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Where to park money that is not needed for 10-15 years?
Old 11-19-2021, 05:22 PM   #1
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Where to park money that is not needed for 10-15 years?

Suppose you retired on a pension, and do not know anything about investing really. Single, no need to leave inheritance. Suppose you have about $100k right now that you are sure you won't need in the next 10-15 years, but would like to protect it from inflation for some possible future use in about 10-15 years. You won't be doing anything with it in the meantime. What would you do with this $100k, where would you put it away for 10-15 years?
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Old 11-19-2021, 05:36 PM   #2
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Suppose you retired on a pension, and do not know anything about investing really. Single, no need to leave inheritance. Suppose you have about $100k right now that you are sure you won't need in the next 10-15 years, but would like to protect it from inflation for some possible future use in about 10-15 years. You won't be doing anything with it in the meantime. What would you do with this $100k, where would you put it away for 10-15 years?
I would start by buying an Ibond for $10 K now (Nov) and the current rate of 7%+ interest. Then buy another $10 K one in January 2022.

The other $80K? Good question. Let's hear from others here.
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Old 11-19-2021, 05:44 PM   #3
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I would start by buying an Ibond for $10 K now (Nov) and the current rate of 7%+ interest. Then buy another $10 K one in January 2022.

The other $80K? Good question. Let's hear from others here.

Thank you. A really stupid question (remember, the person knows nothing about investing): how do you buy an Ibond? And why do you want to wait til Jan 2022 to buy another one?
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Old 11-19-2021, 06:04 PM   #4
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Well I would guess you need at lest a 40/60 fund protect it from inflation.
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Old 11-19-2021, 06:14 PM   #5
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Thank you. A really stupid question (remember, the person knows nothing about investing): how do you buy an Ibond? And why do you want to wait til Jan 2022 to buy another one?
(Simply) You go to Treasury Direct and open an account. You can buy one $10,000 (max you can buy as an individual) every calendar year (or smaller denomination). The interest rates are set in April and October (I think), so you can buy one now and then buy again in January to get the current 7%+ rate, which changes every 6 months.

There's a big thread on I Bond purchasing here on the site so just search for it.
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Old 11-19-2021, 06:17 PM   #6
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This is what somebody told me: they would put the $100k in a tax-efficient mutual fund (so it does not add much to annual taxes). They also said they would not do that immediately, but wait for the Fed to start raising rates, which would likely cause the market to drop, so it would be possible to buy more shares of the tax-efficient fund (or any mutual fund) for the same $100k. Thoughts? Agree or disagree?
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Old 11-19-2021, 06:18 PM   #7
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(Simply) You go to Treasury Direct and open an account. You can buy one $10,000 (max you can buy as an individual) every calendar year (or smaller denomination). The interest rates are set in April and October (I think), so you can buy one now and then buy again in January to get the current 7%+ rate, which changes every 6 months.

There's a big thread on I Bond purchasing here on the site so just search for it.

Great. Thanks a lot for that info. But what about the remaining $80k?
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Old 11-19-2021, 06:26 PM   #8
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Great. Thanks a lot for that info. But what about the remaining $80k?
Here's the I Bond thread. You really should read thru this.

https://www.early-retirement.org/for...-a-111509.html

The other $80K? Do you have any investment accounts now? Like Vanguard, Charles Schwab, etc?

Lets start there.
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Old 11-19-2021, 06:41 PM   #9
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This is what somebody told me: they would put the $100k in a tax-efficient mutual fund (so it does not add much to annual taxes). They also said they would not do that immediately, but wait for the Fed to start raising rates, which would likely cause the market to drop, so it would be possible to buy more shares of the tax-efficient fund (or any mutual fund) for the same $100k. Thoughts? Agree or disagree?

I wouldn't get cute trying to wait for the FED or trying to time the "perfect entry point". Your time horizon is 10-15 years, not 10 weeks.

SPY is a low cost ETF that will give you exposure to the S and P 500. IWM will give you exposure to small cap stocks. A combination of those two will be worth , most likely, much more in 10-15 years.
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Old 11-19-2021, 06:48 PM   #10
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... What would you do with this $100k, where would you put it away for 10-15 years?
History would say that over that time period you'd be farthest ahead by putting all the money into a low-fee total market fund and ignoring it. VTSMX orVTI, for example. Maybe take a look once a year.

Here's a simple book that may help: "The Coffee House Investor" by Bill Schultheis https://www.coffeehouseinvestor.com/ (This is Bill's first book; read it before reading his second one.)
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Old 11-19-2021, 07:09 PM   #11
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Here's the I Bond thread. You really should read thru this.

https://www.early-retirement.org/for...-a-111509.html

The other $80K? Do you have any investment accounts now? Like Vanguard, Charles Schwab, etc?

Lets start there.

Thanks a lot for the link, I'll look into it. Let's say I am all set with the pension, and do not want any complexity, or to learn about investing, or to spend any time managing investments. Just have a bit of extra money I don't need, would like to put it away somewhere where it likely won't lose value over the next 10-15 years.
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Old 11-19-2021, 07:13 PM   #12
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I wouldn't get cute trying to wait for the FED or trying to time the "perfect entry point". Your time horizon is 10-15 years, not 10 weeks.

SPY is a low cost ETF that will give you exposure to the S and P 500. IWM will give you exposure to small cap stocks. A combination of those two will be worth , most likely, much more in 10-15 years.

Thank you for the info about SPY. But I intend to move money only once, so I will "get cute" and will not do it at the point when the shares are most expensive ever (ie, now). I am not in a hurry.
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Old 11-19-2021, 07:16 PM   #13
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History would say that over that time period you'd be farthest ahead by putting all the money into a low-fee total market fund and ignoring it. VTSMX orVTI, for example. Maybe take a look once a year.

Here's a simple book that may help: "The Coffee House Investor" by Bill Schultheis https://www.coffeehouseinvestor.com/ (This is Bill's first book; read it before reading his second one.)

Thank you, but I do not intend to gain investing expertise, or squeeze every last bit of market earnings out of a lump sum that I don't need to start with. I'd just like to avoid having it sit in a bank account for ten years, and lose half of the value.
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Old 11-19-2021, 07:19 PM   #14
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Market timing (e.g. waiting for the fed to increase rates and hoping share prices will fall) is usually a mistake. With a 10-15 year time horizon you're better off getting the money invested now.

Keep in mind the market is irrational--there's no reason to think the market won't shake off rising rates and set new highs... Then you'll be wishing you had invested sooner. Just consider all the bad news the market has shrugged off in the last two years, setting records along the way.
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Old 11-19-2021, 07:22 PM   #15
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Thank you for the info about SPY. But I intend to move money only once, so I will "get cute" and will not do it at the point when the shares are most expensive ever (ie, now). I am not in a hurry.

What tells you SPY is "the most expensive ever"?


Regardless, don't fall into the market timing trap. Most people do it. And don't do very well because they invest based on the headlines or "waiting" for this or that.


But don't take my word for it. This article spells it out pretty well:

https://www.forbes.com/sites/kristin...h=605d44fd5376
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Old 11-19-2021, 07:36 PM   #16
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I'd go with the 80-20 plan, do 80% equities and 20% those Ibond things.
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Old 11-19-2021, 07:47 PM   #17
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Put in VOO and let it ride. Bonds are not worth it right now in my opinion.
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Old 11-19-2021, 07:54 PM   #18
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I used to leave some in a HISA. Not any more. Interest rate is 1.5-2 percent.

That means we are loosing upwards of two percent or more because of inflation.

We now leave excess monies in our investment account. We used to draw down a years worth of cash. Not any more. Three-four months at the outside, and we pay more attention to the number we will require, not a high number. We can always go back for more if we need it.
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Old 11-19-2021, 08:38 PM   #19
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Market timing (e.g. waiting for the fed to increase rates and hoping share prices will fall) is usually a mistake. With a 10-15 year time horizon you're better off getting the money invested now.

Keep in mind the market is irrational--there's no reason to think the market won't shake off rising rates and set new highs... Then you'll be wishing you had invested sooner. Just consider all the bad news the market has shrugged off in the last two years, setting records along the way.

I won't be wishing anything since I don't follow the market, I just want to know when it crashes next time (that tends to be in the news even if a person does not follow the market), so I can buy something during the crash. I am sorry I didn't do it in March 2020, but it looks as though there will be a similar chance again, since the Covid issues with economy are ongoing, and the inflation worsening.
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Old 11-19-2021, 08:46 PM   #20
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I won't be wishing anything since I don't follow the market, I just want to know when it crashes next time (that tends to be in the news even if a person does not follow the market), so I can buy something during the crash. I am sorry I didn't do it in March 2020, but it looks as though there will be a similar chance again, since the Covid issues with economy are ongoing, and the inflation worsening.



So you start this thread very innocently asking for advice and by your own admission "don't follow the market " and "don't know anything about investing" yet when you've been given sound advice backed with articles showing the ridiculousness of trying to time the market you start talking about inflation , covid issues, the economy, predicting crashes, etc

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