Where to park cash for 4 yrs

gayl

gayl

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I just figured out how much cash I need to take RMDs for 2 yrs in cash (2024 & 2025). So now where to put it?? Concerned with buying treasuries or CDs right now

Some readjustment today. Now 85% SCHB, 8% Cash, 4% PWZ, only 3% individual stocks

I've heard something about fixed income that rises with inflation; interested in that as we look forward to 0.75 basis increase tomorrow
 
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A common approach seems to be to keep maturities short... 3, 6, 9, 12 month Treasuries... for now and then go out longer when it seems that interest rates have plateaued.

Also, as of this writing, treasuries are yielding a little more than similar maturity CDs.
 
gayl said:
I just figured out how much cash I need to take RMDs for 2 yrs in cash (until 2026). So now where to put it?? Concerned with buying treasuries or CDs right now
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Is the 5 year issue with I-bonds holding you back from starting there? It's pretty minor.

In addition to treasuries, there are a host of MYGAs available. You just have to choose the right one that makes the money available when you need it.
 
gayl said:
I just figured out how much cash I need to take RMDs for 2 yrs in cash (until 2026). So now where to put it?? Concerned with buying treasuries or CDs right now

Some readjustment today. Now 85% SCHB, 8% Cash, 4% PWZ, only 3% individual stocks
Click to expand...
You can always set up a Treasury Bill or CD ladder. If you are concerned about interest rates going up you can set up a ladder a series of short-term maturities, and as those mature expand the duration through a full two years if you like. Treasuries still seem to be outpacing banks in CD interest offered.

https://www.treasurydirect.gov/instit/marketables/tbills/tbills.htm
 
Koolau said:
Is the 5 year issue with I-bonds holding you back from starting there? It's pretty minor.



In addition to treasuries, there are a host of MYGAs available. You just have to choose the right one that makes the money available when you need it.
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Googing 1-bonds as I don't know what they are or how to buy them

Can I buy treasuries in an IRA? Looking at ladders
 
gayl said:
Googing 1-bonds as I don't know what they are or how to buy them

Can I buy treasuries in an IRA? Looking at ladders
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Correction. Turns out its i-bonds not 1-bonds. Confusing but I've got time.

I've never invested in fixed securities so its a little daunting. Stocks are easier. Just look at the chart
 
gayl said:
Googing 1-bonds as I don't know what they are or how to buy them

Can I buy treasuries in an IRA? Looking at ladders
Click to expand...

Yes, you can buy Treasuries in an IRA if your IRA is a brokerage account. It is really easy and the broker's bond desk can help.

While you can't buy i-bonds in an IRA, you can buy TIPS... Treasury Inflation-Protected Securities... which operate similarly to i-bonds if held to maturity. The principal amount increases each year for inflation. They are a little more complicated than regular Treasuries.
 
Why not a simple 4 year treasury ladder. Rates rising should not affect you if you only care to preserve capital. You'll get 100% every year of your ladder? If you truly don't need the money for 4 years and confident in that, you don't even really need a ladder. Find a secondary market 4 year treasury and earn 3.5% the whole time. Since we are talking cash pile this should suffice?
 
npage said:
Why not a simple 4 year treasury ladder. Rates rising should not affect you if you only care to preserve capital. You'll get 100% every year of your ladder? If you truly don't need the money for 4 years and confident in that, you don't even really need a ladder. Find a secondary market 4 year treasury and earn 3.5% the whole time. Since we are talking cash pile this should suffice?
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[emoji106]even I can understand this. Plus found Schwab has a way to auto build a ladder.
 
I'm hardly an expert, At recent treasury rates though I have stepped up learning myself and building various hypothetical bond ladders on Vanguard right now. I bought and sold a $1,000 treasury just so I could see how it all works. Wow, that was easy ;-) I am working on creating a ladder from 2025-2035 to fit specific needs. I will build it out over next 3 to 12 months. With rates rising I am sure I will catch some later on better. I just want 3.5% which is doable now.
 
You can sell treasuries before they mature?

Back to Google. I think my education is sorely lacking
 
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gayl said:
You can sell treasuries before they mature?

Back to Google. I think my education is sorely lacking
Click to expand...

Yes but you can lose some principal if rates have risen since you bought yours cuz new bonds will have a higher coupon but you can gain principal (cap gain) if rates have decreased as your bond will be more valuable with a higher coupon.
 
Trimming investments to round off holdings, selling some of the dividends in SCHB, SCHD, BAC, CC, PWZ that I had reinvested over the past few years. Bringing all back to multiples of 100 shares. Once that settles out I'll be back for suggestions on where to put 3 yrs worth of RMDs bringing me up to 2026 or 2027 depending on Secure2.0
 
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How about a Treasury that matures when you plan take your RMD and in an amount that is what you expect your RMD to be? I know that your actual RMD will be different but I would think that you could get close.

Then, as each Treasury matures, calculate your RMD for that year and withdraw that amount so it will be the Treasury that matures +/- some other funds in your IRA.

If you do that, then you'll know what you will earn on the assets backing your RMD.

If you don't like the current yield you could go with short Treasuries and then do what I describe in the first paragraph later this year or early next year if/when interest rates stabilize.
 
gayl said:
Trimming investments to round off holdings, selling some of the dividends in SCHB, SCHD, BAC, CC, PWZ that I had reinvested over the past few years. Bringing all back to multiples of 100 shares. Once that settles out I'll be back for suggestions on where to put 3 yrs worth of RMDs bringing me up to 2026 or 2027 depending on Secure2.0
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Why "round off holdings" ?? They are just going to become un-round again as divs come in and trades happen. I pay absolutely no attention to the number of shares we hold in any mutual fund. I just look at the dollars. At Schwab I specify my trades in dollars; probably that's an option at other brokers as well. In mutual funds IMO shares are an outdated concept.

Sisyphus comes to mind.
 
^^^ they will stay whole lots if you turn off automatic dividend reinvestment and let divvies go into the settlement account.
 
OldShooter said:
Why "round off holdings" ?? They are just going to become un-round again as divs come in and trades happen. I pay absolutely no attention to the number of shares we hold in any mutual fund. I just look at the dollars. At Schwab I specify my trades in dollars; probably that's an option at other brokers as well. In mutual funds IMO shares are an outdated concept.

Sisyphus comes to mind.
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I am not reinvesting dividends so there's no way they can 'become un-round.' Plus I haven't owned mutual funds ever since ETFs came out.
 
gayl said:
I am not reinvesting dividends so there's no way they can 'become un-round.' Plus I haven't owned mutual funds ever since ETFs came out.
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Sorry for any confusion. I don't differentiate. An ETF is a mutual fund.
That's what the "F" means. I still don't understand why you want to be "round".
 
OldShooter said:
Sorry for any confusion. I don't differentiate. An ETF is a mutual fund.
That's what the "F" means. I still don't understand why you want to be "round".
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Ok. I mean I haven't bought any mutual funds which are bought at the end of a trading day by the dollar amount. I hold Exchange Traded Funds which are bought / sold by the shares anytime during the trading day and where I can set the limit price and trailing stop. It is simpler for me to have round lots (ie: 100s of shares).
 
Koolau said:
Thanks! It'll take me a while to figure it all out, but a good place to learn. Aloha
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I just did my 1st ever modified CD ladder using the info supplied by Helen. Moved 31k into:
3k 1 mo. 7k 3 mo, 6 mo, 9 mo, 12 mo.
Could've done more but I'm not too sure how I'll feel in a month. This is new-to-me
 
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