Originally Posted by ivanl3
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.