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Author: vargaj Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76237  
Subject: Retirment cash Date: 11/3/1998 3:01 PM
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As retirement approaches (15 months) I'm planning how to manage my nest egg. Right now the plan is to keep all but 3 to 5 years living/emergency cash fully invested in some combination of Foolish strategies. Using Sheard's approach of 5% per year means 15% to 25% cash. My question is where is the best place to keep the cash. So far I keep it in Van ST Bond Fund. What other choices to I have? Med/Long Bond Funds? Short/Med/Long Bonds? Money Market Funds? Mortgage backed securities? the list is endless. naturally I'd like to maximize my income from my cash and the fact that I only need say 5% in any one year it seems like I might have some flexibility . I don't feel that I need instant access to all my cash, but I do need some protection against a prolonged (5 yr) bear market.

Ideas?

Joe Varga
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6402 of 76237
Subject: Re: Retirment cash Date: 11/3/1998 7:36 PM
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Joe Varga asks:

<<As retirement approaches (15 months) I'm planning how to manage my nest egg. Right now the plan is to keep all but 3 to 5 years living/emergency cash fully invested in some combination of Foolish strategies. Using Sheard's approach of 5% per year means 15% to 25% cash. My question is where is the best place to keep the cash. So far I keep it in Van ST Bond Fund. What other choices to I have? Med/Long Bond Funds? Short/Med/Long Bonds? Money Market Funds? Mortgage backed securities? the list is endless. naturally I'd like to maximize my income from my cash and the fact that I only need say 5% in any one year it seems like I might have some flexibility . I don't feel that I need instant access to all my cash, but I do need some protection against a prolonged (5 yr) bear market.

Ideas?>>


One Fool's opinion FWIW: One year in a money market checking account. Two years' worth in a CD, short-term bond fund, or treasuries. Two years' worth in mid-term (5-8 year) bonds or T-Notes. It's money I don't want to subject to much risk, but I still want as much interest as I can earn.

Regards….Pixy


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Author: ataloss Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6422 of 76237
Subject: Re: Retirment cash Date: 11/4/1998 3:44 PM
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<<One Fool's opinion FWIW: One year in a money market checking account. Two years' worth in a CD, short-term bond fund, or treasuries. Two years' worth in mid-term (5-8 year) bonds or T-Notes. It's money I don't want to subject to much risk, but I still want as much interest as I can earn.

Regards….Pixy
>>

So you would sell stock each year and replenish the cash accounts?

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6450 of 76237
Subject: Re: Retirment cash Date: 11/5/1998 2:11 PM
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Ataloss wrote:

<<One Fool's opinion FWIW: One year in a money market checking account. Two years' worth in a CD, short-term bond fund, or treasuries. Two years' worth in mid-term (5-8 year) bonds or T-Notes. It's money I don't want to subject to much risk, but I still want as much interest as I can earn.

Regards….Pixy
>>

So you would sell stock each year and replenish the cash accounts?


Yes, I would replenish the 5-year money as needed, but only when the stock account was up for the year. If down, I would draw from the remaining 5-year money. When stocks were up again, I would replace what was taken during the down year(s).

Regards…..Pixy


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Author: joew3 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6479 of 76237
Subject: Re: Retirment cash Date: 11/6/1998 9:17 PM
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<< Pixy wrote.......One Fool's opinion FWIW: One year in a money market checking account. Two years' worth in a CD, short-term bond fund, or treasuries. Two years' worth in mid-term (5-8 year) bonds or T-Notes....>>

Why so much, 4 yrs worth, in Bond type investments? My first thought was so one could "ride out" bad years. But if I am using the Fool Four approach I would be liquidating some every year. Couldn't I just take my next years needs out of the proceeds?

I am very new to this and maybe I missed something.

Thanks

JoeW

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6529 of 76237
Subject: Re: Retirment cash Date: 11/9/1998 5:41 PM
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JoeW wrote:

<< Pixy wrote.......One Fool's opinion FWIW: One year in a money market checking account. Two years' worth in a CD, short-term bond fund, or treasuries. Two years' worth in mid-term (5-8 year) bonds or T-Notes....>>

Why so much, 4 yrs worth, in Bond type investments? My first thought was so one could "ride out" bad years. But if I am using the Fool Four approach I would be liquidating some every year. Couldn't I just take my next years needs out of the proceeds?


We were talking about someone already retired. The five years' of income outside of stocks is a cushion for market volatility. The FF portfolio may be down in some years. History shows that stocks will beat bonds and the money market some 85% of the time for rolling 5-year periods. What do you do in the years it's down? Sell stocks at a loss? Thus, conservative retirement investors may want to hold back five years' income so it isn't at risk in the stock market. For some discussion on that concept, see the 20-some-odd posts starting at http://boards.fool.com/registered/Message.asp?id=1040013000079000&sort=postdate . They discuss various approaches to retiree portfolios.

Regards….Pixy


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