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Tax Sheltered / Tax Free Money Allocation
Old 09-13-2021, 03:53 PM   #1
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Tax Sheltered / Tax Free Money Allocation

Simple, basic question. If you had the majority of your tax sheltered and tax free (roth) money in cash, and knowing that cash is being eaten by inflation, and knowing that bond yields are very low, and not wanting to allocate any more to stocks or other investments with a similar or higher risk profile to stocks - what would you do with it?
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Old 09-13-2021, 04:16 PM   #2
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The majority of our FI tranche is in the 2 of '26 TIPS as inflation insurance. No joy on the current yield, though. The balance is in Vanguard Ultra-Short-Term Bond Fund Investor Shares (VUBFX) because we will be needing most of it in the next three years to pay for a home we are building. Again, no joy on the current yield.

We do not believe in significantly increasing risk by chasing yield. That just doesn't make sense for the "safe side" of an AA. YMMV, however. We were in SAMBX for several years but when Janet Yellen and The Economist both told us that leveraged loans were getting risky we bailed out. So far I don't think that risk has materialized but that is economic forecasting for you.
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Old 09-13-2021, 04:35 PM   #3
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Vanguard TIPS funds have done well for me in the past year.
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Old 09-13-2021, 05:08 PM   #4
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I like investment grade preferred stocks these days rather than bonds for fixed income... much better yield... my portfolio yields about 5.5%. EPRF is an ETF that focuses on investment grade preferred stock and has a dividend yield of 4.95%.

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%)... obviously not FDIC insured so credit risk of the issuer... but I'm not sure that they can be in an IRA.
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Old 09-14-2021, 06:17 AM   #5
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Quote:
Originally Posted by Vincenzo Corleone View Post
Simple, basic question. If you had the majority of your tax sheltered and tax free (roth) money in cash, and knowing that cash is being eaten by inflation, and knowing that bond yields are very low, and not wanting to allocate any more to stocks or other investments with a similar or higher risk profile to stocks - what would you do with it?
If whatever is bought will be held long term, just put it in total bond.

Don't try to time the market.
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Old 09-14-2021, 08:06 AM   #6
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Maybe a MYGA(Multi Year Guaranteed Annuity) from an insurance company that will pay a higher yield as long as you don't mind a 2-3 year wait for the money. If you can invest for 10 years, you can get 3.20% right now. 2.40% for 2 years.
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