Your DROP account, depending on the state, is retained by the pension system with that guaranteed rate of return. Once your separate it is rolled over into a 401a.
Once separation occurs you take on the risk of investment. Stable value funds, bond funds or index funds. Whatever you have access to.
Depending on the state, your fixed rate of return will be set for 1 year. It can change generally every July 1. So you have a fluctuating rate that can change yearly. Similar to a 1 year CD. I think that is a reasonable comparison.
So maybe you treat that DROP account as a CD. Incorporate that into your AA model in your personal IPS. It's a sweet set up.
Once your separate service you may be able to open up a self directed brokerage. It opens up investment choices to the majority of the retail market. If you have access to Schwab it provides access to all MF, ETFs, stock, treasury. It usually excludes margin, leveraged MF/ETF etc. all within the tax shelter of the 401A. If you have access to Schwab they call it the Personal Choice Retirement Account or PCRA. Regardless, you have a lot options.
Enjoy and good luck.
Once separation occurs you take on the risk of investment. Stable value funds, bond funds or index funds. Whatever you have access to.
Depending on the state, your fixed rate of return will be set for 1 year. It can change generally every July 1. So you have a fluctuating rate that can change yearly. Similar to a 1 year CD. I think that is a reasonable comparison.
So maybe you treat that DROP account as a CD. Incorporate that into your AA model in your personal IPS. It's a sweet set up.
Once your separate service you may be able to open up a self directed brokerage. It opens up investment choices to the majority of the retail market. If you have access to Schwab it provides access to all MF, ETFs, stock, treasury. It usually excludes margin, leveraged MF/ETF etc. all within the tax shelter of the 401A. If you have access to Schwab they call it the Personal Choice Retirement Account or PCRA. Regardless, you have a lot options.
Enjoy and good luck.
Statistics: Posted by Dunningedangkruger — Thu Apr 18, 2024 12:19 am — Replies 5 — Views 654