What asset class is my Cash Balance Fund?

[RHONDAVE]

My state government employer offers a guaranteed cash balance fund of 5% ....

Members who participate in ​

​

​

​

Cash Balance do not make investment​

choices ​

​

​

for either member or employer contributions. The rate of return for​

Cash Balance accounts is not tied to investment performance. Cash Balance​

participants are guaranteed a rate of return (“Interest Credit Rate”) on their​

accounts based on the federal mid-term rate plus 1.5%. When the federal​

mid-term rate falls below 3.5%, members receive a 5% minimum credit rate.....

It also can provide for dividends based on performance, 2017 dividend yield is 5.46%. I am 63 and can keep this fund until I am 70.​

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I would like to included this fund amount in portfolio asset allocation tools, Flexible Retirement Planner, Portfolio Visualizer, etc. It is 20% of our nest egg. What do I call it?​

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[LOL!]

Fixed income.

 

[MuirWannabe]

Sounds similar to a stable value fund, only better. I designate my stable value fund as cash in my asset allocation.

 

[pb4uski]

Fixed income.

+1... with no interest rate risk and an attractive yield.

 

[Dtail]

Sounds similar to a stable value fund, only better. I designate my stable value fund as cash in my asset allocation.

Agree sounds like a better version of a SV fund, but better.
However, I classify my SV fund as Fixed Income. The rate is 3.84%, which is more in line with composite type CD rates which many use as a fixed income allocation.
I could see it either way though.

 

[pb4uski]

+1.... I think of it as fixed income rather than cash.

 

[MuirWannabe]

Agree sounds like a better version of a SV fund, but better.

However, I classify my SV fund as Fixed Income. The rate is 3.84%, which is more in line with composite type CD rates which many use as a fixed income allocation.

I could see it either way though.

I see the point. I’ll consider adjusting how I view it in my AA.

 

[LOL!]

Cash suggests complete liquidity to do anything that one wants to with the value. Fixed income suggests less liquidity than cash. I think the OP's money in this fund is less liquid than cash.

OTOH, this fund won't go down in value I think. So if one is using those allocation tools, see if they allow a fixed annuity as an option for input.

 

[CardsFan]

Per Wikipedia:
The "traditional" asset classes are stocks, bonds, and cash:

Stocks: value, dividend, growth, or sector-specific (or a "blend" of any two or more of the preceding); large-cap versus mid-cap, small-cap or micro-cap; domestic, foreign (developed), emerging or frontier markets

Bonds (fixed income securities more generally): investment-grade or junk (high-yield); government or corporate; short-term, intermediate, long-term; domestic, foreign, emerging markets

Cash and cash equivalents (e.g., deposit account, money market fund)

Since stocks and bonds both the risk the value of the invested amount, I tend to consider all guaranteed principal investments as cash. So I would consider the OP's "cash balance account" as cash. In my mind, cash is what I can access, with no losses, and without selling on the secondary market, if TSHTF. (yes, I know some CD's, if sold shortly after purchase, can result in a minor loss in principal, but at least that is defined amount, not a market risk)

Not that it really matters, as long as YOU know how you are accounting for it.

 

[Dtail]

Does OP care about the classification in terms of how it would be classified for example in various retirement calculators, where one can segregate Fixed Income vs. Cash allocations?
Edit - I see this is the main reason for the request.

 

[VanWinkle]

My state government employer offers a guaranteed cash balance fund of 5% ....

Members who participate in ​

​

​

​

Cash Balance do not make investment​

choices ​

​

​

for either member or employer contributions. The rate of return for​

Cash Balance accounts is not tied to investment performance. Cash Balance​

participants are guaranteed a rate of return (“Interest Credit Rate”) on their​

accounts based on the federal mid-term rate plus 1.5%. When the federal​

mid-term rate falls below 3.5%, members receive a 5% minimum credit rate.....

It also can provide for dividends based on performance, 2017 dividend yield is 5.46%. I am 63 and can keep this fund until I am 70.​

​

I would like to included this fund amount in portfolio asset allocation tools, Flexible Retirement Planner, Portfolio Visualizer, etc. It is 20% of our nest egg. What do I call it?​

​

​

I would call it a blessing!! Keep it as long as you can and call it fixed income.

Congrats,

VW