Fixed incomes

[huusom]

Hi all:

This question may have been asked before but beside CD which is currently at next to nothing. I have about 200K cash that I want to put to work.

What type of investments do you recommend that can generate 3 to 5 percent return and distributed quarterly with minimum risk.

 

[jimnjana]

Hi all:

This question may have been asked before but beside CD which is currently at next to nothing. I have about 200K cash that I want to put to work.

What type of investments do you recommend that can generate 3 to 5 percent return and distributed quarterly with minimum risk.

Look at preferred stock. You can put 1/2 of what you have at risk in preferred stocks and the other 1/2 in safe cds, that would put your overall rate of return into the range you are looking for.

 

[jayc]

150K Penfed 7 yr @ 3.49%, 25K AWF (pays monthly), 25K in T or VZ or AEE or FE or any utility that pays 5-6%. You can also sell covered options on the utility to increase return a little.

 

[Nords]

What type of investments do you recommend that can generate 3 to 5 percent return and distributed quarterly with minimum risk.

I think you need to clarify to us posters what you mean by "minimum risk"-- do you mean "no volatility" or "insured by the FDIC" or "AAA rated" or "I need the principal back by a certain date"?

With the info you've provided, I'd recommend the PenFed 7-year CD. I'm not sure you can arrange quarterly distributions (perhaps monthly?) but they might be able to work that out by e-mail.

 

[aaronc879]

Is PenFed open to anyone or do you have to be employed, past or present, by the federal government?

 

[REWahoo]

Aaron, do a forum search on Penfed membership. We've discussed how anyone can join at least a dozen separate times.

 

[Contrarian]

Well might wish in part to consider a fund, like VFICX, Vanguard Intermediate Investment, which is paying 4.53%, has average credit per Morningstar as A and average bond duration of 5.4 years. I have Penfed CDs and they tend to be competitive rates. If buy long term can also sell and pay penalty. Anyhow, hope this helps for your consideration.

Bob

 

[Nords]

Is PenFed open to anyone or do you have to be employed, past or present, by the federal government?

Aaron, do a forum search on Penfed membership. We've discussed how anyone can join at least a dozen separate times.

Well, REWahoo!, as a fellow moderator emeritus yourself, you know that [-]nobody reads the f#$%in' FAQs, or searches for keywords in previous threads, let alone reads our posts[/-] PenFed membership is open to anyone who meets their criteria or makes a one-time contribution to certain non-profit associations:
https://www.penfed.org/howToJoin/overview.asp

 

[obgyn65]

Hello Huusom - have you thought about municipal bonds ?

What type of investments do you recommend that can generate 3 to 5 percent return and distributed quarterly with minimum risk.

 

[HpRyder]

I take calculated risk. I'm into MLPs.

 

[dex]

I take calculated risk. I'm into MLPs.

Maui Land & Pineapple

 

[2good]

Well might wish in part to consider a fund, like VFICX, Vanguard Intermediate Investment, which is paying 4.53%, has average credit per Morningstar as A and average bond duration of 5.4 years. I have Penfed CDs and they tend to be competitive rates. If buy long term can also sell and pay penalty. Anyhow, hope this helps for your consideration.

Bob

I try to find the early withdrawal penalty for PenFed CD's. I believe you have to log in to your account to get this information and I am not a member (yet). Can anybody help please.

 

[huusom]

Hello Huusom - have you thought about municipal bonds ?

I'm open to all suggestions. My main reason for this is post is for me see if I can generate enough reqular income from my cash in order to ER in a couple of years without loss of principle. I understand there risks in any type of investments but I dont want to take too much chance with the stock market.

To be specific, I need to generate around 3K per month to live reasonably well (not much but I'm not a big spender). How much principle do I need to generate this kind of incomes?

Thanks,

 

[Nords]

I try to find the early withdrawal penalty for PenFed CD's. I believe you have to log in to your account to get this information and I am not a member (yet). Can anybody help please.

*Sigh*. Here, let me search PenFed's website for the phrase "early withdrawal". Oh, there it is! Subparagraph "h" on page 2 of this PDF:
https://www.penfed.org/pdf/accountsforms/688.pdf

Hey, mods... how 'bout a FAQ Archive post with links to the membership criteria for PenFed, USAA, and NFCU. We could also include links to the early-redemption penalties for the CDs of those fine institutions.

Or, heaven forbid, we turn the FAQ Archive (which apparently hardly anyone bothers to read) into a E-R.org wiki like the Bogleheads have done with their info.

 

[2good]

*Sigh*. Here, let me search PenFed's website for the phrase "early withdrawal". Oh, there it is! Subparagraph "h" on page 2 of this PDF:
https://www.penfed.org/pdf/accountsforms/688.pdf

Hey, mods... how 'bout a FAQ Archive post with links to the membership criteria for PenFed, USAA, and NFCU. We could also include links to the early-redemption penalties for the CDs of those fine institutions.

Or, heaven forbid, we turn the FAQ Archive (which apparently hardly anyone bothers to read) into a E-R.org wiki like the Bogleheads have done with their info.

I appreciate your help (despite your sarcasm ). I actually searched the PenFed website before the original posting but it kept asking me to log in.

 

[veremchuka]

To be specific, I need to generate around 3K per month to live reasonably well (not much but I'm not a big spender). How much principle do I need to generate this kind of incomes?

Thanks,

if i understand your question you want to generate $36,000 per year from fixed income which is $3k per month? at 3%, and you'll be hard pressed to find much higher yield short of junk bonds which i would not suggest, you need $1.2 million and of course you have taxes on that $3k so if you need $3k after taxes then it's a higher amount. hope that is helpful.

 

[Contrarian]

I try to find the early withdrawal penalty for PenFed CD's. I believe you have to log in to your account to get this information and I am not a member (yet). Can anybody help please.

I logged in but did not see it. Maybe on original documents or I just did not readily locate. Of course the info. may change too. But I googled and this link should give you some information. Said basically Penfed has average penalty of about 6 month interest for long term CDs. But again things always change. Here is link,
Comparing CDs with Different Early Withdrawal Penalties

Bob

 

[Nords]

I appreciate your help (despite your sarcasm ). I actually searched the PenFed website before the original posting but it kept asking me to log in.

We'll get back to you on the sarcasm after you've boosted your post count by a couple orders of magnitude and answered this question a few dozen more times...

Mods, is there a discussion going on about adding a PenFed thread to the FAQs, or creating a wiki?

 

[2good]

I logged in but did not see it. Maybe on original documents or I just did not readily locate. Of course the info. may change too. But I googled and this link should give you some information. Said basically Penfed has average penalty of about 6 month interest for long term CDs. But again things always change. Here is link,
Comparing CDs with Different Early Withdrawal Penalties

Bob

Thanks, Bob.
the link Nords posted answer the questions. The penalty is 12 month for 7 year certificates and 6 months for up to 5 year certificates.

 

[obgyn65]

Hello Huusom, According to State municipal bonds are offering decent rates now - USATODAY.com the average rate for munis is about 2.7%, therefore you would need $1.3m to generate 36k income. Does this help ?

To be specific, I need to generate around 3K per month to live reasonably well (not much but I'm not a big spender). How much principle do I need to generate this kind of incomes?

Thanks,

 

[chinaco]

You can increase the return by taking on more risk which generally means a chance of loss... either to principal, opportunity, or liquidity (i.e., cost to cash out).

You did not describe much about your situation in the post. When will you need to spend the money?

If you invest the assets in bonds or stocks be sure to diversify.


Careful chasing yield on interest/inflation sensitive securities... especially now.

 

[dex]

To be specific, I need to generate around 3K per month to live reasonably well (not much but I'm not a big spender). How much principle do I need to generate this kind of incomes?
Thanks,

You can lose principle several ways:
- Inflation
- Market price decline
- Default of bond/CD (in excess of FDIC insurance) issuer

One way to determine how much money principle you need is to look at returns for various investments and compute the principle needed from there. Then determine which investment meets your risk criteria.

E.g.
CD - 3 % apx 1,200,000
High Yield Corp Bonds - 9% - 400,000

You also could do a combination of the investments.

What do you think?

 

[lowflyer]

Hi all:

This question may have been asked before but beside CD which is currently at next to nothing. I have about 200K cash that I want to put to work.

What type of investments do you recommend that can generate 3 to 5 percent return and distributed quarterly with minimum risk.

I also like Preferred Stock, but you really need to do your research on the companies you invest in. You might believe that preferred stock is inherently safer that common stock, but if the company has issues, the preferred can suffer right along with the common and your nice, safe dividend might be at risk. Also, like most fixed-income investments, over the past six to 12 months, prices have been climbing, so there aren't very many deals out there. Regardless, they are worth a look.