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I am exploring different types of savings vehicles. This is for a growing bucket of money that is intended as a cushion in the 3-7 year time frame. I have little confidence that any conventional savings account will retain the value of the principal, due to taxes and inflation. It is almost enough to make me wonder if keeping extra cash is sensible at all. Why not just prepay the mortgage with all the extra cash, and then get a good HELOC when I need it. Crazy and sad that this appears more sensible than saving money.
But I am looking beyond the normal savings vehicles.
The vehicle that seems to hold most promise is actually a Roth IRA. If I start "clean" with a new account (not a converted Traditional IRA), then all earnings on the money are tax-free. And I can withdraw the principle (not the earnings) at any time with no penalty. This resolves my concerns about taxes eroding the value of my savings. (Obviously, only the principal would be available for withdrawal, which does limit access to the tax-free earnings.)
What about inflation? I am searching for good, low-risk mutual funds which offer more protection than a TIPS or I-Bond. The one fund I have discovered in this category is John P. Hussman's Total Return Fund (HSTRX). My take on this fund is that it a government bond fund with a healthy diversified basket of alternative stores of value, including gold mining stocks, real estate, utilities, and foreign government bonds.
I would really like to know if there are any funds which rival HSTRX.
I would also like to hear if I am overlooking any gotchas regarding the Roth IRA, or whether there are other types of accounts that would serve the same purpose.
But I am looking beyond the normal savings vehicles.
The vehicle that seems to hold most promise is actually a Roth IRA. If I start "clean" with a new account (not a converted Traditional IRA), then all earnings on the money are tax-free. And I can withdraw the principle (not the earnings) at any time with no penalty. This resolves my concerns about taxes eroding the value of my savings. (Obviously, only the principal would be available for withdrawal, which does limit access to the tax-free earnings.)
What about inflation? I am searching for good, low-risk mutual funds which offer more protection than a TIPS or I-Bond. The one fund I have discovered in this category is John P. Hussman's Total Return Fund (HSTRX). My take on this fund is that it a government bond fund with a healthy diversified basket of alternative stores of value, including gold mining stocks, real estate, utilities, and foreign government bonds.
I would really like to know if there are any funds which rival HSTRX.
I would also like to hear if I am overlooking any gotchas regarding the Roth IRA, or whether there are other types of accounts that would serve the same purpose.
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