Originally Posted by
hopp
Yep ,and spot on.
I must reiterate, RHA funds should be in the most conservative vehicle once you retire, just like your checking or savings account. This is why you invest when younger…to have money to spend later, regardless of what markets do. Even Schwab’s money market is paying near 1.5%..and that is a dollar fund, that is fixed- it cannot lose value unless there is a default in the money markets (armageddon).
The investment committee needs to get this.
It will come back? When does your crystal ball say? In the mean time as I write checks to cover hospital bills, do I tell the billing department to wait until the market comes back, in a year or five?
Self direction is not even required, so long as the investment committee were truly as responsible with the funds as they will be with their own money, used to pay monthly expenses.
There is a cost in being completely in cash, as you know. In hindsight it may appear to be the right answer today but cash's purchasing power will erode over time. RHA funds are meant to attempt to offset the rising cost of healthcare over the very long term, not just today. As mentioned above, your RHA is in approximately 30/70 stocks/bonds with 17% in TIPS. Most financial planners would say this is a completely reasonable asset allocation and very low cost.
This has been a very painful year for nearly every asset class. Hopefully your RHA is just a segment of your entire portfolio and you have other assets to cover your medical expenses (nobody is making you use your RHA today, as you are aware).
As most of your RHA balance is in fixed income over the time as your effective duration is pretty low.
Regarding the R/I committee, I disagree with you that they are somehow being irresponsible with the investment choices. Personally I don't any line pilot making tactical investing decisions with our monies, which is why they utilize several investment advisors. Unfortunately, its a generic solution sometimes and not catered to every pilots situation which it is important to take your entire portfolio into consideration.