Bonds or money market?
I am 68, retired, and 45% of my $350,000 IRA is invested in total stock index. The remaining 55% is in US treasury money market fund. I’d like to keep $60,000 in cash (3 years’ years chicken money). Should I invest some or all of my money market funds into a total bond index fund or an investment grade fund to generate income? Is now a good time to make the leap? I receive social security and am in good health.
Terry Says
No, don’t make that switch. When interest rates rise — and eventually they will — the values of those bonds you buy today will fall. (No one will want your old, low-yielding bonds when they can buy new, higher-yielding ones!)
So for now you’re stuck earning almost no interest in your Treasury money market fund. But you wont LOSE any money either!!
That’s what “chicken money” is all about!
