How would you categorize this type of account [403b stable value fund] and other ideas...

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mahanska
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How would you categorize this type of account [403b stable value fund] and other ideas...

Post by mahanska »

I am a retired teacher. I have a 403b that has $275,000, all invested in a stability principle (no fee) account which pays 4% every year and does not fluctuate. I'm wondering if I should consider this to be part of my "bucket 1" or short term spending or some other category. I still will have to pay income tax on withdrawals. If I consider this to be "cash", then this accounts for 22% of my portfolio.

This was a great asset when interest rates were super low, but now it just feels like a savings account. I'm wondering if I'm being too conservative holding on to the entire amount. I have another $65,000 that is available in after tax regular checking accounts.

[Title clarified - moderator Kendall]
sailaway
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Re: How would you categorize this type of account [403b stable value fund] and other ideas...

Post by sailaway »

I bet that stable value fund felt pretty good when bonds were crashing as interest rates rose, too.

I would count it towards bonds, but I don't distinguish much between bonds and cash within my portfolio.
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retiredjg
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Re: How would you categorize this type of account [403b stable value fund] and other ideas...

Post by retiredjg »

Welcome to the forum. :happy

I would consider it part of the bond allocation in my portfolio. A stable value fund and an intermediate term bond fund make a nice combination. One is more stable. The other often (not always) gives higher returns.
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ruralavalon
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Re: How would you categorize this type of account [403b stable value fund] and other ideas...

Post by ruralavalon »

mahanska wrote: Wed Jul 10, 2024 7:00 am I am a retired teacher. I have a 403b that has $275,000, all invested in a stability principle (no fee) account which pays 4% every year and does not fluctuate. I'm wondering if I should consider this to be part of my "bucket 1" or short term spending or some other category. I still will have to pay income tax on withdrawals. If I consider this to be "cash", then this accounts for 22% of my portfolio.

This was a great asset when interest rates were super low, but now it just feels like a savings account. I'm wondering if I'm being too conservative holding on to the entire amount. I have another $65,000 that is available in after tax regular checking accounts.

[Title clarified - moderator Kendall]
I would count a Stable Value Fund or Guaranteed Income Fund as a part of the fixed income allocation along with any bond funds you own. I do not hold a "cash" allocation.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
tibbitts
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Re: How would you categorize this type of account [403b stable value fund] and other ideas...

Post by tibbitts »

mahanska wrote: Wed Jul 10, 2024 7:00 am I am a retired teacher. I have a 403b that has $275,000, all invested in a stability principle (no fee) account which pays 4% every year and does not fluctuate. I'm wondering if I should consider this to be part of my "bucket 1" or short term spending or some other category. I still will have to pay income tax on withdrawals. If I consider this to be "cash", then this accounts for 22% of my portfolio.

This was a great asset when interest rates were super low, but now it just feels like a savings account. I'm wondering if I'm being too conservative holding on to the entire amount. I have another $65,000 that is available in after tax regular checking accounts.

[Title clarified - moderator Kendall]
I have an account that also pays 4% (but more like 3.95% given a $30 annual fee.) I consider it cash. And yes it was a lot more appealing before the last couple of years.
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