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We could put the money in a money market account and probably earn 7% if we are lucky. This would be fairly safe, right? But I think we really need closer to 10%. Is it possible to earn this safely?

I would love to have guaranteed returns of 10%! I could retire today on that! Unfortunately, those types of yields are available only with risk (e.g., market risk).

I just checked IBC ( and it looks like the highest 1-year yield retail money market fund is paying 6.42% (Strong Investors Money Fund). (This is close to the Vanguard Prime Money Market with today's quote being an annualized 7-day yield of 6.34%.) Of course, if interest rates drop, these rates could also drop without notice--money market funds (or money market accounts, for that matter) generally don't announce the change of rates before they occur and it probably wouldn't make much sense to do so.

The best 5-year CD I could find on Money Rates ( pays 7.72%APY. (The best is 10-yr 7.82%APY.) But if generating an income stream, the interest won't be left in the account to compound, so that 7.72%APY would be 7.44% rate (and 7.83% on that 10-year CD). An advantage of a CD (unless it is a callable CD) is that generally the rate is locked in for the term of the CD, e.g., that 7.72%APY 5-yr CD would be paying 7.72% for 5 years. What happens after that CD matures is a different matter: many issuers will automatically roll the balance into a like-term CD at whatever interest rate they are offering at that time.

Vanguard Total Bond Market has a 1-year trailing total return of 7.54%; 10-year annualized total return of 7.84%. Bond funds are subject to interest rate risk.

One could also use a broker to purchase a few investment-quality corporate bonds. If one holds a bond until maturity, one doesn't care what interest rate movement there is (unlike bond funds), but one would probably want to get bonds from several different companies in case one of the companies defaults (fails to pay interest). Defaults are unlikely with investment-quality bonds, but are not zero. (Sorry, I don'tknow what new-issued bonds are yielding, but I would expect somewhere between 7% and 9%.) Individual bonds usually pay once every 6 months, whereas a typical bond fund will pay dividends once a month. The Bonds Online Home Page ( may be of some help in this area. (I admit being out of my element when it comes to individual bonds.)

Vanguard High-Yield Corporate bond fund has a 10-year annualized return of 10.88%, but the 1-year trailing total returns was a negative 1.73%. ("High yield" is another word for "junk"--there are interest rate risk, credit quality risk, and risk of default, and a slowing economy can make defaults and deteriorating credit quality real risks, even though Vanguard tends to buy the better of the junk.)

One does not want to buy individual junk bonds because these companies are already risky and the low credit rating is often justified by them defaulting.

Stock funds in general do better over the long run, but in the short run they are way more volatile and far from "safe". (Just read all the messages from people complaining that they have lost money since last March!)

If you are tempted to look at an "immediate annuity", watch those fees! Often annuities have hefty fees and expenses, but two companies that are known for their low fees are TIAA-CREF ( and Vanguard ( However, annuities can be rather inflexable, whereas one could use a broker to sell a bond on the secondary market.

Of the requirements you had posted, I would be inclined to look at the possibility of holding individual, investment-quality corporate bonds.
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