steelyman
Moderator Emeritus
There are people/members here who know far more about TIPS than I do so I’ll defer to them.
Where to park money that is not needed for 10-15 years?
- Thread starter rubytuesday
- Start date
There are people/members here who know far more about TIPS than I do so I’ll defer to them.
Why did you come here to ask questions if you already have it figured out?
Good luck timing the market.
rubytuesday
Dryer sheet aficionado
Why are so many of the replies here focusing on "timing the market", and why are you folks so obnoxious about it? Yes, I did decide on that part, that I will not buy anything at the time when it is most expensive to buy it, but I have not figured out anything else.
My question is WHAT to do with $100k that I can't use for 10-15 years, not the exact time of when to do it. So, I'd appreciate it if nobody else mentions timing or not timing the market again, I am not interested in talking about that. I am only asking about the place to park $100k to avoid having it eaten by inflation over 10-15 years (including places that are not the market but something else, if anyone can think of something else).
pacergal
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
ruby-
waiting until there is a "crash" IS timing the market. The best time to invest is now, when you have some funds to invest. The longer it sits in your savings account, the less you will have over time due to inflation.
It sounds like you are blessed with a pension that is sufficient for your needs. I assume you will have social security also at some time.
Perhaps a simple balanced fund or target date fund might be good for you. Nothing to rebalance every year, it is done for you.
Wishing you good luck in your decision making.
I am by no means any expert, and This is a great forum to learn.
waiting until there is a "crash" IS timing the market. The best time to invest is now, when you have some funds to invest. The longer it sits in your savings account, the less you will have over time due to inflation.
It sounds like you are blessed with a pension that is sufficient for your needs. I assume you will have social security also at some time.
Perhaps a simple balanced fund or target date fund might be good for you. Nothing to rebalance every year, it is done for you.
Wishing you good luck in your decision making.
I am by no means any expert, and This is a great forum to learn.
rubytuesday
Dryer sheet aficionado
Another really dumb question: if you have a mutual fund, where do you report the earnings in the tax form? I have been filing simple tax forms with only the wages (replaced by pension) and bank interest forever (and not needing an accountant to fill out two lines in the Form 1040, plus schedule B for bank interest), so I have no idea how I would report earnings from a mutual fund.
+1, even if the next thing to happen is a crash, over 10-15 years market will probably recover. Some people are more comfortable buying into the market gradually over time, say, add 10k a month for 10 months, to avoid putting everything in right before a crash.
38Chevy454
Thinks s/he gets paid by the post
Assuming this is after tax money you are investing, the income from the investments (dividends, and capital gains distributions) is reported on Schedule D. Interest income is just a line item in the Income section on your 1040.
If it is in an IRA which is pretax money, there is no tax reporting for the income each year. No tax due until you take the money, at which point it is a line item in Income section on your 1040.
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rubytuesday
Dryer sheet aficionado
Please please please, nothing more about market crash and timing the market. Don't want to talk about that.
People here seem to say to put the money either into IBonds or TIPS or an index fund. Thank you for that advice. Somebody else in my private life, not in this forum, told me that a tax-efficient fund would be good if I didn't want to pay much tax while not drawing any money from that account.
My remaining questions are:
1. How is TIPS or IBond better than a bank CD (since bank CD rates go up with inflation too)?
2. Does anyone have experience with a tax-efficient fund, and what is that experience?
People here seem to say to put the money either into IBonds or TIPS or an index fund. Thank you for that advice. Somebody else in my private life, not in this forum, told me that a tax-efficient fund would be good if I didn't want to pay much tax while not drawing any money from that account.
My remaining questions are:
1. How is TIPS or IBond better than a bank CD (since bank CD rates go up with inflation too)?
2. Does anyone have experience with a tax-efficient fund, and what is that experience?
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rubytuesday
Dryer sheet aficionado
Thank you! So, Schedule D (it is after-tax money). That answers one of my three remaining questions, so there are now actually two remaining questions (see above).
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REWahoo
Give me a museum and I'll fill it. (Picasso) Give
One of the basics of discussion boards on the internet is you do not get to dictate what others can say in response to your posts.
And as the Rolling Stones famously sang, "Goodbye Ruby Tuesday..."
pacergal
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
ruby--
here is a great starter read for you. Short enough to read over and over if needed.:
If You Can, by William Bernstein. You can get a free pdf copy here, https://www.etf.com/docs/IfYouCan.pdf
here is a great starter read for you. Short enough to read over and over if needed.:
If You Can, by William Bernstein. You can get a free pdf copy here, https://www.etf.com/docs/IfYouCan.pdf
It is clear you know practically nothing about investing, if you aren't sure you want to invest this money in TIPS or an equity index fund. Nothing wrong with that.
However, instead of asking such basic questions in a forum, you should educate yourself on the matter. Taking advice from strangers regarding a subject you know nothing about is a recipe for disaster.
Do some reading. Start here: https://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit
target2019
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
1. Put it in high interest account now. Discover, etc.
2. Buy iBond each year and/or
3. VOO - S&P 500 index fund
Year 1 - 10K to iBond, 10K to VOO
Year 2 - same
Year 3 - and so on
This can be tweaked to accelerate or decelerate the investing. It can also be tweaked to change the ratio between iBond and S&P500. Maybe you want 30% iBond to 70% S&P500 eventually?
Keep it simple.
None of us know that the market is most expensive now, why do you, someone who admits they know nothing about investing, think you would know better than those of us who have been in the market 30 plus years. Your trying to time the market and you can't.
Well you have talked about it, you just don't want to hear our answer to that. I have a friend I tried to get into the market a few years ago, but he thought the market was to high. He has lost the 50% gain since then.
Mulligan
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Right now, its not even close. IBonds are superior, as Tips have a negative fixed component.
Plus they are simple, which is what you want with capital preservation. They are sisters to the Series EE savings bond which is the traditional savings bond (its doesnt pay squat, maybe 0.20% or something).
Also remember IBonds are tax deferrable and state income tax exempt. Meaning you dont have to pay taxes on the income received until you cash any of the IBond. They have 30 year maturities and at that point you must pay.
OldShooter
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
No dumb questions here. Not a single one of us was born knowing how to fill out a tax return. I will go out on a limb and say that no one here looks down this kind of question.
Really, every buy and sell decision is to some extent timing. Buy today or tomorrow? sell this tax year or next? ... With your time horizon you will probably see two or three big market dips while your money is parked. This is expected and no big deal; if history is any guide, every single dip is followed by a recovery. So even if you buy today and the market dips tomorrow, it will almost certainly come back and move higher. Maybe even within a few months. Almost certainly within just a few years. Just as it has for a hundred years or more.
Understandable. The industry works hard to make us little guys believe that investing is complex and that we have to hire their priests and witches to guide us. The point of the Bill Schultheis' first book that I recommended is to show you that "investing expertise" is not necessary. It is a pretty gentle book, even including a recipe for pumpkin pie. You can sample his thoughts via several short blog posts here: https://coffeehouseinvestor.com/the-blog
rubytuesday
Dryer sheet aficionado
Okay, even though I am not an investor, I do have one market account. I converted my modest IRA into Roth (and yes, I did most of the conversion when the market crashed in 2020, which saved me a tremendous amount in taxes, plus the value went up last year post-crash by something like 65%, which will never be taxed because it is in a Roth). My Roth is in an aggressive mutual fund, but I rarely even look at it, and will not be doing anything with it hopefully for a long time. I won't say which company, but it seems to be doing well (it is a managed fund, I wouldn't know what to do with it if I had to do anything).
But this $100k is savings, which I obviously couldn't convert into Roth. In the past couple of initial years of retirement, I realized that I was spending far less than I thought I would, have a good healthcare coverage, and will not need an emergency fund of the size that I thought I would need. So I don't know what to do with the extra $100k. I suppose I could put it in the same really aggressive fund where I have my Roth, but that one grows so fast (and btw also swings up/down/up sharply from day to day) that I would be paying a lot in taxes (while I am not withdrawing anything), which is something I don't want. That is why a friend suggested a tax-efficient fund for these extra $100k.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Let's say that you have two choices with this $100k. Both are reasonably prudent but one is higher risk than the other.
Choice 1 will likely double in 10 years but you'll pay 15% in taxes so at the end of 10 years you'll have $185k.
Choice 2 will likely triple in 10 years but you'll pay 20% in taxes so at the end of 10 years you have $260k.
Which would you rather have after 10 years... $185k or $260k?
Sounds like you prefer the $185k to me.
Montecfo
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I also do not think the tax efficient piece is really important.
Small cap stocks have the best track record as inflation hedge over periods of a decade plus. Large caps are good too, though not quite as good as small caps.
So I would look for a good small cap index or fund and a good large cap fund or index. Maybe split 50:50.
Find some candidates at www.morningstar.com.
Small cap stocks have the best track record as inflation hedge over periods of a decade plus. Large caps are good too, though not quite as good as small caps.
So I would look for a good small cap index or fund and a good large cap fund or index. Maybe split 50:50.
Find some candidates at www.morningstar.com.
TheWizard
Thinks s/he gets paid by the post
To the OP:
Step 1: LEARN about investing. It's moderately critical to your financial well being.
Step 2: invest most of your excess money and excess retirement income into stock index funds, such as VOO, VTI, VXF, VGT, and QQQ.
In year nine of retirement, this is exactly what I do with excess money beyond around $10k that I keep in checking to cover lumpy expenses...
Step 1: LEARN about investing. It's moderately critical to your financial well being.
Step 2: invest most of your excess money and excess retirement income into stock index funds, such as VOO, VTI, VXF, VGT, and QQQ.
In year nine of retirement, this is exactly what I do with excess money beyond around $10k that I keep in checking to cover lumpy expenses...
brydanger
Recycles dryer sheets
- Joined
- Jun 30, 2019
- Messages
- 150
Buy a rental property.
100k will allow you to buy a solid 250-400k rental (solid meaning it's in a good neighborhood, is attractive to a good family and allows someone to move in right way) and also allows you to hold back 20k for expenses and unknowns.
If you find something on the low end of the cost scale you'll likely profit monthly right away (on top of the management company you hired to run it) and even if you're on the high end, you'll cashflow within a couple years.
By the end of your 10-15year window the tenants will have paid the loan down by half, rents will be paying you monthly and chances are the property will be worth well more than what you paid... and thats without even calculating the annual write-offs, deductions etc.
What does all that mean?
It means you now have options:
- Refi and pull your 100k back out but keep the rental and the monthly income
- Let it ride, because you realize you like having the monthly income better than the cash you still likely don't need
- Sell and pull all the money out (I strongly doubt you'll decide on this option at that point, but nice to know its there if you need/want it).
100k will allow you to buy a solid 250-400k rental (solid meaning it's in a good neighborhood, is attractive to a good family and allows someone to move in right way) and also allows you to hold back 20k for expenses and unknowns.
If you find something on the low end of the cost scale you'll likely profit monthly right away (on top of the management company you hired to run it) and even if you're on the high end, you'll cashflow within a couple years.
By the end of your 10-15year window the tenants will have paid the loan down by half, rents will be paying you monthly and chances are the property will be worth well more than what you paid... and thats without even calculating the annual write-offs, deductions etc.
What does all that mean?
It means you now have options:
- Refi and pull your 100k back out but keep the rental and the monthly income
- Let it ride, because you realize you like having the monthly income better than the cash you still likely don't need
- Sell and pull all the money out (I strongly doubt you'll decide on this option at that point, but nice to know its there if you need/want it).
anothercog
Recycles dryer sheets
This site is great. I was about to come ask the same question and hadn’t even considered ibonds. Just signed up my wife and I. We’ll invest 20k now and 20k in January. That takes care of $40k of our “problem.”
aja8888
Moderator Emeritus
This is dumb. Are you trolling us? You don't watch the market, yet you think you will hear about a crash opportunity to go all in?
Go look at a 10+ year chart on S&P 500. Look at all the times it was at a "peak price" … and where it went after that.
https://finance.yahoo.com/chart/%5EGSPC#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--
Match 2020 was a once in a lifetime event. The previous time that happened was October 1987.
freedomatlast
Thinks s/he gets paid by the post
- Joined
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- Messages
- 1,191
With a ten to fifteen year time horizon, I'd put it in VTSAX. And I'd do it now and not try to time the market. It's tax and fee efficient and the dividends would be recorded for tax purposes on IRS Schedule B, part II.
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