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.)

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.

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/

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.

It will therefore be interesting to see how DSENX does, especially to someone who now has 35-40% of the total retirement nut in it.

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.

about 50% permanent.

This has the potential to be a HUGE problem this time around, as the Fed has no interest-rate weapons left to coax the economy back to the positive side.

There's always NIRP. Or devaluing the dollar. Or QE4 (or 5 or whatever we're on.)
It would not surprise me if countries in the future went cashless and part of that would be the idea that if they wanted to do NIRP, everyone would be effected.
Edited to add: hey, maybe President Trump has some ideas. LOL. What was that quote, "Every nation gets the government it deserves?" Or something along those lines...

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

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?

For what it’s worth and
from a purely - over simplified - Technical Analysis…
The “lows” brushed the 150-day Simple Moving Average.
This also happened earlier this year.
Each time, the price has bounced off this price area.
We have seen this several times over the past few years
so this has been a decent buying area.
The first sign of this pattern failure is likely to be if the
price falls thru this 150 area and fails to bounce back above it
with greater than average volume.
This would mean that the next (lower level) of price support
would be that 200-day moving average.
If and when the markets break down, it appears to me that
$INDU will be the first to go.
Off to play tennis.

FYI: Morgan Stanley’s stocks guru, Adam Parker, argues that part of the trouble active managers have had beating index funds in recent years is that benchmarks themselves are moving targets.
Take the S&P 500: While turnover of the large-cap stock benchmark is low, there certainly is turnover. For the S&P 500, an average of 22 companies, about 4.4% of the index, are added or removed each year. That number tends to rise during big rallies and busts, like 1995-2001 and 2005-2009, when mergers and bankruptcies tend to peak.
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2015/06/15/should-active-managers-blame-the-benchmark/tab/print/

FYI: U.S. stocks fell for the second day in a row, but perhaps most importantly, major benchmarks rallied back from their lows. Greece, and it’s potential to be jettisoned from Europe’s common monetary union, remain at the fore. So does the Federal Reserve, which will update investors with a policy statement and press conference on Wednesday. Gold rallied, with some watching for the metal to hold allure in turbulent times.
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2015/06/15/etf-market-vital-signs-june-15-stocks-drop-two-in-a-row/tab/print/

Opening up bloated funds (YAFFX $8.7B AUM, YACKX $12.1B AUM) to new investors represents poor fund stewardship, period, end of the story. Sorry, I would not invest in a fund company not aligned with the best interest of current investors.
Instead, I would consider USMV (0.15% ER) and/or RPV (0.35% ER).
Kevin

Thanks; I read this back when, 2.5y ago, but did not pay enough attention.
Son has been doing decisionmaking for well over a decade now, so much of the success is due him. Sounds like quite the aspiring prick, but you know.
HP quote is pretty funny if you ever worked there (as I did).
Interesting overall.
Daughter is still on the mend, or maybe there:
http://jenannlynn.org/
I can see why M* describes shared management as it does. Dad is only 73.5. Bet he still dislikes those digs.

http://www.marketwatch.com/story/us-manufacturing-sector-said-to-be-technical-recession-2015-06-15
If other indicators turn negative, I doubt the FED moves on rates.