3 ms·
One thing you should get out of your head is that there is zero risk. Even keeping it all in cash in a checking account has risk. CD ladder isn't a bad choice.
by jtchang 3y ago
One thing you should get out of your head is that there is zero risk. Even keeping it all in cash in a checking account has risk.
CD ladder isn't a bad choice. A treasury bill ladder could also work and might actually fit as well. The risk is in a rising interest rate environment the t-bills you buy now will be worth less in the future. You'll still get the dollars in absolute terms but it might buy less. Too bad you can't buy I-bonds past 10k a year.
Also the biggest risk in your plan is the "leave alone and not manage". There is manage a little, manage a lot, or pay someone to manage it for me. Leaving it alone and not managing it has its own risks.
- ActorNightly 3y ago>Even keeping it all in cash in a checking account has risk. Besides the obvious FDIC 250k limit, can you clarify this? I don't see how leaving the money alone would have any risk.
- VikingIV 3y agoInflation outpacing your account's interest rate is a risk factor which FDIC doesn't insure against. While your balance won't decrease, its buying power relative to the current dollar will weaken. E.g. an $800k purchase in 2003 would now cost $1.3m.
- ActorNightly 3y agoInflation % vs interest % doesn't directly matter. If Im spending under a certain amount of the interest income, and reinvest the rest, its always going to be inflation beating.