Investment Dilema during Career Change

[Mantaray14]

I was recently downsized and decided to take ths opportunity to go back to school for 2 yrs. for a much needed career change (I'm 6 months through already). Due to spouses job, and severance we will be okay through most of it. I moved my corporate Vanguard 401k to a Vanguard Personal IRA, and just moved the bulk of it into money market, which is paying very little interest. I did this because I do not feel comfortable investing in risky assest classes while I am making this career transition. I guess I need to know in the back of my mind that my IRA funds will be there intact, even though we also have a seperate emergency fund. It's stressful enough taking on a career change, and I do not need additional stress about what the markets or bonds will be doing etc... FWIW, my wife is still investing through her employer.

So that being said, what investment options do I have other than MM? I'm thinking 1 year CD's, but not sure if doing that through Vanguard is efficient. Also wondering if TIPS would fall into the "safe" category I'm looking for, and how I would go about investing in those assests as well. I feel my options are pretty limited for what I'm looking for through my Vanguard IRA, but I may be wrong,so any suggestions would be appreciated!

Best Regards

[snshijuptr]

I'm going to try to convince you to realign your risk tolerance for this money.

Just because you are going to school is NO EXCUSE to touch your retirement money. If you ever really need money, you should get a job! You still have time for a job, trust me. I work part time while getting my PhD and DH works full time while getting his Masters. Plus as a student, even a graduate student, you can work on campus easily. Use your campus job boards and find a job. In fact, whether you need it or not, you should be working. What will look better to employers "I took 2 years off work to pursue my degree" or "I worked while simultaneously pursuing my degree"? Especially if you are entering a new field, you need to start gaining work experience in that field.

Now with that said, there is no reason that you should be touching your retirement money until you retire. In that case, the money should go right back out into the market at an asset allocation appropriate to your time frame (years until you retire).

[disneysteve]

I totally agree with snshijuptr. The fact that you are back in school has absolutely nothing to do with how you should invest your retirement money. Not sure how old you are but I'm guessing you are a good ways from retirement or else you wouldn't be going back to school to change careers.

Don't base long-term investment decisions on short-term conditions. The money in your IRA is for retirement and should be invested accordingly.

[Slug]

I tend to agree with this advice. You're clearly conservative at this point in time though. Perhaps a hedge. Put half of it in "safe" investments like you describe, but keep the rest in play in the market. Your smart enough to be in grad school and have the added bonus of a supporting spouse. You should be fine taking at least some risk. I had the same when I went back to school. Then, my wife quit her toxic job and a few months later got pregnant. Even with this potential fiscal disaster, we were fine living on the student loans and a bit of savings. In the midst of all of that, I was still adding to our Roth's and staying with stock investments. Don't let short term swings distract you from a long-term time horizon.

[Mantaray14]

Okay - thanks everyone for your input. Some good ideas to think about.

Best Regards