Mary, I would not move all to short-term. Doing so will lessen your risk - but will also decrease the current yield/interest.
Mary - consider a portion as rates have been volatile. Your funds probably did better than the short-term bond funds on a day like yesterday.
Beth - I am keeping clients in bonds. While they WILL go down when interest rates go up, the magnitude of the drop is much less than what stocks can do. In the meantime, they are paying interest. Does your 403(b) happen to have a "Stable Value" or "Guaranteed" fund? These can be a great option, as they pay reasonable returns (usually around 3%) with minimal risk
Hi kzlink, Lynda and Eric -- we have you in the queue next :)
I agree with Beth that you should have an allocation to bonds. Depending on your age and income needs, bonds (some, not all) act as a stabilizing factor in a portfolio.
Hello Zac - Why do you want to buy a home now?
Hi Zac - the home-buying decision is a big one. Whether or not it's the right choice for you at this time depends on many factors: job stability, other assets, etc. I would encourage you to save for at least 10% down.
Welcome SKS and sam! We will get to you shortly. Just a reminder to everyone participating, if you miss the answer to a question, the transcript will always be here for you!
Looks like Zac may have stepped away, let's take one from Lynda in the meantime.
Hi Lynda - generally yes.
Lynda - yes. I agree with you.
Hi Lynda - in general, I have clients leave Roth money in place as long as possible. Exceptions may be an unusual event causing high taxes in a given year (sale of appreciated property), that would cause the 401k money to be taxed at a much higher rate - in that instant I may have a client take some funds out of Roth (assuming no other non-Roth non-401k funds are available).
Hi Eric - I think a foreign bond fund is a good idea, and I think the allocation you indicate also sounds about right - I often start with 10% of the total bonds. I put them in tax-advantaged accounts where/is possible
Zac - Buying a home does take away some flexibility. You will be saddled with a long-term mortgage payment, taxes that always seem to increase, and transaction costs and market value changes when you sell. Generally you should'nt buy if you are only going to be in a home for a few years. Be sure to not overburden yourselves with mortgage/taxes/insurance/maintenance costs - even if the bank is willing to lend you the money, make sure you are comfortable covering those costs. You might qualify for some low downpayment programs - you should speak with a mortgage banker/broker to get an idea of what you might qualify for.
Zac - in my personal opinion. I would consider buying a home. I would prefer that you have at least 10% down (20% even better) but building equity in your home at low rates is attractive. Obviously, consider job stability not only in your position, but also are you not
candidate to possibly relocate.
Hi SKS - well, you've certainly hit a "hot-button" topic. I have read more analytical approaches to varying the drawdown with the market return. Michael Kitces has written about this, I believe he's the a
Sorry - Kitces is the author of a paper on monitoring the drawdown. Recently there's been talk of using the IRA reguired minimum distribution amount as a guideline. Also, you may know, but the 4% rule applies to a 65 year old with a 60% stock/40% bond portfolio.
Hi SKS - This is an area under continual review and I'm afraid there aren't any hard facts that will always work. Obviously spending less is better, and you will need to react to both inflation rates and market movements in the underlying portfolio, so trying to hedge both of those factors may help give one confidence in making withdrawals in retirement.
SKS- yes. there have been much debate about the 4% rule. However, I like to discuss a range of 4-6%. We counsel our clients to have outside cash( from our management) just in case we experience another bear market. If we did experience a severe downturn, we would reduce the portfolio distributions and "turn-on" the distributions from the cash account.
Hello Sam - If you are getting a tax refund, the treasury is paying you back money you lent them interest free, so turning around and lending it back with interest is an improvement. If you are set on buying treasury bonds, doing it direct is a good safe and cheap way to do it. Please consider adjusting your withholding or estimated payments so you don't get a tax refund in the future
Hi Sam - buying treasuries via tax refund is a good idea if you want to buy treasuries. You can buy them at www.treasurydirect.gov, but I believe buying through tax refund enables you to buy more than the $10k/person/year limit (I think that number is correct). For the Roth IRA, I like Vanguard, www.vanguard.com, and specifically their Target Retirement Funds, e.g. Target Retirement 2040 for you.
Hi Laura - yes, I think a safety deposit box is well worth it for the nominal fee. I keep property deeds, vehicle titles, any stock certificates, social security cards, birth certificates, etc. Peace of mind.
SKS- I like to have a safety deposit box for important documents. If you do not want the hassle of going to the bank. Consider buying a safe that is fire and water proof.
ohhh and don't forget about the thieves- make it heavy and durable.
Our apologies to kzlink! Your question got cut off. Here it is:
Kzlink: spouse or non-spouse beneficiary?
And one more question: has the IRA owner (you?) reached age 70 1/2, i.e. started taking RMDs (required minimum distributions)