I definitely think bond funds are the way to go in accumulation mode, but once you're retired and drawing down funds, I can make a case for using individual bonds since you can match the duration to the time frame that you will need cash. To that point, as a recent retiree, I've put together a small TIPs ladder. It's only 10 years long and it only covers a portion of my expected spending--at that level it certainly seems like a reasonable component of my retirement plan. The majority of my portfolio is still in stock and bond funds, with another five years or so of spending (not covered by the TIPs ladder) in cash. That said, I agree with the other comments here that a TIPS ladder lacks simplicity, which is a definite downside.
I do the same as the author and manage to travel in style for a fraction of the cost if paid. It is important to know that it can actually be a fair amount of work trying to efficiently use the miles, but for better or worse, I've been successfully throwing myself at this for years. That said, I look at my 10 credit cards--each with a very specific use and purpose--and realize that if something were to happen to me, there's no way my wife could decipher this. So I've slowly started to cut back the cards and make things easier for my wife (or other heirs) take care of things if the time were to come. I know from experience in managing my parents' modest estate that there's plenty of work to do so no point in making someone close out 10 credit cards as part of that.
My wife and I have the same issue, although we don't have kids, which makes it less clear about how we handle this. Our current estate plan calls for assets to be distributed between our seven nieces/nephews and to charity. We can certainly afford to help some of the nieces/nephews now, but they're all in different places in life and not sure how to do that equitably. Then there's the question of whether we even need to distribute our money equitably--as nieces/nephews we have closer relationships with some compared to others.
Premium economy pretty much exists for the traveler that can't decide if they want to pony up the extra $$$ for business class or just fly economy. Just keep in mind that there's some variation to how airlines treat PE--for some it's more of a juiced up economy class, while others treat it more as "business lite." Premium economy (which the airlines have different names for) is a separate class of service--not just the economy seats with a few extra inches of leg room. Happy travels!
If your income was over the amount to qualify for a subsidy, why did you purchase an ACA policy as opposed to looking for one that wasn't part of the exchange? Did you cross shop to see how they compared?
I disagree that the bonds can be riskier than cash. What would be a bad year for bonds? Losing 2 or 3%? Stocks can lose more than that in a single day.
So 3.5% on your cash value? Given that 10-year treasury rates are roughly half of that, what is the risk involved in getting that return? Under the theory that there's no "free lunch" in investing, why are you expecting an above average return with this and what is the trade off? It may be an acceptable trade off for you, which is fine, but there *has* to be a trade off and that's what I'm curious about.
Comments
I definitely think bond funds are the way to go in accumulation mode, but once you're retired and drawing down funds, I can make a case for using individual bonds since you can match the duration to the time frame that you will need cash. To that point, as a recent retiree, I've put together a small TIPs ladder. It's only 10 years long and it only covers a portion of my expected spending--at that level it certainly seems like a reasonable component of my retirement plan. The majority of my portfolio is still in stock and bond funds, with another five years or so of spending (not covered by the TIPs ladder) in cash. That said, I agree with the other comments here that a TIPS ladder lacks simplicity, which is a definite downside.
Post: Comfort Has a Cost
Link to comment from March 2, 2024
This was sure a fun read!
Post: Taxing Our Brains
Link to comment from December 20, 2023
Anyone else have a Janis Joplin song going through their head while reading this?
Post: My Car Journey
Link to comment from September 2, 2023
I do the same as the author and manage to travel in style for a fraction of the cost if paid. It is important to know that it can actually be a fair amount of work trying to efficiently use the miles, but for better or worse, I've been successfully throwing myself at this for years. That said, I look at my 10 credit cards--each with a very specific use and purpose--and realize that if something were to happen to me, there's no way my wife could decipher this. So I've slowly started to cut back the cards and make things easier for my wife (or other heirs) take care of things if the time were to come. I know from experience in managing my parents' modest estate that there's plenty of work to do so no point in making someone close out 10 credit cards as part of that.
Post: Scoring Points
Link to comment from August 30, 2023
My wife and I have the same issue, although we don't have kids, which makes it less clear about how we handle this. Our current estate plan calls for assets to be distributed between our seven nieces/nephews and to charity. We can certainly afford to help some of the nieces/nephews now, but they're all in different places in life and not sure how to do that equitably. Then there's the question of whether we even need to distribute our money equitably--as nieces/nephews we have closer relationships with some compared to others.
Post: When to Give
Link to comment from July 29, 2023
Premium economy pretty much exists for the traveler that can't decide if they want to pony up the extra $$$ for business class or just fly economy. Just keep in mind that there's some variation to how airlines treat PE--for some it's more of a juiced up economy class, while others treat it more as "business lite." Premium economy (which the airlines have different names for) is a separate class of service--not just the economy seats with a few extra inches of leg room. Happy travels!
Post: Wishing My Life Away
Link to comment from April 8, 2023
If your income was over the amount to qualify for a subsidy, why did you purchase an ACA policy as opposed to looking for one that wasn't part of the exchange? Did you cross shop to see how they compared?
Post: Affordable Care?
Link to comment from April 6, 2022
I disagree that the bonds can be riskier than cash. What would be a bad year for bonds? Losing 2 or 3%? Stocks can lose more than that in a single day.
Post: No Bonds for Me
Link to comment from October 30, 2021
So 3.5% on your cash value? Given that 10-year treasury rates are roughly half of that, what is the risk involved in getting that return? Under the theory that there's no "free lunch" in investing, why are you expecting an above average return with this and what is the trade off? It may be an acceptable trade off for you, which is fine, but there *has* to be a trade off and that's what I'm curious about.
Post: A Less Risky Life
Link to comment from March 29, 2021