Want to move to a more stable and capital preservation investment?

[2quik6]

I am to the point where I want to start moving money out of so many stocks and into a more stable and value preservation investment, such as T-bills or bonds, and or CD's. I know its interest rates on the move down, they may not make all that much. My goal would be to find something that would maintain at least a 2.5-3.5% interest rate.
I know I can make more ethan that currently with VMFXX but maybe not long term.
I know my individual stocks well, but do not know much about T-bonds/bills and other fixed income instruments that would preserve capital.
Can anyone share their thoughts on what may be decent alternatives and how you go about purchasing them if not an EFT or MM fund?

Thanks

[exodusNH]

I am to the point where I want to start moving money out of so many stocks and into a more stable and value preservation investment, such as T-bills or bonds, and or CD's. I know its interest rates on the move down, they may not make all that much. My goal would be to find something that would maintain at least a 2.5-3.5% interest rate.

Over what period of time?

[arcticpineapplecorp.]

you might want to ladder TIPS if you're trying to preserve the capital (against inflation presumably).

there were posts about buying treasuries

[retired@50]

I am to the point where I want to start moving money out of so many stocks and into a more stable and value preservation investment, such as T-bills or bonds, and or CD's. I know its interest rates on the move down, they may not make all that much. My goal would be to find something that would maintain at least a 2.5-3.5% interest rate.
I know I can make more ethan that currently with VMFXX but maybe not long term.
I know my individual stocks well, but do not know much about T-bonds/bills and other fixed income instruments that would preserve capital.
Can anyone share their thoughts on what may be decent alternatives and how you go about purchasing them if not an EFT or MM fund?

Thanks

The time horizon matters.

The latest 10 year Treasury Note issued on September 16 paid 3.875%.
Source: https://treasurydirect.gov/marketable-s ... ury-notes/

Here is a list of upcoming Treasury auctions.
https://treasurydirect.gov/auctions/upcoming/

If your broker allows you to buy at auction you might find it more convenient than using the Treasury Direct website.

Regards,

[LotsaGray]

I am to the point where I want to start moving money out of so many stocks and into a more stable and value preservation investment, such as T-bills or bonds, and or CD's. I know its interest rates on the move down, they may not make all that much. My goal would be to find something that would maintain at least a 2.5-3.5% interest rate.
I know I can make more ethan that currently with VMFXX but maybe not long term.
I know my individual stocks well, but do not know much about T-bonds/bills and other fixed income instruments that would preserve capital.
Can anyone share their thoughts on what may be decent alternatives and how you go about purchasing them if not an EFT or MM fund?

Thanks

You can lock in 4.7%+ for up to ten yrs in nominal treasuries. Or you can get REAL yield of 1.5% to 2.0% up to 30 yrs buy holding TIPS. If you go with funds the NAV can vary as rates move. This is true for holding bonds directly also. But since you term matched your needs you won’t have to ever realize those impacts.

[exodusNH]

I am to the point where I want to start moving money out of so many stocks and into a more stable and value preservation investment, such as T-bills or bonds, and or CD's. I know its interest rates on the move down, they may not make all that much. My goal would be to find something that would maintain at least a 2.5-3.5% interest rate.
I know I can make more ethan that currently with VMFXX but maybe not long term.
I know my individual stocks well, but do not know much about T-bonds/bills and other fixed income instruments that would preserve capital.
Can anyone share their thoughts on what may be decent alternatives and how you go about purchasing them if not an EFT or MM fund?

Thanks

You can lock in 4.7%+ for up to ten yrs in nominal treasuries. Or you can get REAL yield of 1.5% to 2.0% up to 30 yrs buy holding TIPS. If you go with funds the NAV can vary as rates move. This is true for holding bonds directly also. But since you term matched your needs you won’t have to ever realize those impacts.

The ten year is under 3.8%. The two year is around 3.5%.

The days of nearly 5% are gone for any duration.

[LotsaGray]

I am to the point where I want to start moving money out of so many stocks and into a more stable and value preservation investment, such as T-bills or bonds, and or CD's. I know its interest rates on the move down, they may not make all that much. My goal would be to find something that would maintain at least a 2.5-3.5% interest rate.
I know I can make more ethan that currently with VMFXX but maybe not long term.
I know my individual stocks well, but do not know much about T-bonds/bills and other fixed income instruments that would preserve capital.
Can anyone share their thoughts on what may be decent alternatives and how you go about purchasing them if not an EFT or MM fund?

Thanks

You can lock in 4.7%+ for up to ten yrs in nominal treasuries. Or you can get REAL yield of 1.5% to 2.0% up to 30 yrs buy holding TIPS. If you go with funds the NAV can vary as rates move. This is true for holding bonds directly also. But since you term matched your needs you won’t have to ever realize those impacts.

The ten year is under 3.8%. The two year is around 3.5%.

The days of nearly 5% are gone for any duration.

Sorry typo. Meant to type 3.7%+. Yes 5% treasuries have left the building. If op or others must have 5%, there are MYGA. Did not mention to op as a time range was not mentioned and not sure op wants to lock in the money as is in these.

[blortchplop]

I am to the point where I want to start moving money out of so many stocks and into a more stable and value preservation investment, such as T-bills or bonds, and or CD's. I know its interest rates on the move down, they may not make all that much. My goal would be to find something that would maintain at least a 2.5-3.5% interest rate.
I know I can make more ethan that currently with VMFXX but maybe not long term.
I know my individual stocks well, but do not know much about T-bonds/bills and other fixed income instruments that would preserve capital.
Can anyone share their thoughts on what may be decent alternatives and how you go about purchasing them if not an EFT or MM fund?

Thanks

Sometimes, employer retirement plans will offer a stable value fund. These funds can sometimes have a return above 2.5%. They consist of bond-like underlying investments protected by insurance contracts to provide a more steady rate of return. They typically have restrictions for what you can do with money taken out of the fund—often not allowed to move it into other fixed income for 90 days.

My employer's 401k has one called "Lincoln Stable Value Separate Account". Its historic returns have varied between 3.36% (worst 3 months, Jan-Mar 2021) and 5.44% (best 3 months, Jul-Sep 2009); inception date is November 1998. I've also heard the TSP G fund and TIAA traditional sometimes classified as stable value funds.

Series EE savings bonds are guaranteed to double in value when held for 20 years. This is an equivalent annualized return of 3.54% before taxes.

Series I savings bonds return at a rate indexed to inflation (CPI) which is updated every 6 months, plus a fixed rate which is set at purchase and does not change. The fixed rated is currently 1.3% and likely to decrease for bonds purchased after November. If you think inflation will exceed 2.5%, these might fit your criteria.

Both Series I and Series EE savings bonds can only be held at treasury direct. Tax on interest can be deferred until redemption and is exempt at the state level. The purchase limit is $10,000 per year for each type of bond per person or entity. Some people create LLCs or revocable living trusts to increase purchase limits with entity accounts.

It's interesting to note that none of the above are marketable securities.

[2quik6]

The time horizon matters.

The latest 10 year Treasury Note issued on September 16 paid 3.875%.
Source: https://treasurydirect.gov/marketable-s ... ury-notes/

Here is a list of upcoming Treasury auctions.
https://treasurydirect.gov/auctions/upcoming/

If your broker allows you to buy at auction you might find it more convenient than using the Treasury Direct website.

Regards,

This is very helpful, thank you!

Looks like Treasuries would still be the main alternative after review of all of the replies.
My time horizon would be for the next 8-15years then re-evaluate. That would give me a good 15yrs to live off of more than half of my savings, then another 15 yrs to live on whatever I put into Treasuries, etc that are stable, plus a few hundred K to continue to play in the market for my "mad money".
I think I have enough to live on for 30 yrs, and that does not include what I would start receiving for SS, pension, and RR retirement at 62, so should be more than enough and that is with estimating health insurance at $1000-1500 a month for the next 8 years till 65.


Do these mentioned Treasuries compound if you were to buy a 10-yr T, and it appears that would pay an interest payment 2 times a year, does that interest get compounded or is it only paid in cash?

Thanks

[retired@50]

Do these mentioned Treasuries compound if you were to buy a 10-yr T, and it appears that would pay an interest payment 2 times a year, does that interest get compounded or is it only paid in cash?

Thanks

I believe the interest gets paid in cash, either at Treasury Direct (if you use that site) or at your broker, in your settlement fund.

Regards,

[2quik6]

Thoughts on the VUSXX Treasury MM fund?

[retired@50]

Thoughts on the VUSXX Treasury MM fund?

VUSXX is a fine choice for a money market fund, but you should realize that the interest rate earned will be closely linked to the Fed funds rate controlled by the Federal Reserve Chairman. Subject to future ups and downs as the FOMC sees fit.

If you're looking to lock in a current interest rate for a long(er) time, then you're going to have to extend the duration.

Regards,

[2quik6]

Thoughts on the VUSXX Treasury MM fund?

VUSXX is a fine choice for a money market fund, but you should realize that the interest rate earned will be closely linked to the Fed funds rate controlled by the Federal Reserve Chairman. Subject to future ups and downs as the FOMC sees fit.

If you're looking to lock in a current interest rate for a long(er) time, then you're going to have to extend the duration.

Regards,

Yes, I realize that, historically it has paid around 2.5% since inception, and around 5% currently. We have had many years of very low, near 0% fed funds rates, hopefully they can normalize to a near normal of around 2-3% for a healthy economy. I see VG also has CDs, however the page does not seem to progress when I try to get a detailed view of all of the options currently offered and rates.
Pretty much any interest I can make in the next few years is just icing on the cake extra. Thank you!