Does this make sense?

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nbseer
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Does this make sense?

Post by nbseer » Sun Mar 11, 2018 9:01 pm

Just did this year's tIRA conversion to my Roth IRA. I am retired, taking SS and plan on using my Roth as a tax-free emergency fund in case I need to buy a car, house, etc. So don't want to invest it in stocks, but also would like to get some return.

Does it make sense to put this $$ in a short-term bond fund, or one-year duration cd's?

Lafder
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Re: Does this make sense?

Post by Lafder » Sun Mar 11, 2018 9:07 pm

It depends on what the rest of your holdings are.

Do you have taxable holdings you can pull from before this Roth?

CDs are likely FDIC insured and have a guaranteed return. Is there a penalty if you pull the money out early?

Bonds are not guaranteed or insured.

lafder

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ruralavalon
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Location: Illinois

Re: Does this make sense?

Post by ruralavalon » Mon Mar 12, 2018 10:41 am

nbseer wrote:
Sun Mar 11, 2018 9:01 pm
Just did this year's tIRA conversion to my Roth IRA. I am retired, taking SS and plan on using my Roth as a tax-free emergency fund in case I need to buy a car, house, etc. So don't want to invest it in stocks, but also would like to get some return.

Does it make sense to put this $$ in a short-term bond fund, or one-year duration cd's?
My suggestion is to invest this as part of your regular asset allocation.

If retired and over age 59.5 everything is part of your emergency fund because everything is available for emergencies, in my opinion there is no need for a separate dedicated emergency fund.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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David Jay
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Re: Does this make sense?

Post by David Jay » Mon Mar 12, 2018 10:47 am

I would put the portion that you may need at any time (i.e. the equivalent of an emergency) in a ST bond fund. Any variation in NAV will be small and brief.

In my case, I will be maintaining (2) years living expenses in ST bonds when I retire next year.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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