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At what rate would you be willing to tie up at least $100,000 to $250,000 of your currently unneeded nest egg cash for a full 5 years in federally insured bank or credit union deposits?

Assume for purposes of this question that you are retired, on a fixed income, and that early withdrawal will result in a penalty equal to 6 months interest.
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I'd go 5 yrs for 3.00% APY+
I'd go 5 yrs for 2.75% APY+
I'd go 5 yrs for 2.50% APY+
I'd go 5 yrs for 2.25% APY+
I would never tie any cash up for 5 yrs (explain)

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Assume for purposes of this question that you are retired, on a fixed income, and that early withdrawal will result in a penalty equal to 6 months interest.

...

100% (1 Vote )
I would never tie any cash up for 5 yrs (explain)


None of this applies to me as I keep both wife's and my vast fortunes (by our standards) in nothing (one small exception) but solid dividend payers (minimum 4.5% some significantly higher) in mostly tax free accounts (as space comes available). So far I've had no reason to withdraw any of the money as we have no debt and live comfortably on our federal government pensions. If anything the extra cash builds up in the accounts far faster than I can find tax free room ... so wife gifted a very nice check to a family member in need and we are thinking of doing an extra winter trip to Portugal early next year?

Anymouse <no US holdings at all>

https://www.theglobeandmail.com/investing/markets/stocks/ALA...

https://www.theglobeandmail.com/investing/markets/stocks/ENB...

https://www.theglobeandmail.com/investing/markets/stocks/LB-...

Note: I keep cash here until I find a better place for it.
https://www.theglobeandmail.com/investing/markets/stocks/XDV...

https://www.theglobeandmail.com/investing/markets/stocks/CM-...

https://www.theglobeandmail.com/investing/markets/stocks/BNS...

https://www.theglobeandmail.com/investing/markets/stocks/IPL...

https://www.theglobeandmail.com/investing/markets/stocks/TRP...
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Something much higher than what you have listed. I am not among the group that would say "never" but it would need to be at least double the highest option listed for me to consider.

Something like a AAA insured corp bond at 6%? I'd consider it.

Keep in mind, you specified "unneeded next egg" which means this is money one can afford to take some risk with - so why put it in an ultra-safe investment?

Drop it in a balanced fund and let it ride for five years. If history is a guide, your chances are that you will be better off five years later than 2.25% (at least going back to the 1950s for all rolling 5 yr periods).
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Agree with Hawkin. The returns are too low to justify such a large AND long term investment.

4-26 week Treasuries yield 2+% with the same risk, so it makes no sense to to invest for 3 years for such a smaller increase in the return.

https://www.treasury.gov/resource-center/data-chart-center/i...
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I prefer to take my investment returns as capital gains and minimize dividend & interest income. This allows me to control the timing of taxable transactions. No sense paying taxes on an interest or dividend payment if you don't need to spend the money. Better to let it continue to grow, pre-tax.

I've avoided fixed income securities for more than a decade. My current allocation id 95% stock.

intercst
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I have a proportion of my port in short term blue chip bonds that pay higher rates.

Mostly for income these days I prefer buying rental real estate in Mexico that also has strong upside capital potential.


david fb
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I would never tie any cash up for 5 yrs (explain)

I'm getting better than 3% now with dividend stocks that have been paying better than that.
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...your currently unneeded nest egg cash....

The unstated element here is the time definition implied in the above qualifier. Being an unsecured creditor in the era of "Bail-in"; health issues previously elaborated upon; uncovered weather damage in what appears to be atypical and record setting weather events over the recent years; and a host of other possibilities may serve to radically alter the "currently unneeded" definition all by themselves. Let alone the possibility that the phrase might imply far less than 5 years.

My choice would be none of the above, but then one's risk profile can be such that the perceived safety of the presented options offers less anxiety than other options that have been mentioned in this thread.

Poz
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