Re: 4% Guaranteed Interest Option in 403(b)?
Postby asif408 » Tue Sep 30, 2014 7:29 am
I also am using a fixed fund in my 457b that pays 3.5%. The problem I have with the fixed fund accounts I've seen is that they are rather opaque with respect to the investments.
Here is what my provider shared: https://www.nrsforu.com/iApp/rsc/profil ... d=10000002
I can see there is a big chunk in corporate bonds, but I know little about the credit quality other than that the average is BBB+ (which means they are likely some junk bonds) and there are some CMLs and CMOs in the investments as well, which I am not a fan of.
So the way I see it, the fund pays more because it has a lower credit quality and longer average duration than the total bond fund I have. The account has no withdrawal or transfer restrictions, which is a plus.
TFSA Investment Options
For these reasons, I was not willing to put my complete bond portion in it, but I decided half fixed/half bond fund was a good compromise.
I would suggest finding out as much as you can about the investments (if even possible).
As others already mentioned look at the withdrawal/transfer restrictions (if any). If you aren't sure you could always put 25-50% of the bond portion in it to start and then add more later if you are comfortable with things.