Cash

[burkey]

I am retiring at age 57 in 12 days. Have a bit of cash on hand and even with financial help have no idea where to invest. Lucky to have steady stream of pension, future annuity, 401K, but feel like I should be doing something with some of the cash. Have that fear of 2008 all over again. Dislike getting no growth out of cash on hand. Any ideas?

 

[pb4uski]

It depends. How soon will you need the cash and are you willing to take any risks with it?

Google cash at the top pf the page and you'll find lots of threads addressing the subject.

 

[urn2bfree]

The highest liquid cash vehicles are credit unions and online banks and they are around 1%. A ladder of CD might get you a bit more from the longer Cd's but at reduced liquidity without penalty for early withdrawal. Both will generate taxable interest at marginal rates, but that is the only growth.
If you truly have dependable streams of cost of living adjusted guaranteed income to cover your expenses and then some more for emergencies, you don't need to have too large a cash liquid position which would suggest you put some of that cash to work targeted to your appropriate asset allocation. Dollar cost average or value cost average in. At age 57 you have a long time to make your money work.

 

[nvestysly]

Give me your cash and I'll guarantee you 2%! That's way better than any bank! No my name is not Bernie.

On a more serious note... As mentioned above - what do you want to do with the cash - is it short term, long term? Do you need any of it to live your life or can it simply grow and grow? Most of us need some amout of cash for the proverbial rainy day.

DW and I put money in I-Bonds every week. That's our cash. It's illiquid for 1 year. After that you can tell them to send your money and it shows up in your bank account the next business day. We started doing this several years ago. Now we have quite a cushion of liquid cash (been there longer than 1 year) so the 1 year illiquid provision doesn't concern us. I think you can even get your money back within 1 year you simply lose the interest. Look at www.treasurydirect.gov to learn more about idividual investors saving money in I-Bonds. Yes there are lots of pro & con discussions about U.S. Government instruments but it works for us.

on edit: I just looked at my account and the interest rate for the I-Bonds purchased recently is 1.76%. This changes based on the level of inflation - that's why it's called an I-Bond. Looking back through my history I have several that are paying upwards of 4%. Periodically I go back and cash-out the I-Bonds that have a really low interest rate.

 

[Dawg52]

For CD's, Penfed has competitive rates. See below. For better returns you will have to take on more risk. Some people like the Vanguard Wellesley balanced fund. It's by no means a cash substitute though. Maintains a 40/60 stock/bond mix. But a pretty steady fund.

https://www.penfed.org/Money-Market-Certificate/?intcid=ad-3YrMMC-PenFedORG-Ticker-10312012

 

[Tadpole]

Something like this?
RPHYX RiverPark Short Term High Yield Retail Fund RPHYX Quote Price News

 

[eytonxav]

Something like this?
RPHYX RiverPark Short Term High Yield Retail Fund RPHYX Quote Price News

+1 don't be fooled by the high yield reference as the way this fund is managed makes it fairly low risk.

 

[photoguy]

+1 don't be fooled by the high yield reference as the way this fund is managed makes it fairly low risk.

Can you clarify why? when I look at it on morningstar/yahoo finance it's basically a junk bond fund (they didn't list duration but the description says up to 3 years).

 

[Tadpole]

photoguy, Here is David Snowball's write up. He says that he uses it as his "money market" type fund:
RiverPark Short Term High Yield Fund (RPHYX) - July 2011, updated October 2012 - Mutual Fund Observer

 

[Amethyst]

We are parking some need-it-eventually funds in a tax-free municipal bond fund. Naturally there is risk of price fluctuation, but it's typically a shallower range than other mutual funds. Meanwhile we are getting income free of state and Federal tax.

Amethyst

 

[SumDay]

I just put our cash in an Ally savings account w/ .95% interest. Not great, but better than zero.

 

[photoguy]

photoguy, Here is David Snowball's write up. He says that he uses it as his "money market" type fund:
RiverPark Short Term High Yield Fund (RPHYX) - July 2011, updated October 2012 - Mutual Fund Observer

Thanks for the link. Looks like it's really an ultra-short fund. This is something else for me to check out.

 

[kyounge1956]

I am retiring at age 57 in 12 days. Have a bit of cash on hand and even with financial help have no idea where to invest. Lucky to have steady stream of pension, future annuity, 401K, but feel like I should be doing something with some of the cash. Have that fear of 2008 all over again. Dislike getting no growth out of cash on hand. Any ideas?

Is a Stable Value Fund available through your 401K plan? If so, that's another alternative you might want to look at. These generally pay a bit more than CDs or other cash vehicles. Whether it's a good fit for you depends upon (among other things) how soon you might need to withdraw the cash, how much is in your 401K vs the amount of cash you want to invest, and how much the Stable Value Fund is paying compared to your other options for investing this cash.

 

[Midpack]

I just put our cash in an Ally savings account w/ .95% interest. Not great, but better than zero.

+1. We bought iBonds to the annual limit, rest at Ally savings.

But it sounds like the OP may be asking for another asset class to invest in, not where best to keep cash.