Hello all,
For those of you who have FIRED or will soon and have a CD/Bond or some kind of laddering for drawdown and sequence of returns risk mitigation how did/will you implement it?
Right now I'm debating between using treasury direct (combo of Series I, since it only has a 10k/yr limit) and other instruments or the simpler CD ladders (and tools) provided by Ally:
https://www.ally.com/bank/cd-ladder/quick-calculator.htmlThe more I look into the various ways to implement this the more I'm getting to analysis paralysis. I'm even asking some very fundamental questions like... WTF a 5 year treasury bond is yielding 1.84% but a 5 year CD from Ally is 2.25%... what's going on here?
Anyway... just curious as to what others are doing (if anything). My basic plan is to have half of my yearly minimum spend in a CD/some guaranteed instrument that matures that year and the other half from my dividends/interest on my other investments. This would be a 5 year ladder so 2.5x one year of expenses in total.
This way if the market takes a shit I won't have to deplete that much of the principle (if any). If it doesn't take a shit I will renew the ladder and liquidate some of my portfolio. It's similar to what Dr. Doom described for those that are familiar with it.