Invest with a guaranteed rate?

[K1981]

My company's 401K offers a fixed rate fund (administered thru Vanguard), in addition to a handful of the funds that Vanguard manages.  The fixed rate for 2014 is 5.1%.  Would most people stick to leveraging this sure thing rate or try to diversify the money into some other funds?  I also have an IRA that I keep a b it more risky and diverse, in additional to some taxable index funds.

[Ybserp]

What else is offered? What are the expense ratios of all the funds?

[Joel]

I would consider that part of my bond allocation. I also might increase my bond allocation if I could put more money into something with a guaranteed 5% return.

How is it guaranteed though?

[dragoncar]

Damn, I'd take it.  It's definitely subsidized somehow... I've seen up to mid 3% in certain plans.

I'm assuming this is USD? 

[thedayisbrave]

Sounds like a stable value fund? You could put the bond allocation of your AA in that - that's probably what I'd do in your situation.  You can put your riskier stuff in the IRA and taxable.  Sounds like a good deal to me, but yeah I'd make sure you're not paying for it somewhere else like dragoncar mentions.

[foobar]

Sounds like a stable value fund? You could put the bond allocation of your AA in that - that's probably what I'd do in your situation.  You can put your riskier stuff in the IRA and taxable.  Sounds like a good deal to me, but yeah I'd make sure you're not paying for it somewhere else like dragoncar mentions.

The downside is that their are often limits on switching out so rebalancing can get tricky. SV funds do tend to be a decent deal if you were just going to shove the money into a bond fund or cd anyway

[K1981]

It's a stable value fund that is funded by our company, while the remaining funds are Vanguard managed.  EP is .03% so pretty low cost.  With interest rates staying low it will likely drop slightly next year.  The 5 year is at about 6% and 10 year at 6.7%.