Where to invest cash in IRA

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scarson
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Where to invest cash in IRA

Post by scarson » Mon Sep 24, 2018 9:21 pm

I sold some Closed End Funds in my IRA and raised cash so I can follow the experts advice here and invest in index funds. My dilemma is, should i invest right away or wait for a correction? Is there a popular liquid ETF that you can recommend that I can sell in a hurry - a safe one like a short term bond.

Thanks

Sam

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fortfun
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Re: Where to invest cash in IRA

Post by fortfun » Mon Sep 24, 2018 9:37 pm

Will you need this money soon?

If not, contribute 5.5k in a Roth IRA (Vanguard Tot US Stock is a good bet).

We really need more information to help you.

Topic Author
scarson
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Re: Where to invest cash in IRA

Post by scarson » Mon Sep 24, 2018 9:43 pm

The cash is already in a Roth IRA - am thinking of buying VTI in a correction. Until then, should I invest in VTIP or any other short term bond fund? I do not need the money for at least 15 years.

Thanks

Sam

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fortfun
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Re: Where to invest cash in IRA

Post by fortfun » Mon Sep 24, 2018 9:47 pm

scarson wrote:
Mon Sep 24, 2018 9:43 pm
The cash is already in a Roth IRA - am thinking of buying VTI in a correction. Until then, should I invest in VTIP or any other short term bond fund? I do not need the money for at least 15 years.

Thanks

Sam
Why not leave it in the Roth IRA?

billfromct
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Re: Where to invest cash in IRA

Post by billfromct » Mon Sep 24, 2018 11:01 pm

You don't say you have your Roth IRA with Vanguard but you indicate that you have or are looking at ETFs within your Roth IRA.

The Vanguard Prime Money Market Fund is currently paying 2.11%. I would imagine other mutual fund company MM funds are probably paying 1.8%-2.0%; my guess only.

With speculation that the Fed will raise interest rates 2-4 times over the next 12 months, it would be prudent to have this money, that you will investment within the next year or so, in a money market fund until the next correction arrives.

I will be starting RMDs in January & have 3-4 years of RMDs in the Vanguard MM fund (in my rollover IRA) since I think interest rates will rise 2-4 times over the next year. I can wait out the interest rate cycle for my short/intermediate term IRA fixed income allocation, which is about 60% of my rollover IRA fixed income allocation.

bill

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Lancelot
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Re: Where to invest cash in IRA

Post by Lancelot » Mon Sep 24, 2018 11:52 pm

billfromct wrote:
Mon Sep 24, 2018 11:01 pm
The Vanguard Prime Money Market Fund is currently paying 2.11%. I would imagine other mutual fund company MM funds are probably paying 1.8%-2.0%; my guess only.

With speculation that the Fed will raise interest rates 2-4 times over the next 12 months, it would be prudent to have this money, that you will investment within the next year or so, in a money market fund until the next correction arrives.

I like Vanguard Prime MM too. I have also been buying some Vanguard Short Term Treasury. Maybe after rates rise, I may take a position in Intermediate Trearuries.
No Where for Very Long...

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dogagility
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Re: Where to invest cash in IRA

Post by dogagility » Tue Sep 25, 2018 5:21 am

scarson wrote:
Mon Sep 24, 2018 9:21 pm
I sold some Closed End Funds in my IRA and raised cash so I can follow the experts advice here and invest in index funds. My dilemma is, should i invest right away or wait for a correction? Is there a popular liquid ETF that you can recommend that I can sell in a hurry - a safe one like a short term bond.
If this money was previously in an equity fund, invest it all in a total stock market index now.

Market timing is antithetical to Boglehead philosophy. Nobody, including you and me, knows what will happen within the stock market near term. Over time, the market trend is upward. You are more likely to lose market gains waiting for the "correction" than you are to accurately time your investment.
"The stock market is a device for transferring money from the impatient to the patient" -- Warren Buffett

Topic Author
scarson
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Re: Where to invest cash in IRA

Post by scarson » Tue Sep 25, 2018 5:31 am

Thanks to all who replied. The money is an old Interactive Brokers IRA. So buying a mutual fund is expensive. I can buy Vanguard ETF's like VTI for a small commission. I do agree that market timing is expensive, made that mistake in the past a couple of times and missed a lot of moves.

Sam

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oldcomputerguy
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Re: Where to invest cash in IRA

Post by oldcomputerguy » Tue Sep 25, 2018 6:42 am

scarson wrote:
Tue Sep 25, 2018 5:31 am
Thanks to all who replied. The money is an old Interactive Brokers IRA. So buying a mutual fund is expensive. I can buy Vanguard ETF's like VTI for a small commission.
Just a suggestion, why not open a new Roth IRA at Vanguard and pull this money over to that account? Then you can buy whatever Vanguard funds you want with no commission.
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

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