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Where is the best place for my wife and I to place $200,000 if we are in our 70s and want no risk, but maybe some growth?

My wife and I are in our 70s. I still work because I want to. My wife is retired. We collect Social Security and have IRAs. We want to put $200,000 in a no-risk place that may offer some growth, but is still accessible when the day comes that we want it, whether that is a few months from now, or ten years from now. Where is the best place for it?

Retirement, Social Security, IRAs
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November 2018

In order to stay within your "no-risk" criteria, you would want to stick with an FDIC or NCUA insured account. (The NCUA is the government insurance for credit unions, the same as the FDIC is for banks). You can get slightly higher interest rates by shopping around for high-interest savings accounts from online banks and credit unions. Currently (November 2018), rates on savings accounts are between 2% and 2.5% from the highest offers in the country.

Another option to explore is to open a Certificate of Deposit (CD) after shopping around for the best yields. 5-year CDs are approaching 4% and you should be able to get around 3.5% for a 3-year CD. You could by multiple CDs with different maturity dates so you have slightly more access to the money. If you must break the CD early, you don't lose any of your money, and the 'fee' is simply the bank keeping a few month's interest they paid you. 

Money market accounts might also provide a little higher interest yield than a savings account, but with easier access to the money than a CD. When shopping around, make sure you differentiate between a money market account and a money market fund. A money market fund is a mutual fund which invests in very safe cash-equivalent investments. This makes them safe, but they can lose value. Funds are also not FDIC/NCUA insured, which may not fit your criteria. Also, realize that not all banks/credit unions are FDIC/NCUA insured, although nearly all are. Make sure to look for the logos of the FDIC or NCUA if you want the protection of the government backing. 


You may also want to explore the possibility of investing in a fund which invests in very safe investments. An example to research and explore would be a Short-Term Treasury Bond Fund. Treasury bonds are backed by the full faith and credit of the United States Government, which means they are considered safe investments due to the extremely low chance of default, as the U.S. Government is unlikely to go bankrupt. When interest rates rise, however, these funds do lose value. Using short-term bonds means you will have less risk from interest rates potentially rising. As an example (not a recommendation), Vanguard's short-term treasury bond fund is currently yielding 2.9% (November 2018). 

Another option would be a Treasury Inflation Protected Securities (TIPS) fund, which will have a lower yield but will give you protection against inflation. Inflation protection could be helpful considering inflation is one of the biggest risks during retirement. TIPS will increase both their value and their interest payments to you at the same rate as inflation. 

Finally, consider talking with a fee-only and fiduciary financial planner to see if it would make sense to take on a little more risk in order to allow for greater growth. Considering the timeframe you gave was between a few months and ten years, it makes it hard to offer more specific thoughts on what a 'reasonable' level of risk might look like. A financial planner might be able to work with you to narrow down this window and provide more specific advice.

November 2018
November 2018
November 2018
November 2018