401K Stable Value or IRA CD/Treasuries?

[Spock]

OP - I didn't see any mention of i-bonds.

For me:
1. 10K max investment/year isn't worth opening and keeping track of a Treasury Direct account.
2. This is 401K/IRA money. From what I've read I can't buy an I-Bond in an IRA.

 

[copyright1997reloaded]

NO WAY would I go long term treasuries or CD's at *current* rates (which are under the rate of inflation and even under consumers inflation expectations. But that's just me.

Suck it up, keep durations short, wait for this to play out a bit.

OP, forgot to mention: I have 7 figures sitting in a 401k Stable Value fund - waiting patiently (??) for higher rates (to invest it in fixed rate) or lower equity prices (to invest it in mutual funds) or both.

ETA: It earned 2.15% (nominal) over the last year.

 

[Alex The Great]

What's wrong to have both SVF and CDs in 401K?
I do have CDs in a ladder recently purchased from 1 to 3 years.
For shorter term, I have the rest in SVF.
I'm also 55 and plan to use these money through 55 rule to fund ER (hopefully, voluntary).
But in 401K I have a brokerage link to Schwab where I can buy anything available in IRA.

 

[John Galt III]

If your plan offers a good bond fund, one possible strategy is to just sit out the rate hikes in the SV (six months?) and then switch to the bond fund.

SV funds work well in a low interest (and low inflation) environment, so it might be nice to have the option in case we get there in a few years. They have also been a nice cash alternative in retirement plans when everything else seemed overpriced.

Thanks. Will consider that. I do have a Dodge and Cox bond fund in the plan.

 

[copyright1997reloaded]

Revisiting this thread vs. creating a new one.

Now that short term rates have risen quite a bit (e.g. 1-year T-Bill at 4.112%, I am re-thinking keeping a big chunk of my fixed allocation in stable value.

If I keep it in the 401K, I could move it to a short term govt. bond fund like VFIRX, but even the 1-3 year government bond funds have been hit (at least so far) this year -5.07% in the case of VFIRX.

But if I move money from my old-mega corp 401k (which has very low expense ratios and has things like the stable value (called interest income fund), it is a one-way trip. My ex-mega corps stable value fund has been "good", i.e. historically has paid a higher rate of return than normal money market funds.

My 401k does allow partial withdraws/rollovers, so this isn't an all or none decision. Having typed this, it seems to make to pursue this (at least partially).

 

[RetireAge50]

Great idea. I did exactly as you described above.

 

[Spock]

Revisiting this thread vs. creating a new one.

Now that short term rates have risen quite a bit (e.g. 1-year T-Bill at 4.112%, I am re-thinking keeping a big chunk of my fixed allocation in stable value.

If I keep it in the 401K, I could move it to a short term govt. bond fund like VFIRX, but even the 1-3 year government bond funds have been hit (at least so far) this year -5.07% in the case of VFIRX.

But if I move money from my old-mega corp 401k (which has very low expense ratios and has things like the stable value (called interest income fund), it is a one-way trip. My ex-mega corps stable value fund has been "good", i.e. historically has paid a higher rate of return than normal money market funds.

My 401k does allow partial withdraws/rollovers, so this isn't an all or none decision. Having typed this, it seems to make to pursue this (at least partially).

I still haven't executed yet, but my idea is to go longer durations (10 years) with the Stable Value 401k $ when moved to my IRA.
Yes. Rates are still rising (although I just read this morning that the BoE has restarted unlimited QE again this morning...) but I suspect that todays bond/CD rates will be being SVF rates 5ish years from now (my SVF doesn't raise very fast).