how to invest this money

[robbase]

What would you recommend for a person that had $90K to invest. They are not comfortable with stocks. Also want periodic access to some of this money "just in case" (so I was thinking of some kind of laddering)

The person is 65 years old person & is making about $35 K that is not currently investing in 401K/ IRA/ etc....was wondering about putting it into some kind of ROTH IRA since

you can

They plan to work as long as they are able to

[The J]

Are they comfortable with some risk? Short-term bond funds generally have a better yield than laddered CDs, and the funds stay available.

[haapai]

Oh wow! So much more information is needed to even begin. We can't tell from what you have posted whether this person has any retirement savings at all. The person that you have mentioned may be a workaholic with a nice little retirement plan (or other retirement assets) that could replace 70%+ of prior income, or they could be practically penniless.

[robbase]

"or they could be practically penniless"

This part is probably true unfortunately, there basically is no real retirement plan

[robbase]

J- what short term bonds funds would you recommend?

Also ref investing it as a Roth IRA, I was thinking also about the tax deduction the person would get at the end of the year due to their tax bracket...thoughts?

[Peace77]

Do they have any debt? If so, pay it off before investing.

Is their home paid for? If not, I would pay off the mortgage on their home.
If they don't have a home or condo, I suggest investing in a home.

To have some funds readily accessible, I suggest placing some of the funds in a high yield savings account such as ALLY.

They can compare rates on Savings Accounts, Money Market Funds and CD's at BankRate.com Be sure to check out the rates for jumbo accounts as those pay considerably more.

[robbase]

No debt

renting apartment

[robbase]

I am strongly considering to recommend this

Vanguard GNMA Fund Admiral Shares (VFIJX)

From what I am seeing it is backed by the full faith and credit of the US Gov so is just as secure as T-Bills--no?

[phil5185]

it is backed by the full faith and credit of the US Gov so is just as secure as T-Bills--no?

No - not as secure as T-Bills. T-bills are guaranteed by the govt, they pay about the same as CDs (1% or 2%). But the GNMA Bonds are short term marketable bonds, they are worth what a willing buyer will pay for them on any given day - they have about a 6.5%/yr average return.

The GNMA bonds are backed by the govt (and by Vanguard) to exist and to be available for you when you want to sell them. But, similar to a stock, if their market value happens to be 25% less that what you paid for them, that is what you are guaranteed to get.

Here is their performance history (they are what I use).

Load Adjusted Returns
1-Year: 6.14%
3-Year: 6.83%
5-Year: 6.67%
10-Year: 6.11%

[Plain Old Petunia]

Where is the money now? Taxable account? Old 401k? I ask because you can't deposit 90k into an IRA in one year, unless the money is already in some sort of retirement vehicle.

I suggest Vanguard's short-term bond fund. Don't expect the GNMA fund to return 6% in a rising interest rate environment; it won't. Splitting between the two (GNMA and ST) would be more prudent. An even better choice would be Vanguard Target Retirement Income, with 20% in stocks. 20/80 is less risky than 0/100.

Does the person wish to own their own home? Depending on the area, 90k may be more than enough to purchase a condo or other small home outright. (Assuming the money is available free of tax).

[robbase]

The money now is in T-Bills (taxable account)

sorry when I was mentioning the Roth IRA, I meant to phase in $6K a year to a Roth, not much but figure it is something to reduce taxes (the Roth IRA tax credit) due to their income bracket; although now that I look at it harder I see this tops out at $26.5K for a single person; so guess I was totally off on that one

[robbase]

Does the person wish to own their own home?

sort of, but currently live in a very high cost of living area and not wanting to move right now due to having a job and been born and raised in the high cost of living area for 65 years, the person will probably move when they can't work or lose job but for now staying put

The person always mentioned in the past about possibly moving to Florida but not as long as they have a job and are able to work

[The J]

I'd probably go with the GNMA fund, but returns may vary over the next few years.

[robbase]

any other input?

[Peace77]

For the portion they wish to remain liquid, American Express high yield savings is now paying 1.3% (higher than Ally, ING or local banks).