Ask Terry Questions cd vs t-bill vs income fund

cd vs t-bill vs income fund

By Terry Savage on May 23, 2019 | Chicken Money

I am concerned about a market downturn. Is it a good time for putting money in a tbill or cds. Is there a difference between them. Would it be dividend fund  be a safe investment?

Terry Says

Each of these alternatives has a different level of risk. It’s difficult to answer without knowing your age and stage in life.  So let me say that generally, and if you are at least 15 years away from retirement, you’ll want to keep your retirement plan money invested in the stock market in a diversified group of funds. As you get closer to retirement,  you’ll move to the most conservative stock funds in the plan, which are typically dividend/income funds. And maybe move some to the “safe haven” inside your plan — likely a “stable value” or money market type account.  That conservative dividend fund could still have some downside in a bear market.

But while your retirement investments are for GROWTH of your money, everyone should have some “chicken money” outside your retirement plan for emergencies.  At least 6 months of living expenses is the minimum.  You can put some in a bank money market deposit account or short term (6 months or less) CD.  Or you can buy Treasury bills directly from the government in $100 increments. Click on my article on how to buy Treasury bills for details.

Bottom line, you need enough “chicken money” so you can sleep at night in a market downturn, knowing you won’t be forced to sell near the bottom.




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