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Seeking Fund Recommendation
Old 03-08-2020, 08:58 AM   #1
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Seeking Fund Recommendation

Part of my ER strategy calls for a portion of my nest egg to grow 4% annually.

I am looking for a fund that comes as close as possible to meeting the following goals:

1. 4% return (after fees) with little volatility in order to reduce sequencing risk.

2. Tax Avoidance. It would be nice if some or all of the fund contain tax free munis in order to reduce tax liability.

I live in PA.

I am fine sacrificing the opportunity for returns in the 6%+ range.

Thanks for any suggestions you may have.
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Old 03-08-2020, 09:49 AM   #2
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Quote:
Originally Posted by ivanl3 View Post
Part of my ER strategy calls for a portion of my nest egg to grow 4% annually. I am looking for a fund that comes as close as possible to meeting the following goals:

1. 4% return (after fees) with little volatility in order to reduce sequencing risk.

2. Tax Avoidance. It would be nice if some or all of the fund contain tax free munis in order to reduce tax liability.

I am fine sacrificing the opportunity for returns in the 6%+ range.
If you're with Vanguard, their VBTLX total bond market index fund averages around 4% with a low .05% expense ratio. If you need higher returns in exchange for a little more volatility, add some VTSAX total stock market fund.

If this is in a taxable account, you could look at VWITX intermediate term tax exempt fund with a .17% expense ratio. It averages around 4-5% returns.

Otherwise you're probably looking at long term CD's around 2% or high interest savings accounts, like Discover or Ally, around 1.6%.

You can mix and match as needed. You might put 1-3 years expenses in a high interest savings. 5-10 years expenses in bond funds, and put the long term stuff in stocks where you can ride out the ups and downs.
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Old 03-08-2020, 11:16 AM   #3
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There are many investment grade preferred stocks that will pay over 4% reliable income. Check out the more recent pages of the preferred stocks thread for details.
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Old 03-08-2020, 04:11 PM   #4
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NUV is an unleveraged closed end mini bond funds. It has done well over the long term.

The merger fund has 3-4 percent return but very steady. MERFX.

Preferred stocks could work if you are ok with interest rate volatility. There are some relatively high yielding issues likely to be called in the next few years which will tend to offset some.of the rate risk. There is an ongoing thread on preferred here. Also some very good closed end funds to consider, but you have to watch the premiums.

Good to research through Morningstar.
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