Where to park money that is not needed for 10-15 years?

[rubytuesday]

Thanks to a few posters that mentioned potentially helpful things, but I won't be following the thread any more (I guess there is no way in this forum for the OP who started the thread to lock the thread). I'm a bit surprised by the degree of "flaming" about a pretty straight-forward financial question .

 

[pb4uski]

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.”

And if you want to you can overpay your 2020 income taxes by $5k and buy $5k of i-bonds with your 2020 tax refund... those would be paper bonds though.

 

[pb4uski]

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. ...

Match 2020 was a once in a lifetime event. The previous time that happened was October 1987.

Jeesh ray... that is quite harsh. Did you get up on the wrong side of the bd this morning? There are plenty of people concerned about the prospect of a correction or crash sometime soon given we are at all-time highs and valuations are so rich.

 

[target2019]

Thanks to a few posters that mentioned potentially helpful things, but I won't be following the thread any more (I guess there is no way in this forum for the OP who started the thread to lock the thread). I'm a bit surprised by the degree of "flaming" about a pretty straight-forward financial question .

I don't see any flames, but I suspect you've gotten more than a few good responses. It takes a while to get used to the inevitable drift of threads and the personal opinions.

 

[teachme]

Suppose you retired on a pension, and do not know anything about investing really. Single, no need to leave inheritance. Suppose you have about $100k right now that you are sure you won't need in the next 10-15 years, but would like to protect it from inflation for some possible future use in about 10-15 years. You won't be doing anything with it in the meantime. What would you do with this $100k, where would you put it away for 10-15 years?

Lots of good advice so will not double up. Would put 5-10% in BTC (Bitcoin) via a Coinbase/CoinbasePro Account.

 

[jeffdavidson]

Vtsax.

 

[gayl]

I retired on a govt pension that covers everything 100%. Put 88% of mine in SCHB, 5% Cash, 7% other. JMHO but my choices would be 100% in either SCHB (Schwab), SPY, FSKAX ( Fidelity) all Total Market Index ETFs / Funds. Pick just 1, auto invest all dividends & capital gains. Once you get over 500k, branch out. Til then just 1. Done

 

[OldShooter]

Lots of good advice so will not double up. Would put 5-10% in BTC (Bitcoin) via a Coinbase/CoinbasePro Account.

I don't want to to provoke an unresolvable debate, so I'll just add William Bernstein's observation about retirement portfolios: “Make no mistake about it: The object of this particular game is not to get rich – It’s to not get poor.”

 

[meleana]

I would start by buying an Ibond for $10 K now (Nov) and the current rate of 7%+ interest. Then buy another $10 K one in January 2022.

The other $80K? Good question. Let's hear from others here.

I second this.

 

[foxfirev5]

I don't want to to provoke an unresolvable debate, so I'll just add William Bernstein's observation about retirement portfolios: “Make no mistake about it: The object of this particular game is not to get rich – It’s to not get poor.”

The biggest problem I see here and other sites is a personal bias. The advice I would give myself is completely different than what I would give my 35 year old son, assuming he wants to retire at age 50. While I'm probably OK going conservative and protecting my gains it may be irresponsible for others.

I know we run for cover with the anti - this time is different banter. However the situation really is evolving. Look at the differences in investing when I started in the '70s and today. Ten to fifteen years is a long time.

 

[gooddog]

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.

My advise would be to follow what Mulligan said. He knows his stuff.

 

[Skitso999]

Do NOT time the market!

So you start this thread very innocently asking for advice and by your own admission "don't follow the market " and "don't know anything about investing" yet when you've been given sound advice backed with articles showing the ridiculousness of trying to time the market you start talking about inflation , covid issues, the economy, predicting crashes, etc

Do not try to time the market. I tried to do that last year with a lump sum that I had acquired in May. I was waiting for the so-called "double bottom" that would occur when a new covidly variant came out (like the Delta-88 variant) and, of course, that never happened! Seems like it would've been a good idea at the time, right?

Well, it wasn't!

Buy this moment, when the hoopla about the Omicron variant is rampaging, and that's about as good as you can get.

You're in the market for 10-15 years anyway, and the market will undoubtedly do great over that timeframe. Look at any index fund performance you like to prove that to yourself! How about VOO?

 

[rayvt]

The OP said he is gone, but I wonder if he bought during Friday's crash.
I would bet "No."

That's the problem with doing timing by the seat of your pants. You say that you'll wait for a crash, then when the crash comes either you decide to wait for the "real' crash (like double bottom) or you freeze.

 

[FREE866]

That's the problem with doing timing by the seat of your pants. You say that you'll wait for a crash, then when the crash comes either you decide to wait for the "real' crash (like double bottom) or you freeze.

Right....people with that mindset want and wait for an "all systems are go" sign....and it simply doesn't work like that; by the time such sentiment arises the market always has moved way ahead in advance.



People have to realize that if you're in this for multi decades the risk isn't experiencing a bear market, but rather missing out on bull markets return. The evidence , based on history, is staggering!

 

[steelyman]

Maybe the reason why the thread starter stopped is that it got sidetracked from their question. Lots of “man-splaining” (I think that’s the word?).

 

[target2019]

Maybe the reason why the thread starter stopped is that it got sidetracked from their question. Lots of “man-splaining” (I think that’s the word?).

That would make for a nice thread tag.

 

[pb4uski]

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.

I agree, but there is one nuance of EE savings bonds for real long term investors to consider in this low interest rate environment... and that is IF you hold an EE savings bonds for 20 years, then you are guaranted to double your money... so if you put in $10,000 at the end of 20 years your EE savings bond will be worth $20,000. That is a guaranteed return of 3.53%... but you have to stay the entire 20 years... if you withdraw before then you'll only get the ~0.2% that Mulligan refers to.

At 20 years, a bond we sell now will be worth twice what you pay for it. If you keep the bond that long, we make a one-time adjustment then to fulfill this guarantee.

https://www.treasurydirect.gov/indiv/products/prod_eebonds_glance.htm

 

[UnrealizedPotential]

What tells you SPY is "the most expensive ever"?


Regardless, don't fall into the market timing trap. Most people do it. And don't do very well because they invest based on the headlines or "waiting" for this or that.


But don't take my word for it. This article spells it out pretty well:

https://www.forbes.com/sites/kristi...g-the-buy-low-sell-high-myth/?sh=605d44fd5376

I agree a lot of people try to time the market. I would not agree that it is based on headlines exclusively or even that it could come into play for a decision . at least not for myself. Some can see for themselves that this market is expensive based on historical standards and one does not need to read any headlines to know that.

Still, the main takeaway for me is that no matter when you invest you are taking a risk. Investing is not risk free at any point. the market could keep going up or it could crash 60%. We do not know what the market will do. But no one can argue that investing is not a sure thing at any point.

 

[Mulligan]

I agree, but there is one nuance of EE savings bonds for real long term investors to consider in this low interest rate environment... and that is IF you hold an EE savings bonds for 20 years, then you are guaranted to double your money... so if you put in $10,000 at the end of 20 years your EE savings bond will be worth $20,000. That is a guaranteed return of 3.53%... but you have to stay the entire 20 years... if you withdraw before then you'll only get the ~0.2% that Mulligan refers to.







https://www.treasurydirect.gov/indiv/products/prod_eebonds_glance.htm

PB, that is very true. I just didnt finish out my thought on them because he said 10-15 years which was below the 20 year threshold. Just think how horrible it would be if some poor sap got screwed up and redeemed them one day before the 20 year period. If current yield of .2% stays throughout, I wouldnt want to do the math on how much that one day cost him. It would be too painful.

 

[Fufina]

If you do not need it for 10-15 years then I would put it in Fidelity or Vanguard S&P 500 Index fund. You would have the time to weather the downs of the market. Five years or less, then I would place it in a more of a 40/60 Index fund of market/bonds.

 

[Midpack]

I bonds have their appeal, but at $10-20K/yr they’re useless for people holding more than $10-20K in cash - many/most retirees (the predominant audience here?).

 

[ProGolferWannabe]

Suppose you retired on a pension, and do not know anything about investing really. Single, no need to leave inheritance. Suppose you have about $100k right now that you are sure you won't need in the next 10-15 years, but would like to protect it from inflation for some possible future use in about 10-15 years. You won't be doing anything with it in the meantime. What would you do with this $100k, where would you put it away for 10-15 years?

I would suggest a target date fund. One deposit and done…let Fidelity reallocate each year. Sit back and hopefully let time do it’s thing.