Looking for low risk Vanguard fund

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
dotdotloop
Posts: 27
Joined: Sun Aug 05, 2018 3:52 pm

Looking for low risk Vanguard fund

Post by dotdotloop » Thu Aug 09, 2018 1:52 pm

As I prepare to move from using an advisor to overseeing our investments myself, I'm a little stuck on selecting a low risk Vanguard fund for what I view as our secondary savings. We have $50k in cash (I'm starting to question if this is really too much to keep in cash too- thoughts? We really only need about $25k for an emergency fund). Outside of our retirement accounts, we have $32k earning 4.36% since inception- it's invested in SEOXX, SEIMX, SEITX, SUMAX, SEATX, TMLCX, TMMAX (based on our advisor's recommendations). Honestly, I've been happy with our return (minus the $ we've been paying in fees- UGH!). Any recommendations for a Vanguard fund? I'm looking for something fairly low risk because I want the money to be pretty stable, as we're thinking of using it for a downpayment in several years- it'll probably be at least 5 years until we need it (unless something unforeseen happens).

User avatar
iceport
Posts: 3997
Joined: Sat Apr 07, 2007 4:29 pm

Re: Looking for low risk Vanguard fund

Post by iceport » Thu Aug 09, 2018 1:57 pm

Vanguard Short-Term Corporate Bond Index Fund (VSCSX) is certainly worth considering. Current yield = 3.38%. Sensitivity to interest rate risk is limited by the relatively short duration of 2.8 years.
"Discipline matters more than allocation.” ─William Bernstein

magicrat
Posts: 413
Joined: Sat Nov 29, 2014 7:04 pm

Re: Looking for low risk Vanguard fund

Post by magicrat » Thu Aug 09, 2018 1:58 pm

Money market, CDs, or possible short term bonds

MichCPA
Posts: 271
Joined: Fri Jul 06, 2018 9:06 pm

Re: Looking for low risk Vanguard fund

Post by MichCPA » Thu Aug 09, 2018 1:59 pm

You just posted in another thread about contributing to a roth vs paying down an ARM. If you have a spare 25k above your EF and you are worried about risk I would just plunk it down on your mortgage even though its at 2.875 due to the ARM provision.

livesoft
Posts: 62716
Joined: Thu Mar 01, 2007 8:00 pm

Re: Looking for low risk Vanguard fund

Post by livesoft » Thu Aug 09, 2018 2:02 pm

"SEOXX, SEIMX, SEITX, SUMAX, SEATX, TMLCX, TMMAX" are a mix of money market, tax-exempt bond funds, and equity funds (US and international), so I would not have considered that mix particularly "low risk" without knowing the actual asset allocation that they were used at. I think all of them have near-equivalent Vanguard funds though, so one could achieve the same non-safe risk level if one wanted to.

For example, if your current mix was 20% equities and 80% bonds, then the Vanguard LifeStrategy Income fund would match that asset allocation.
Wiki This signature message sponsored by sscritic: Learn to fish.

User avatar
Toons
Posts: 12967
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: Looking for low risk Vanguard fund

Post by Toons » Thu Aug 09, 2018 3:38 pm

Vanguard Lifestrategy Income





:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

retiredjg
Posts: 33887
Joined: Thu Jan 10, 2008 12:56 pm

Re: Looking for low risk Vanguard fund

Post by retiredjg » Thu Aug 09, 2018 5:24 pm

Welcome to the forum.

Questions like this are impossible to answer because people have no idea what your situation looks like.

In order to get reliable answers, you should post your information in the format we use to help people with their portfolio questions. See the link at the bottom of this message for how to do that. The closer you follow the format, the better help you will get.

Nate79
Posts: 3498
Joined: Thu Aug 11, 2016 6:24 pm
Location: Portland, OR

Re: Looking for low risk Vanguard fund

Post by Nate79 » Thu Aug 09, 2018 5:41 pm

Vanguard has very good MM funds.

dotdotloop
Posts: 27
Joined: Sun Aug 05, 2018 3:52 pm

Re: Looking for low risk Vanguard fund

Post by dotdotloop » Thu Aug 09, 2018 8:49 pm

iceport wrote:
Thu Aug 09, 2018 1:57 pm
Vanguard Short-Term Corporate Bond Index Fund (VSCSX) is certainly worth considering. Current yield = 3.38%. Sensitivity to interest rate risk is limited by the relatively short duration of 2.8 years.
Thanks! I'll check this out!

dotdotloop
Posts: 27
Joined: Sun Aug 05, 2018 3:52 pm

Re: Looking for low risk Vanguard fund

Post by dotdotloop » Thu Aug 09, 2018 8:49 pm

Nate79 wrote:
Thu Aug 09, 2018 5:41 pm
Vanguard has very good MM funds.
I'll look into this- thank you!

dotdotloop
Posts: 27
Joined: Sun Aug 05, 2018 3:52 pm

Re: Looking for low risk Vanguard fund

Post by dotdotloop » Thu Aug 09, 2018 8:50 pm

retiredjg wrote:
Thu Aug 09, 2018 5:24 pm
Welcome to the forum.

Questions like this are impossible to answer because people have no idea what your situation looks like.

In order to get reliable answers, you should post your information in the format we use to help people with their portfolio questions. See the link at the bottom of this message for how to do that. The closer you follow the format, the better help you will get.
Thank you so much! Yes, I'm definitely just getting my feet wet with using the forum and doing so in the appropriate manner. I will check out the link and repost according to the format.

dotdotloop
Posts: 27
Joined: Sun Aug 05, 2018 3:52 pm

Re: Looking for low risk Vanguard fund

Post by dotdotloop » Thu Aug 09, 2018 8:50 pm

Toons wrote:
Thu Aug 09, 2018 3:38 pm
Vanguard Lifestrategy Income





:happy
Thanks!!

dotdotloop
Posts: 27
Joined: Sun Aug 05, 2018 3:52 pm

Re: Looking for low risk Vanguard fund

Post by dotdotloop » Thu Aug 09, 2018 8:51 pm

livesoft wrote:
Thu Aug 09, 2018 2:02 pm
"SEOXX, SEIMX, SEITX, SUMAX, SEATX, TMLCX, TMMAX" are a mix of money market, tax-exempt bond funds, and equity funds (US and international), so I would not have considered that mix particularly "low risk" without knowing the actual asset allocation that they were used at. I think all of them have near-equivalent Vanguard funds though, so one could achieve the same non-safe risk level if one wanted to.

For example, if your current mix was 20% equities and 80% bonds, then the Vanguard LifeStrategy Income fund would match that asset allocation.
Good to know! Thank you so much- this helps! I have lots to learn!

dotdotloop
Posts: 27
Joined: Sun Aug 05, 2018 3:52 pm

Re: Looking for low risk Vanguard fund

Post by dotdotloop » Thu Aug 09, 2018 8:53 pm

MichCPA wrote:
Thu Aug 09, 2018 1:59 pm
You just posted in another thread about contributing to a roth vs paying down an ARM. If you have a spare 25k above your EF and you are worried about risk I would just plunk it down on your mortgage even though its at 2.875 due to the ARM provision.
Oh gosh- I've definitely considered this. I just have a hard time swallowing the fact that I could earn more elsewhere- it's such a hard call. I've definitely thought about putting the extra into our mortgage!

TropikThunder
Posts: 1032
Joined: Sun Apr 03, 2016 5:41 pm

Re: Looking for low risk Vanguard fund

Post by TropikThunder » Thu Aug 09, 2018 8:58 pm

dotdotloop wrote:
Thu Aug 09, 2018 8:53 pm
MichCPA wrote:
Thu Aug 09, 2018 1:59 pm
You just posted in another thread about contributing to a roth vs paying down an ARM. If you have a spare 25k above your EF and you are worried about risk I would just plunk it down on your mortgage even though its at 2.875 due to the ARM provision.
Oh gosh- I've definitely considered this. I just have a hard time swallowing the fact that I could earn more elsewhere- it's such a hard call. I've definitely thought about putting the extra into our mortgage!
It's not just a question of earning more than the current 2.875, it's earning more than what the ARM will adjust to.

MichCPA
Posts: 271
Joined: Fri Jul 06, 2018 9:06 pm

Re: Looking for low risk Vanguard fund

Post by MichCPA » Fri Aug 10, 2018 8:33 am

TropikThunder wrote:
Thu Aug 09, 2018 8:58 pm
dotdotloop wrote:
Thu Aug 09, 2018 8:53 pm
MichCPA wrote:
Thu Aug 09, 2018 1:59 pm
You just posted in another thread about contributing to a roth vs paying down an ARM. If you have a spare 25k above your EF and you are worried about risk I would just plunk it down on your mortgage even though its at 2.875 due to the ARM provision.
Oh gosh- I've definitely considered this. I just have a hard time swallowing the fact that I could earn more elsewhere- it's such a hard call. I've definitely thought about putting the extra into our mortgage!
It's not just a question of earning more than the current 2.875, it's earning more than what the ARM will adjust to.
+1 The ARM provision is the key there. That ARM will probably adjust closer to 4.5 or 5, and you can't out earn that on a risk-free, after-tax basis. Since your are pulling money off of the back end of your mortgage THAT is your rate of return on those payments. You are just waiting for your mortgage to earn more interest before paying it and you can't beat 2.875 risk free on cash after taxes anyway. If the pile of cash feels good that's fine, but have a set policy for max in cash based on EF requirements, expected needs, and normal AA, and put the rest to work. If you have a low tolerance for risk keep in mind that reducing your mortgage reduces your financial risk, esp w the ARM.

Post Reply