No. of Recommendations: 1
AEnriquez Date: 3/4/01 8:29 PM Number: 28259

<<<<Fellow Fools
Regarding the retiree porfolio, I have a question, What is the most cost efective way to invest the "Income Cushion",treasuries or short and mid term bonds Vangaurd Index Funds?
If the answer is Treasuries, what is the easies and less expensive way to buy them?

Regarding the retiree portfolio, please be advised that The Motley Fool Model Retiree Portfolios were always about the most deceptively dangerous, blindly stupid, and totally inappropriate misapplications of misleading ideas ever to come down the pike and were originally proposed by a most persuasive, however overly enthusiastic, TMFr who has apparently recanted his original ill-thought-out concepts.

<<Thanks, fellow Fools
After I read your answers, I believe some clarifiacation is required.

Indeed so!

<<As far as "Income cushion", I meant the money that we need to live for 5 years, the amount needed for three to five years usually invested in bonds and the money needed for the first three invested in MM.>>

The money that you need to live for five years may be held in a money market account/fund or in a combination of money market accounts/funds and laddered certificates of deposit or laddered treasuries.

Admittedly, one might conceiveably hold some specific individually well-rated bonds with relatively near dates of maturity, however I suspect that the transactional costs involved would not make it very cost effective for the average individual.

In general, the money that you need to live for five years should almost never be held in the form of stock or stock funds, nor in the form of bonds or bond funds.

Many conservative investors in their later years prefer to have relatively readily available money which should last them for more than five years and seven years or ten years are not believed to be unreasonable periods.

In addition, one should maintain some reasonable and readily available relatively liquid emergency fund in cash or near cash at short term interest, so that your total retirement plan need not be thrown completely out of whack at the wrong time by an occasional emergency.

You need to do a bit of study and serious thinking about where to put the rest of your funds and, until you find a better idea, you might give serious consideration to a simple and workable combination of a bit of DIA (Dow 30), SPY (S&P 500), and QQQ (Nasdaq 100), along with quite a bit of cash at short term interest, all rebalanced periodically. If you do not fully grasp the foregoing, LEARN and FIND OUT what is happening.

Remember, the name of the game is SURVIVAL!

Beware not to become overly distracted from basic goals by mere mechanical details.

It's your money, and you are the one who will experience the joy, rapture, and delight of success or the sorrow, degradation, and misery of failure.



P.S. Yes, I have been around a bit longer than you, and I may have seen more brilliant ideas fail, however I am still around and, so far, I have survived.

You might enjoy going to and reading the now somewhat timely post #13944 on the old Foolish Four board.

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