So I took Roxanne to "Early Arrival" at nursery school on Monday (really called Early Drop Off, but we re-branded it Early Arrival in our house after it became apparent that Roxanne thought we were going to simply drop her off on the corner and speed off), a task that I enjoy, as we get some nice daddy-daughter time together, and that I will soon miss, as my new commute will not allow me to drop her off. She had on a new all black ensemble (thanks to my Mom and Dad) on which she was effusively complimented by her teachers. I chatted with the teacher and then shouted goodbye to Roxanne, who was already ensconced in some drawing. "Bye, Charlie!," she shouted back. The teachers cracked up and I gave her a kiss, and a gentle reminder that, hipster wardrobe or not, I am still daddy to her.
I am winding things up at the old job now, among them my retirement savings accounts (a 401k and a 403b). The fund choices at my current gig are just adequate, at the new job not much better, so I am rolling the nice little pile of cash that I've accumulated, and in which I am fully vested, into an IRA that I established previously with rollovers from prior accounts. Right now that small IRA is 10% in cash and 90% in Blackrock Global Allocation (MDLOX), a nice fund in the "tactical asset allocation" model that has done well in recent years. MDLOX has a nice track record going back a decade or more and I'll keep it.
But for the new money, I am actually going to pick up a new asset class - Treasury Inflation Protected Securities, TIPS. These are US Treasury bonds that pay a lower coupon but adjust the principal value up each year to keep pace with CPI inflation. The breakeven CPI rate is around 2.5% - an easy hurdle to beat, especially at this point in the economic cycle. The problem with TIPS is that the principal adjustment is taxed as ordinary "phantom income," which is not great in a taxable account. But in an IRA, that is no problem. So this is step one in my process of picking up some "alternative assets" - some real return securities, in a tax sheltered account. The next step is picking how the TIPS exposure will be executed - ETF, fund, etc. Stay tuned, if you care.
Speaking of retirement funds at work, here is a neat trick, not original to me. Every year, increase your deferral rate by at least 1% until you hit the maximum dollar deferral ($15,500 in 2008 if you are under 50), especially if you get a raise. I've been doing this for a few years. I don't miss the 1% of my salary, and it helps that retirement fund grow a little quicker. And yes, when I start the new job I'll bump the rate up 1%, just as if I'd stayed put, regardless of how much of a raise I am getting.