of real financial economic catastrophe..

IMO TIPS are the low-risk option, especially for money that will stay invested long term. You can't get that kind of inflation catastrophe protection anywhere else. Yields are a little hard to estimate because the YTM calculation is simply a lower bound, effectively assuming zero inflation. But with any reasonable inflation estimate added to the coupon rate the yield is not terrible.

[lawman]

Quote:

Originally Posted by OldShooter IMO TIPS are the low-risk option, especially for money that will stay invested long term. You can't get that kind of inflation catastrophe protection anywhere else. Yields are a little hard to estimate because the YTM calculation is simply a lower bound, effectively assuming zero inflation. But with any reasonable inflation estimate added to the coupon rate the yield is not terrible.

I love my I-Bonds..I wish I had bought more 20 years ago..

[OldShooter]

Quote:

Originally Posted by lawman I love my I-Bonds..I wish I had bought more 20 years ago..

Yes. I have never done I-bonds because the annual purchase limit is so low. We just buy TIPS directly, not a TIPS mutual fund. There is not much of a yield curve, so we don't even ladder. Since 2004 we have held basically one issue, the 2s of 2026. A year or so ago I bought some that mature in 2021. Those $$s are part of the psychological bucket that we will be spending as necessary until the equity market settles down. On that shorter issue I may have done better with treasury notes but I didn't check. From many posts here it's clear that chasing basis points makes a really enjoyable and absorbing hobby, but I'm just not into it.

[joeprintz]

Tax free bond income counts for Medicare premiums- not like for Federal income tax.

[lawman]

Quote:

Originally Posted by joeprintz Tax free bond income counts for Medicare premiums- not like for Federal income tax.

Thanks...Did not know that

[pb4uski]

Quote:

Originally Posted by lawman On a side note I also need to get my taxable income down to avoid higher Medicare premiums..What is safe fund or ETF that is federally tax exempt?

As other have mentioned, muni-income is added back in. Income from a MYGA (deferred annuity... similar to a CD by issued by an insurer but not FDIC insured) wouldn't count until withdrawn or annuitized, but that is arguably just kicking the IRMAA can down the road.

[RobbieB]

Quote:

Originally Posted by lawman On a side note I also need to get my taxable income down to avoid higher Medicare premiums..What is safe fund or ETF that is federally tax exempt?

Really? First level IRMMA with Rx kicker is a whole $800 a year.

[lawman]

Quote:

Originally Posted by RobbieB Really? First level IRMMA with Rx kicker is a whole $800 a year.

I thought it was about $2600.00 each