Need Portfolio Advice - What to do with some cash?

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Woodman53
Posts: 5
Joined: Tue Jul 13, 2021 9:19 am

Need Portfolio Advice - What to do with some cash?

Post by Woodman53 »

Hi Everyone,

Is it too late to buy TIPS (Vanguard Inflation-Protected Sec Inv - VIPSX). I have $70,000 dollars from a CD that has matured and from balancing my portfolio.

Currently my Portfolio is as follows (Value about 1 million) 98% is in a traditional IRA

Stocks - 60%
- Vanguard Total Stock Market Index Admiral - 40%
- Vanguard Small Cap Index - 4%
- Vanguard Total Intl Stock Index - 16%

Cash, Bonds or Bond Like Instruments - 40%
- MYGA - 6%
- Roth IRA at Credit Union - 27% (Pays 1.75% interest - Insured by NCUA, this is liquid and can be withdrawn at anytime with no penalty)
- Cash - 7%

So I am looking for what to do with the 7% cash. Potential Options;
- Buy MYGA - from Americo, rating "A", yield = 2.80%
- Put in Credit Union Roth IRA (Will be over NCUA insurance limit)
- Buy VIPSX (Will an allocation of 7% make a difference?)
- Other ideas?

My income is $77,000 (Pension no COLA and Spousal SS) and expenses are $100,000. I am 67 (spouse is 66) and I will be 70 in Oct 2023 when I will start drawing Social Security and our total income will then be $120,000, so we are in good shape.

What should I do with the 7% cash?

Look forward to hearing your thoughts.
Last edited by Woodman53 on Wed Jul 21, 2021 5:44 am, edited 4 times in total.
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Mel Lindauer
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Re: Is it too late to buy TIPS

Post by Mel Lindauer »

Currently TIPS are providing a negative real return, so I don't think they're a good choice at the present time. You might consider I Bonds, currently yielding 3.54% for the first $20k, but there doesn't seem to be much of anything else that's a risk-free hideaway that's producing a positive real return.
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Robot Monster
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Joined: Sun May 05, 2019 11:23 am

Re: Is it too late to buy TIPS

Post by Robot Monster »

I don't know if TIPS makes sense for you. A well respected member of this forum, Vineviz, created a "very rough rule of thumb, in table form" (below). I think you should probably max out your I Bonds before resorting to TIPS; you're allowed $20K per year between you and your spouse. Maybe do $20K I Bonds now, and another in January. Unsure what to do with the remaining $30K.

I Bonds
"I bonds earn interest for 30 years unless you cash them first. You can cash them after one year. But if you cash them before five years, you lose the previous three months of interest. (For example, if you cash an I bond after 18 months, you get the first 15 months of interest.)"

Vineviz

Code: Select all

Stocks	LTT	TIPS	STIG
100%	0%	0%	0%
90%	10%	0%	0%
80%	20%	0%	0%
70%	20%	10%	0%
60%	20%	20%	0%
50%	20%	30%	0%
40%	10%	40%	10%
30%	0%	50%	20%
LTT = Long-term Treasuries
TIPS = Broad TIPS fund (or Series I Savings Bonds or individual TIPS ladder)
STIG = Short-term investment grade corporate bond fund
source
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GMCZ71
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Location: McMinnville, Or

Re: Need Portfolio Advice - What to do with some cash?

Post by GMCZ71 »

Woodman53 wrote: Tue Jul 20, 2021 1:47 pm

Cash, Bonds or Bond Like Instruments - 40%
- MYGA - 6%
- Roth IRA at Credit Union - 27% (Pays 1.75% interest - Insured by NCUA, this is liquid and can be withdrawn at anytime with no penalty)
- Cash - 7%


- Put in Credit Union Roth IRA (Will be over NCUA insurance limit)
- Buy VIPSX (Will an allocation of 7% make a difference?)
- Other ideas?


Look forward to hearing your thoughts.
Roth is generally used for all stocks and long term growth tax free. What are the custodial fees @ CU?
John
Topic Author
Woodman53
Posts: 5
Joined: Tue Jul 13, 2021 9:19 am

Re: Need Portfolio Advice - What to do with some cash?

Post by Woodman53 »

Correction the IRA at the Credit Union is not a Roth IRA. It is a traditional IRA. Sorry for the confusion.

There are no custodial fees at the credit union.

I trying to determine what to do with the $70,000 and how to structure the “Bond/CD/MYGA/Cash” portion of the portfolio when we are in a low interest rate environment with possible increases in interest rates and inflation.
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