Author Topic: Need fixed rate return. CDs?  (Read 732 times)

wageslave23

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Need fixed rate return. CDs?
« on: April 22, 2019, 06:53:54 AM »
My uncle is looking for something to put his 401k in that would guarantee a fixed 3-5% return for a couple of years.  I'm leaning towards CDs.  Any recommendations?

ixtap

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Re: Need fixed rate return. CDs?
« Reply #1 on: April 22, 2019, 08:51:33 AM »
Where are you getting above 3% on CDs?

wageslave23

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Re: Need fixed rate return. CDs?
« Reply #2 on: April 22, 2019, 09:03:07 AM »
I have no idea, thats why I'm asking for suggestions.  I've seen ads for 2.5 - 3% for 2+ yr cds, but never looked into them because I had no interest in investing in them at the time.  Any shorter term bonds that are almost as secure as government bonds that would return 3 or 4%?

Financial.Velociraptor

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Re: Need fixed rate return. CDs?
« Reply #3 on: April 22, 2019, 09:37:27 AM »
I would look at closed end funds (CEF) trading at a discount to NAV.  Go here: https://www.cefconnect.com/closed-end-funds-screener and set a filter for bonds and sort by discount to NAV.  You should be able to get a lot better than 3% and distributions paid monthly. 

Don't buy anything trading for a premium to NAV,  no matter how high the yield!

grobinski

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Re: Need fixed rate return. CDs?
« Reply #4 on: April 22, 2019, 09:59:44 AM »
Have you looked at Worthy bonds? I would be interested in what other mustachians think about Worthy or similar peer-lending platforms.

https://worthybonds.com

I've had a bit of $ in Worthy since close to inception, it's still there and has yeilded the stated  5%.

Rob_bob

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Re: Need fixed rate return. CDs?
« Reply #5 on: April 22, 2019, 01:35:14 PM »
Emerging market Sovereign Debt (PCY) 4.81% and Emerging Market Bond (EMB) 5.5%, these are Government bonds.

FWIW I've owned PCY since 2007 and it's still chugging along.
« Last Edit: April 22, 2019, 01:40:26 PM by Rob_bob »

Abe

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Re: Need fixed rate return. CDs?
« Reply #6 on: April 22, 2019, 09:12:02 PM »
Vanguard Total International Bond Index Fund Admiral Shares (VTABX) offers higher-quality bonds (mostly in developed rather than developing countries) with comparable returns and a lower fee (0.11% vs 0.50% and 0.40%). Keep in mind that since all of these are low-yield funds, the expense ratios really become a significant factor over time. Overall, you will be hard pressed to find a bond fund that is low risk and has a 4-5% yield. 3% is doable, though.

             1-year  3-year      5-year
VTBAX: 5.15%   3.20%   4.12%
PCY:     4.46%   4.70%   5.13%
EMB:    3.58%   4.60%   4.53%


wageslave23

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Re: Need fixed rate return. CDs?
« Reply #7 on: April 23, 2019, 07:30:42 AM »
Thanks everyone!  I think the lower risk bonds might be a good option, at least for part of his money.