57M in US. Planning to retire overseas and live off cash inheritance for 5-8 years while doing Roth conversions.
I know the safe move would be to keep cash in HYSA or TIPS, but would it make sense to invest a portion of that cash in something with a slightly higher return?
What are the available strategies for short-term investing? Plan to hold off on claiming SS until cash runs out so that I can maximize Roth conversions.
Retiring in within 2 years. Short-term bucket strategies?
byu/PHL1365 ininvesting
Posted by PHL1365
8 Comments
There is no short term investing. If it’s 2 years just keep it in a hysa
There are no strategies for short-term investing. Short-term is speculation, and that’s not something you probably want to do.
HYSA, money market, short-term treasuries, things like that *only*. 2 years is way, way too short of a time horizon for equity or equity-like (in volatility) assets.
Investing is something you do so cash never “runs out”. Hold at least a small amount of your current cash in an exchange traded fund like VOO and watch what happens compared to the cash you hold.
Anyone telling you there is no short term is wrong.
For retirement you’ll want a treasury and bond ladder with a portion dedicate to TIPS.
There are maturities as little as 4 weeks, but 13 weeks seems to be the sweet spot for those with SS and or pension income.
Agency along with corporate bonds are the only “short term” investments I think of. It gets you a bit more than treasuries with only adding a bit of risk.
for the 2-year timeframe, the objective isn’t “a little higher return,” but rather ensuring that you don’t completely blow up your sequence of returns risk right before your retirement
bucket strategy explained simply:
hold two-three years’ worth of expenses in cash/MMF/T-bills (ladder), another three-five years’ worth in short-duration bonds or TIPS, while putting everything else in equities
if you’re looking to juice yields slightly, go with short-term treasury bonds or laddering (3-12 months) as far as the optimal strategy right now
investing in equities for two years’ worth of funds is something people come to rue later on , this bucket strategy is already a win for you, and now you’re just protecting it
I might base much of my decision based on what you have right now. If you currently have a cash position I would stay in something like SGOV until the market is showing a clear trajectory and then reevaluate. Otherwise your biggest risk so close to retirement is you get stuck in a market crash that takes 10 years to recover. You sacrifice the upside for that insurance but it may be a better bet given that interest rates still yield a respectable amount.