Re JohnChisum's "I have been eyeing multi-asset income funds for near cash investing ... The TRowe Price Spectrum Fund. RPSIX, falls into this category as well."
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I don't know what type of risk profile ron (original poster) is looking for in his cash alternative. Possibly, RPSIX would fit the bill. I love the fund. In fact, it's grown to be my largest single holding.
But, just to put things here into perspective, let's take a closer look at RPSIX. It's hard for me to see how a fund with the following risk characteristics could in any way shape or form be considered an acceptable substitute for cash - or even "near cash" for that matter.
Per Price's most recent fund Prospectus, Spectrum Income may invest in the following assets (among others) up to the allowable percentages listed.
Emerging Market Bonds ......... 30%
High Yield Debt (junk bonds)... 25%
Stocks ..................................... 25%
International Bonds ................. 20%
Long Term Treasury Bonds .....15%
Now, compare that to Price's Prime Reserve money market fund which invests only in debt rated AA or higher and typically limits average maturity to 90 days or less. Compare the two - RPSIX and the money market fund. Notice the difference in risk profiles.
Don't just take my word for it. Here's what T. Rowe Price says in their own words about the risks of investing in the Spectrum Income Fund (from the fund's Prospectus):
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"Principal Risks ...
"Asset allocation risk The fund’s risks will directly correspond to the risks of the underlying funds in which it invests. By investing in many underlying funds, the fund has partial exposure to the risks of many different areas of the market .....
"Interest rate risk A rise in interest rates could cause the price of a bond fund in which the fund invests to fall. Generally, securities with longer maturities and funds with longer weighted average maturities carry greater interest rate risk.
"Credit risk An issuer of a debt security held by an underlying bond fund could be downgraded or default, thereby negatively affecting the fund’s price or yield. The fund is exposed to greater credit risk to the extent it invests in underlying funds that hold high yield bonds. Issuers of high yield bonds are usually not as strong financially and the securities they issue carry a higher risk of default and should be considered speculative.
"Liquidity risk This is the risk that the fund may not be able to sell a holding in a timely manner at a desired price.
"International investing risk Investing in the securities of non-U.S. issuers involves special risks not typically associated with investing in U.S. issuers. International securities tend to be more volatile and less liquid than investments in U.S. securities and may lose value because of adverse political, social, or economic developments overseas, or due to changes in the exchange rates between foreign currencies and the U.S. dollar. In addition, international investments are subject to settlement practices and regulatory and financial reporting standards that differ from those of the U.S.
"Emerging markets risk The risks of international investing are heightened for securities of issuers in emerging market countries. Emerging market countries tend to have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries. In addition to all of the risks of investing in international developed markets, emerging markets are more susceptible to governmental interference, local taxes being imposed on international investments, restrictions on gaining access to sales proceeds, and less liquid and less efficient trading markets.
"Dividend-paying stock risk To the extent the fund invests in an underlying fund that focuses on stocks, it is exposed to greater volatility and the risk of stock market declines that could cause the fund to underperform bond funds with similar objectives. Stocks of established companies paying high dividends may not participate in a broad market advance to the same degree as most other stocks, and a sharp rise in interest rates could cause a company to reduce or eliminate its dividend."
Link to Prospectus: http://individual.troweprice.com/staticFiles/gcFiles/pdf/trspi.pdf
(See pages 7-12 for referenced/excerpted content.)

Roy,
Man do I miss you and your old forum and the frequent visitors like Rono, which I was drawn to because you provided a method/analysis, for investors to dump poorly performing mutual funds. At the time, the internet was full of advice on what to buy, but not what to sell or when to sell a badly performing mutual fund. Investing was simple then, the 1990's and into early 2000's. Thanks so much for your 3-alarm advice, your website, and definitely your humorous columns on the junk stuff out there. After many years of investing and having felt some pain during the tech run, I am just a boring buy and hold indexer, and have not much to say about this board.
birdsgears, anders, anderson

Dex, you are spot-on and I have been doing similar calculations. But I am also trying to factor in that the $125,000 is RMD free. But regardless, if I live to 95 that is $550,000 (actually $425,000 after factoring in the $125,000) I have received from the annuity. It may just be better to grow the $125,000 at 70 instead of letting it do nothing until I am 85. Then again, the way I look at it, instead of worrying about the next 20 or 25 years or longer when I am 70, all I have to worry about is the next 15. Probably no right or wrong answer but a personal choice.

One thing to consider is as you age will you be able to handle your finances? I'm not talking about Alzheimer or similar but just mental decline. From that aspect the annuity could be helpful. I have some nephews I can turn my fiances over to.
As I mentioned before I think my small pension and SS does give me some peace of mind.

Wonder what it would cost to also buy a 15 year term insurance policy that would payout $125K to guarantee against loss of principal of the annuity?
So from age 70-85 your term life policy covers the costs of the annuity in case of "early departure". At age 85 the annuity kicks in.

I have always been against annuities. The first link explains why you should never buy an annuity. But the second link about the new rule where you can purchase up to $125,000 of a deferred annuity with IRA money that won't go against your RMD sounds compelling to me. Playing around with an annuity calculator, I see that at age 70 a 15 year $125,000 deferred annuity pays out some $4600 monthly (over $55,000 annually) beginning when I am 85.

I really like to see the math of that and then look at alternative investments.
In 15 years 125,000 will double to 250K at 4.8%/year
rule of 72
72
15 years
4.8 %
So the question is - what is the % the 125 is growing at and how much of the 55 is return of principal so we can calculate the annual return.

Dex, you are spot-on and I have been doing similar calculations. But I am also trying to factor in that the $125,000 is RMD free. But regardless, if I live to 95 that is $550,000 (actually $425,000 after factoring in the $125,000) I have received from the annuity. It may just be better to grow the $125,000 at 70 instead of letting it do nothing until I am 85. Then again, the way I look at it, instead of worrying about the next 20 or 25 years or longer when I am 70, all I have to worry about is the next 15. Probably no right or wrong answer but a personal choice.

I have always been against annuities. The first link explains why you should never buy an annuity. But the second link about the new rule where you can purchase up to $125,000 of a deferred annuity with IRA money that won't go against your RMD sounds compelling to me. Playing around with an annuity calculator, I see that at age 70 a 15 year $125,000 deferred annuity pays out some $4600 monthly (over $55,000 annually) beginning when I am 85.

I really like to see the math of that and then look at alternative investments.
In 15 years 125,000 will double to 250K at 4.8%/year
rule of 72
72
15 years
4.8 %
So the question is - what is the % the 125 is growing at and how much of the 55 is return of principal so we can calculate the annual return.
When I looked at annuities they didn't compare favorably with junk bond funds.

@msf- Well, whatever you do, you are one hell of a great asset to the rest of us here at MFO, and I thank you for that!

+1 I think he is in a class of his own here.

I have always been against annuities. The first link explains why you should never buy an annuity. But the second link about the new rule where you can purchase up to $125,000 of a deferred annuity with IRA money that won't go against your RMD sounds compelling to me. Playing around with an annuity calculator, I see that at age 70 a 15 year $125,000 deferred annuity pays out some $4600 monthly (over $55,000 annually) beginning when I am 85. Yes, I know many/most of us males, including me, may never make it to 85 or much beyond, but it still sounds compelling. Instead of worrying about the next 25 to 30 years and outliving our nest egg, I would think this would narrow our focus to only the next 15 years (before the annuity kicks in) and doing the right things financially in our investments. What am I missing here? I will say, were I to ever purchase an annuity it would ONLY be through New York Life.
http://www.forbes.com/sites/davidmarotta/2012/08/27/the-false-promises-of-annuities-and-annuity-calculators/
http://taxvox.taxpolicycenter.org/2014/08/01/new-way-invest-old-age-many-will-buy/

Shoot - When the 10 year spiked to 2.4+ I was thinking about a short or intermediate term muni fund. But, didn't have that much to park, so held off. T. Rowe Price has one I've used in the past - you can probably do better on fees. Won't make a lot. But, for the most part, exempt from Federal taxes. Too late now. But look at these if rate gets back up there in next month or so.
Confucius say: He who hesitates is lost. :)

FYI: Diamond Hill Capital Management has closed its long/short equity fund to new investors. The $4.3bn Diamond Hill Long-Short Fund (DIAMX) launched in 2000 and was closed to new investors on June 12.
Regards,
Ted
Ted
http://www.fundaction.com/news/diamond-hill-closes-alts-fund-to-new-investors/
M* Snapshot DIAMX: http://www.morningstar.com/funds/XNAS/DIAMX/quote.html
Lipper Snapshot DIAMX: http://www.marketwatch.com/investing/Fund/DIAMX?countrycode=US
DIAMX Is Unranked In The (L/S E) Fund Category By U. S. News & World Report:
http://money.usnews.com/funds/mutual-funds/long-short-equity/diamond-hill-long-short-fund/diamx

Included is a video. Baron says the rate hikes are already priced in to the markets. One of the more sensible managers out there.
http://www.cnbc.com/id/102765850

Sometimes it take some encouragement to get seniors to spend. This list is a bit long, but I like getting a 10% raise at my age.
Dunkin Donuts gives free coffee to people over 55 . If you're paying for a cup every day, you might want to start getting it for FREE. YOU must ASK for your discount !
Other discounts for seniors as young as 50 years young:
List 1
List 2
List 3
List 4
NOW, go out there and claim your discounts - - and remember -- YOU must ASK for discount ---- no ask, no discount.

Isn't the point of saving to provide the opportunity to spend at some later point in time? Get use to the fact that 1/3 of the US will be spending down their hard earned savings.
Seems stimulative to the economy to me.
I dare say, fewer AUM due to redemptions and spending might ruffle a few manager's feathers with respect to the growth of fees, but there will be new savers.
One persons spending is another persons income. This acquired income will partly be saved for another future retirement.
The passing of the baton if you will.

When yo take into account the other factors e.g. lack of savings for retirement, wages stagnant since the '70s - it isn't a good data point.

Isn't the point of saving to provide the opportunity to spend at some later point in time? Get use to the fact that 1/3 of the US will be spending down their hard earned savings.
Seems stimulative to the economy to me.
I dare say, fewer AUM due to redemptions and spending might ruffle a few manager's feathers with respect to the growth of fees, but there will be new savers.
One persons spending is another persons income. This acquired income will partly be saved for another future retirement.
The passing of the baton if you will.

Hi Guys,
Returns are intimately tied to when you leave the investment starting gate. Nobody can consistently predict returns for the next few years. Both GMO and John Hussman have launched signals warning that the Shiller cyclically adjusted price-to-earnings (CAPE) ratio is uncomfortably high. They imply the likelihood of a near-term downturn.
Indeed if that is the case, the question is how to prepare? I sure don’t have a definite answer. Any answer is likely to be closely coupled to an individual’s specific timeframe, his wealth, his risk profile, and his short-term/long-term need tradeoffs. But history can provide some guidelines to help scope the problem.
Here is a Link to a nice chart from the Wrapmanager site that displays the S&P 500 pricing history since 1900:
http://www.wrapmanager.com/wealth-management-blog/did-the-sp-500-reach-all-time-highs-is-there-a-cause-for-concern
Note that the chart also marks off P/E ratios at critical turning points in the S&P’s storied history.
As LewisBraham suggests with his post, when the investment battle is exactly joined directly influences annual returns. Some starting dates are especially disastrous. But over time, the historical record demonstrates that even poor starts have been integrated away by the rising tide. Over the very long haul, the precise starting date is not all that significant.
Here is a Link to a nifty calculator that yields S&P 500 returns with and without dividends reinvested for any input starting and end date. The calculator is from a “Don’t Quit Your Day Job” website:
http://dqydj.net/sp-500-return-calculator/
The calculations can be easily completed both with and without inflation adjustments.
For example, if an investor had the misfortune to invest immediately before the 1929 Crash, his annual return to this month would have been 9.69% with dividends reinvested. If he had been prescient enough to have delayed that initial entry date until April of 1932, his annual return would be at the 11.37% level.
For those of us old enough to have initiated our investment program immediately after WW II, our annual return would have been 11.01%, again with dividends reinvested. If we have been in the S&P 500 Index over the last 30 years, our reward would have been 10.99%. When you leave the starting gate matters a little, but the returns are impressive regardless of the precise timing.
I hope you visit the websites that I referenced, and that you find them helpful.
Best Wishes.

"Stock prices have reached what looks like a permanently high plateau."
- Irving Fisher: October 21, 1929

FYI: The definition of floccinaucinihilipilification is the estimation of something as valueless. It is rarely
used (for obvious reasons) and encountered primarily as an example of one of the longest words in
the English language. I have been waiting for just the right occasion to employ this word, and I finally
found it: Little deserves my use of floccinaucinihilipilification so much as relying on the historical
average of the Shiller CAPE 10 to determine whether stocks are undervalued or overvalued. It can’t
be used to time the market, despite the advice of the gurus who rely on this metric.
Regards,
Ted
http://www.advisorperspectives.com/newsletters15/25-are-grantham-and-hussman-correct-about-valuations.php

Sounds like you and I are in about the se place nearing retirement and thinking what to do investment wise going forward. I can tell you what I did.
I was downsized a couple years ago but was able to pick up with another company at the same pay. This allowed me to move my 401k to an IRA with Schwab. I picked Schwab because they have a local office here that gave me access to a financial advisor - for free. Also chose them because of all the products they have to offer.
To make a long story shorter, I split money 3 ways. A 3rd in their robo syst, Intelligent Portfolio, a 3rd in their managed Windhaven portfolio and the remaining 3rd, for the same fun reasons you gave, self manage.
Hech, we are all different, but this is what was most comfortable for me leading into retirement. I'm happy with my choice.

I am holding a lot of cash in my taxable account 15% tax bracket and want to find a place to park some . Any suggestions on either taxable or non taxable investment?