Jimonlimon
Recycles dryer sheets
- Joined
- Dec 12, 2022
- Messages
- 141
Question about splitting my 401k asset allocation between CD's and index funds with nothing in between.
(EDIT to clarify: "index funds" meant a mix of Large Cap, Mid Cap, Small Cap, and international stock index funds. Actually I'm more in managed funds but was planning to move to index funds.)
My thought is to buy extremely safe, FDIC insured Certificates of Deposit for the money I need to withdraw in the next 5 years. For the funds that would be nice to enjoy I would keep them in index and managed funds.
Is it crazy to mix very secure CD's with much more volatile index funds without a moderate risk/reward component to the portfolio?
Reasoning for this strategy is that I don't want to delay retirement if we have another big dip this year. So I'm considering putting everything that I need to match our current income into a ladder of CD's. These would be within my Nationwide 401k through a Schwab Personal Choice Retirement Account. Current available CD rates range from 5.15% for 1 year to 4.6% for 5 year.
I haven't seen any other insured or "extremely safe" investments that offer 5%. Since this is within my pre-tax 401k I don't have an incentive to invest in lower-interest tax-advantaged government bonds.
Total in my 401k is $520k. My wife's 401k has about the same and we would just let hers ride for several years until we need it. We will both be 58-1/2 when I retire. Most of our needs will be covered by my pension; once we start drawing SS at around FRA our expenses will be more than covered by pension plus SS.
(EDIT to clarify: "index funds" meant a mix of Large Cap, Mid Cap, Small Cap, and international stock index funds. Actually I'm more in managed funds but was planning to move to index funds.)
My thought is to buy extremely safe, FDIC insured Certificates of Deposit for the money I need to withdraw in the next 5 years. For the funds that would be nice to enjoy I would keep them in index and managed funds.
Is it crazy to mix very secure CD's with much more volatile index funds without a moderate risk/reward component to the portfolio?
Reasoning for this strategy is that I don't want to delay retirement if we have another big dip this year. So I'm considering putting everything that I need to match our current income into a ladder of CD's. These would be within my Nationwide 401k through a Schwab Personal Choice Retirement Account. Current available CD rates range from 5.15% for 1 year to 4.6% for 5 year.
I haven't seen any other insured or "extremely safe" investments that offer 5%. Since this is within my pre-tax 401k I don't have an incentive to invest in lower-interest tax-advantaged government bonds.
Total in my 401k is $520k. My wife's 401k has about the same and we would just let hers ride for several years until we need it. We will both be 58-1/2 when I retire. Most of our needs will be covered by my pension; once we start drawing SS at around FRA our expenses will be more than covered by pension plus SS.
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