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As an aside, if someone is fairly risk averse (i.e. doesn't want to lose more then 10-15% in a crisis like what just happened) and wants to park ~200k, is the b
by singhrac 6y ago
As an aside, if someone is fairly risk averse (i.e. doesn't want to lose more then 10-15% in a crisis like what just happened) and wants to park ~200k, is the best option a high-yield savings account? A CD? I would have normally thought treasuries but obviously interest rates are low.
- reducesuffering 6y agoDepends on if you mean 10-15% real purchasing power or nominal. Most people think of cash as safe as possible but heavy inflation could wipe out 50% real purchasing power in a few years. Nominal? Sure, high yield savings account is safest, 1% currently, and won’t lose any nominal. You could even do a bond or muni bond fund, BND or VTEB, to gain extra after-tax yield ~2% without losing more than 10-15%. But you really want to not lose more than 10-15% real, in which you’d need to think of the money as a portfolio including inflation hedges like TIPS (inflation protected bonds), Stocks, and Gold, albeit in small 5-10% allocations because of their greater risk.
- mrep 6y agoI like BND. Only dropped 8.7% from peak to bottom in march (back up now), it pays out a decent dividend, and it is a vanguard etf and vanguard is awesome in my experience.
- throwaheyy 6y agoThe fed lowering interest rates has murdered money market rates (e.g. 0.1% annualised return). Not a financial adviser but I’m currently using a mix of 1% APR HYSA and some bond ETFs (some total bond exposure, then some additional holdings increasing exposure to just US bonds and US municipal bonds).