Loki,You're one of the posters I always read, because your posts are on point and your advice seems so reasonable. You advised: "The alternative, which is what I would do, would be to . . . put the money into a ladder of 1-5 year CDs, and put it back into the Vanguard Total Bond Fund as each of the CDs come due."We've been sitting in Vanguard's Short-Term Bond Index, reinvesting dividends. With the idea of keeping 5 years of future income in cash, I've been planning to build a 5-year CD ladder at Vanguard, starting with 2 and 3 year CDs, and rolling into longer term CDs each year. I've been reluctant to tie money up in 4 and 5 year CDs in the current low interest rate environment, and that's the same reason I've avoided the Total Bond Market Fund. I thought to keep a year of cash at ING Direct, whose rate seems to be the same as a 1-year CD. Advise sought.
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