How to Get A Better Return on Your Stockpiled Cash

TL;DR

Learn alternative options for parking large amounts of money when the stock market is not ideal.

Transcript

this is mle fool answers I'm Alison Southwick and I'm joined as always by Robert brokamp personal finance expert here at the mle fool and he's also the adviser on the mle fools rule your retirement newsletter hello Allison hi bro how are you doing today just groovy how are you I'm good your chair is really rattly is it I better stop moving maybe it... Read More

Key Insights

• 🚟 Annuities and pensions can be considered as alternatives to bonds in a retirement portfolio.
• 🥡 One's proximity to retirement and the presence of other sources of income should be taken into account when determining asset allocation.
• ✋ Investing in high-yield savings accounts, CDs, and short-term bond funds can offer better returns than traditional savings accounts.
• 😒 Paying off debt can be a wise use of cash, especially if the interest rates are higher than the potential returns on cash investments.
• ❓ The timing of Social Security benefits can affect overall retirement income and should be considered in financial planning.
• 🍉 Building an emergency fund and saving for short-term expenses are important financial strategies.
• 🥺 Negotiating with cable companies and seeking deals in person can lead to better outcomes.

Questions & Answers

Q: How do you determine how much money you should have in the stock market?

A rough guideline is to start with 110 minus your age, which should be the percentage of your investable portfolio in the stock market.

Q: What are the similarities between a defined benefit pension and an annuity?

Both provide a monthly payment until the recipient's death and are often invested in stocks and bonds.

Q: Should Social Security be considered as part of the asset allocation in retirement planning?

Yes, it is recommended to calculate the monetary value of Social Security as if it were an annuity to determine the overall asset allocation.

Q: What are some alternatives to the stock market for storing cash?

High yield savings accounts, CDs, stable value funds, and individual bonds are some options to consider.

Summary & Key Takeaways

• Most traditional ways of stashing cash are not very profitable.

• Defined benefit pension and annuities can be considered as alternatives to bonds in a retirement portfolio.

• How much you need to save depends on the source of income, expenses, and proximity to retirement.

• High yield savings accounts, CDs, and short-term bond funds are other options for storing cash.