It sounds like a treasury ladder would work best for this. Schwab and Fidelity have tools to do this for you. A CD ladder would be another alternative, but I think you will do slightly better with treasuries, especially if you face state tax. The only issue is that the payments are typically yearly, not monthly. I don't know if there are tools that can automate monthly ladders.Yea I want to get payments in a fixed amount on a monthly basis. As I learn more about investing I'll move the money where I see fit. Doesn't even have to be 5 years. It could be a year or 2. I only said 5 year annuity b/c it seems like that's the shortest time frame I can get with regards to an annuity.
Another, perhaps better, option is to simply buy an income mutual fund (short term bond fund) and use the brokerage automatic distribution tool to pay out a fixed amount every month.
Here is a form at Fidelity that does that:
https://www.fidelity.com/bin-public/060 ... counts.pdf
You would basically buy $100,000 of a fund like FNSOX (0.03 expense ratio).
Then use a tool like this to estimate the five year payment. https://www.mycalculators.com/ca/retcalc1m.html
Set the inflation rate to zero to keep payments equal over five years. I got an annual amount of $21,628.35 or roughly $1,800 per month.
When you fill out the form, just state that you want monthly payments of $1,800.
I don't know if Schwab or Vanguard have similar features, but it seems like the best option. It takes a few steps to set up, but then everything is automatic.
Then you can dollar cost average into something else once you are more familiar with investing.
The biggest hurdle is behavioral (you said that you were concerned that you might spend it too soon). Once you set it up to make deposits to your checking account, you need to forget this money exists if there is a chance that you might raid it.
Statistics: Posted by Harmanic — Sat Jan 25, 2025 8:43 pm — Replies 4 — Views 204