Where would you put cash that you want to access in 5 years? 2023 we are planning quitting and moving to working only part time. We will need the funds starting 5 years from now. We were considering like half in total stock market index funds like VTSAX, and the other half in safer vehicles like bonds and CDs that have low cost fees. My dilemma is that we can't access the bulk of our nest egg until we are 59 1/2. We are currently putting away a year's worth of living expenses in a taxable trading account each year for the next 5 years. I am concerned of where to place that, as we will need to spend chunks of it every year for about 5 years. Putting it all in stocks seems risky as hell. My fear is the market tanking, as we get ready to go.What say you?
My dilemma is that we can't access the bulk of our nest egg until we are 59 1/2.
Quote from: ACyclist on June 01, 2018, 09:44:32 AMWhere would you put cash that you want to access in 5 years? 2023 we are planning quitting and moving to working only part time. We will need the funds starting 5 years from now. We were considering like half in total stock market index funds like VTSAX, and the other half in safer vehicles like bonds and CDs that have low cost fees. My dilemma is that we can't access the bulk of our nest egg until we are 59 1/2. We are currently putting away a year's worth of living expenses in a taxable trading account each year for the next 5 years. I am concerned of where to place that, as we will need to spend chunks of it every year for about 5 years. Putting it all in stocks seems risky as hell. My fear is the market tanking, as we get ready to go.What say you?What percentage of your expenses do you expect part-time work to cover? What is your target withdraw rate from your investments overall?I agree that 100% with a 5 year timeline is a bit too risky (although you could compensate for the risk by saving more than you think you'll need and/or be flexible about the exact timeline). There are other options in addition to saving 5 years expenses in a taxable account. You might be served just as well rolling some of your nest egg into a traditional IRA to take SEPP withdraws from until 59 1/2. You could also balance your taxable stocks with bonds in a Roth IRA to avoid paying taxes on bond interest during your accumulation years. Of course you can also simply choose an allocation of stocks and tax-free bonds in your taxable account.
6.07% a year or over the 12 years?
Like, PFF, is that a conservative ETF? Then, the rest in safer investments, like CDs and bonds. This is a tight timeframe. market losses would hurt, if I need to access that cash.
Part time work will be enough to just pay medical insurance premiums and luxury things. I am using the 4% withdrawal rate from the total (total = roth+403b+taxable trading account+other shiny things) to cover our living expenses. Our living expenses are quite low. Zero debt and modest lifestyle.
Vanguard has a tax-managed balanced fund: VTMFX. I believe it is 50% large and mid cap stock index, and 50% muni bond fund.
Where would you put cash that you want to access in 5 years? 2023 we are planning quitting and moving to working only part time. We will need the funds starting 5 years from now... Putting it all in stocks seems risky as hell. My fear is the market tanking, as we get ready to go. What say you?