Author Topic: Invest with a guaranteed rate?  (Read 2478 times)

K1981

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Invest with a guaranteed rate?
« on: September 16, 2014, 08:17:42 PM »
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

  • 5 O'Clock Shadow
  • *
  • Posts: 96
Re: Invest with a guaranteed rate?
« Reply #1 on: September 16, 2014, 08:21:11 PM »
What else is offered? What are the expense ratios of all the funds?

Joel

  • Pencil Stache
  • ****
  • Posts: 817
  • Location: California
Re: Invest with a guaranteed rate?
« Reply #2 on: September 16, 2014, 09:47:26 PM »
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

  • Walrus Stache
  • *******
  • Posts: 9322
  • Registered member
Re: Invest with a guaranteed rate?
« Reply #3 on: September 17, 2014, 02:55:08 PM »
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

  • Pencil Stache
  • ****
  • Posts: 700
  • Location: Raleigh, NC
  • CFO @ My Life
Re: Invest with a guaranteed rate?
« Reply #4 on: September 17, 2014, 03:09:19 PM »
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

  • Pencil Stache
  • ****
  • Posts: 731
Re: Invest with a guaranteed rate?
« Reply #5 on: September 17, 2014, 04:08:01 PM »
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

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Re: Invest with a guaranteed rate?
« Reply #6 on: September 18, 2014, 09:20:37 PM »
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%.