Treasury Bills
TS: I’m 64 and working, wife is 60 not working (may go back soon). Have $700K in IRA, $25K in wife’s IRA, $580K in Investment account (stocks, bonds, cash) and $100K in 401K. Currently invest with Merrill Lynch. Why wouldn’t we put as much as possible ($1 million) into T bills? We aren’t going to need $1 million anytime soon. House etc. all paid off, not much debt. Can we roll IRA funds into T Bills without penalty? If we can get 4% on $1 million per 6 months=$80K per year, that would be like my wife returning to work without working! Let me know – Enjoy you on WGN, Thanks,
Terry Says
Whew — well let me set you straight on a few things.
1. You can’t buy T-bills directly in an IRA (though some major firms will buy them for your IRA as custodian. I know Schwab, Fidelity and Vanguard will do that.
2. You are only given that rate for 6 months. AT maturity you’ll renew at the then-current rate. If inflation is brought under control, that rate will drop. Or it could rise. So it’s not like you’re guaranteed to get that $80.000 this year — or next.
3. You’re young enough to need some long-term growth, which stocks provide over THE LONG RUN (at least 20 years). So you don’t want to put “everythng” into T-bills.
With all those caveats, yes open an account and buy some T-bills — 26 week maturities.
Read this: https://www.terrysavage.com/t-bills-beat-cds/
