I have low 6 figures in a BOA money market. It's very liquid, but only pays .15% interest. I would assume there must be better options out there? FWIW Vanguard's prime money market is only .16


Also, are there any good resources for helping pick out Vanguard funds? This investment is not tax protected, and I would want it to lean on the conservative side.

strike3,

i'm not going to chase your moving goalposts anymore (commodities double your money! j/k they're just for fun) so i think this conversation has run its course. good luck with your investment "style".


kingdan,

need to know about your risk tolerance and timeline for investment of this cash. you can do better than 0.15% "risk-free" with high-yield online savings.

So thanks to this thread I've build a 3 fund portfolio and put some money in there every month for the long term.
I want to save an additional $2-3k a month over the next years and debating where to put it.

- Going to probably need the money in 2-3 years
- Would be fine losing a bit (but not all) of it if the EV was there

I'm thinking about just buying more of the same old with it but always read here that those stocks/funds are for a longer period. Still, my banks offer only abysmal saving rates of ~1% for the one and 0.00x% for the other (lol). Can't easily get other bank accounts due to moving around / living abroad.

I want to keep some money liquid (access to it within a week if necessary) and overall conservative with it.

I also want to invest money with Vanguard that I won't be touching for 5+ years so I will be quite sensitized to the swings.

europa,

a CD from a bank is probably your best option if you can find one in your situation.

with these criteria, you could go as risky as something like a (short-term) bond fund. for only a few grand i probably wouldn't bother, but it might be worth the effort and/or risk if you're really going to save $2-3k * 12-36 months.

keep this in savings.

did you mean desensitized?

back to the original question:

this is tough because the "conservative" portion of a portfolio -- fixed income or "bonds" -- is also the part that is tax-inefficient. if you don't have tax-advantaged space available for a technique like http://www.bogleheads.org/wiki/Placi...ntaged_Account, you might just have to bite the tax bullet.

anyway, i would generally recommend a target retirement or life strategy fund. pick one that has a stock/FI ratio that matches your timeline and/or risk tolerance.

So for bond funds sane question again given that I don't have anything to do with the US really:

US bonds or world bonds? Looks like more and cheaper options for US, as always..

yes i meant desensitized, whoops!

thanks for the post. any thoughts on VWIAX

i wrote a long post about this recently. perhaps a mix.

idk, what is it?

You obviously know that for short time frames the standard answer is CD's and money markets. Since you appear to be looking for a little more yield and say you are willing to accept more risk to get it, I would look at fund like this:
https://personal.vanguard.com/us/fun...FundIntExt=INT

This fund is 80% bonds and 20% stocks. Vanguard ranks it as a 2 on a 1(less risky) to 5(most risky) scale.

Make no mistake, you could lose money in this fund, especially if interest rates rise and the stock market crashes.

Vanguard Wellington, a balanced fund. Ranked a 3 out of 5 on the risk scale.

To the OP, is this for the money you need in a few years? I don't really know much about this fund in particular, but in general I would say a balanced fund is too risky for a short term invester and not aggressive enough for a long term investor. I like balanced funds for people close to retirement, that need growth but also don't want a huge downturn.

wellington is well-respected but it's an active fund so i avoid it in favor of the things i already recommended (which basically do the same thing but with passive indexes and hence lower expenses).

it is (potentially) appropriate for a timeline of 5+ or 10+ years.

I invested 2.7k across three stocks in 2011 (my senior year of high school) and hit a low of 1.7k in 2012 and their value is now at 2.4k. I want to gtfo and move these funds elsewhere.

Where can I go with my 2.4k? The money is meaningful enough to me that I would be very unhappy bustoing all of it, but still separate enough from the money I need for life expenses that I'm willing to gambool and see 25-35% of it disappear if things go poorly.

assuming you already have an emergency fund and a handle on your debt and guessing about every other detail that you didn't provide, i'd shove this into a Roth IRA and buy a target retirement fund.

using the very rough rule of thumb "stocks may drop 50% at any moment", you're looking for about a 60/40 stocks/fixed income ratio if you can truly tolerate a 25-35% drop in the value of this investment.

I'm 24. Have no debt. Have an extra $100k to invest. I can handle swings of 20-30% but would be pretty crushed if I lost it all.

Also, I should probably mention that I am very uneducated about investing, so please try not to use abbreviations or confusing terms. Thanks for any help.

kyle,

normally i'd recommend a target retirement fund. with your stated risk tolerance though, the target retirement fund you choose is going to have a lot of bonds which are undesirable in taxable space. you can either live with that, or build your own three-fund portfolio.

my recommendation about confusing terms is to google them. it's hard to have a conversation if you don't speak the language at all.

also read this thread; i guarantee i've defined every piece of jargon in this post.

I'd pick up The Intelligent Asset Allocator and The Ages of The Investor, both by William Bernstein. The books are concise, easy to read, and will be relevant for your situation considering you'll be lump-sum investing at a young age (he discusses this in detail). One book is like 43 pages and the other is short too so you can get through them both in an evening. Bernstein also runs efficientfrontier.com which is an investing site with some good articles and a reading list for investors.

i haven't read those books but both are well-regarded on bogleheads (where wbern posts occasionally). nice recs.

quick retirement-plan checkup:

28yo single usa, 100k post-tax net worth mostly in high-risk vanguard funds. 6k pre-tax in a 401k, no ira. current year income 130k, expect overall lifetime mean income to be 100k/year (in today's dollars) with very high volatility. currently unemployed so don't have 401k options.

looking to contribute to an ira. as far as i can see i should be contributing post-tax dollars to a traditional ira and immediately converting it to a roth, since the comparative tax deduction on my relatively high income for this year is far outweighed by 30 years of tax-free interest earnings (even assuming really conservative returns). could someone confirm this is the only sensible choice and i'm not missing something obvious? thanks.

verite,

with 130k of income, you are (almost certainly, without a ton of deductions) not eligible for a direct roth contribution. you also do not get a tax reduction by contributing to a tIRA. hence i agree that a backdoor roth is the way to go.

i think there are rules about having earned income before contributing to an ira (maybe it's only direct roth contributions?), so keep an eye on that in the future.

note also there are other retirement accounts that cover you if you have a job but are not eligible for a workplace savings plan like a 401k -- simple IRA, self-directed 401k, etc. keep those in mind in the future as well.

Returning to this thread with roughly the same personal situation but (I think) a different economic situation:

I have at least $50k that I'm not going to be touching for the next couple years. So, I'd like to put that somewhere better than a savings account. I'm thinking about putting it in a low-cost intermediate-term bond fund (I guess maybe this one https://personal.vanguard.com/us/fun...FundIntExt=INT). My reasoning is that this is relatively low-risk (i.e., the odds of me losing more than 10% of my investment are pretty low), the yields aren't bad right now (3% on 10-year treasury bonds seems pretty solid to me), inflation is very low, and the fed doesn't seem to be artificially inflating prices on these longer-term bonds anymore.

Alternatively, I could invest in just straight treasury bonds, but it seems like diversification and higher yields probably justify buying riskier corporate bonds. I could buy short-term bonds, but yields are crap. I could buy longer-term bonds, but that exposes me to a lot more risk. I could also buy foreign bonds (either denominated in dollars or not), but I know very little about this.


Country you live in
US

Income
Extremely variable. I have ~30k fixed income as a PhD student, and I do a variety of other things on the side that earn me somewhere between $0 and $200k/year.

Risk Tolerance
Medium

Timeframe for investment
Possibly 2 years (I could see myself wanting to buy an apartment in ~2 years). More likely 5-10 years.

Debt
None

Other stuff
I have additional retirement investments in a fund that is almost entirely stocks, and I'll likely be investing more in a similar fund in a couple months come tax time. So I don't really need more exposure to the stock market.

Probable complete noob question, but why don't Americans invest in banks overseas? My bank in aus gives me 5% as standard on a savings account. Seems like in US it's hard to get more than 1.

Obviously there are money moving fees And exchange rate issues but those are surmount able

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noah,

you were pretty keen on money market funds four months ago. what happened to that?

is it that dale and i spent several posts explaining how you were wrong, only to see you disappear from the thread and never thank either one of us for our help?

good luck.

the-fryke,

if there were free money to be made in this "just keep your cash in an aussie bank account" scheme, lots of people would be doing it. since they aren't, i conclude that it isn't possible.

i don't actually know if it's possible but here are some guesses about why it wouldn't work:

- oz banks won't accept non-oz customers (non-americans run into this all the time with american banks)
- oz equivalent of fdic won't cover non-oz customers, leading to an uncompensated increase in risk
- increased currency risk since i don't spend AU$
- transaction fees including currency exchange quickly eat up profits
- the only thing i keep in cash is my emergency fund. in an emergency, extracting cash from a foreign sovereign is the last thing i want to be doing