Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 01-21-2013, 05:09 PM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by veremchuka View Post
So I take it you don't like Vanguard's junk bond fund either? I bought it in the mid $4 range when it was yielding ~ 12%, actually a bit more. The yield has dropped a lot but 4.6% in my Roth, it is tax free so that looks good. Cap appreciation has been good too up to the $6.1X area. I don't have much, about 4% of total portfolio. I consider selling it and putting the money into the Total International Stock Market Index to up the % of equities and the % of international. It would have to drop a lot in nav for me to lose money and that'd push up the yield. This is why I resist doing this.
VG tends to concentrate in BB names in their junk fund. Those issues have been largely been treated by the market as if they are already investment grade - tight spreads and essentially no covenants. Not real attractive proposition to me personally. YMMV.
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-21-2013, 08:29 PM   #22
Thinks s/he gets paid by the post
Onward's Avatar
 
Join Date: Jul 2009
Posts: 1,664
Just one word, Benjamin. Annuities.

Retirement Researcher Blog: An Efficient Frontier for Retirement Income
__________________

__________________
And if I claim to be a wise man, it surely means that I don't know.
Onward is offline   Reply With Quote
Old 01-22-2013, 08:57 AM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,968
Quote:
Originally Posted by samclem View Post
And we're playing this game to earn how much? An extra 2% per year yield? Look at the blue line--it dropped more than 2 percent in a week in some cases.
Those are fairly long durations in your chart, I'd never be caught out at 20 years in bond funds especially in today's environment, shorter duration lessens the impact, but there will definitely be a bond fund NAV correction when interest rates finally head up in 2 years or so. So what's the alternative in the interim, acknowledging that equity corrections have always been larger though not coincident by any means (nor should they be)?

Not arguing, asking your (or like minded others) view...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Old 01-22-2013, 09:39 AM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 5,676
Quote:
Originally Posted by samclem View Post
...(snip)...

And we're playing this game to earn how much? An extra 2% per year yield? Look at the blue line--it dropped more than 2 percent in a week in some cases.

All this is irrelevant if one holds the bonds to maturity, though that could mean holding on to that bond with the 3% yield for many years while new bonds are paying 6+%.

Seems like lots of downside risk to me for an extra few percent right now.

samclem (Dirty Bond Market Timer--and suddenly a "chartist". I'm going to be sick now . . .)
Are you talking about long term bonds here? The 30 year Treasury is at 3%. I personally don't go out in maturity beyond intermediate bond funds (maybe 5 year duration).
__________________
Lsbcal is offline   Reply With Quote
Old 01-22-2013, 10:32 AM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
easysurfer's Avatar
 
Join Date: Jun 2008
Posts: 7,885
My fixed income portion is in total bond index funds. I plan on staying the course and re-balance when necessary. If the NAV goes down, when I re-balance, that'll be more shares purchased for the future
__________________
Have you ever seen a headstone with these words
"If only I had spent more time at work" ... from "Busy Man" sung by Billy Ray Cyrus
easysurfer is online now   Reply With Quote
Old 01-22-2013, 10:43 AM   #26
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,410
When I retired last year I rolled over my 401k, which was all bond funds, into my IRA and had to make decisions on bond investments. I kept my AA but went with intermediate term corporate bonds (investment grad and high yield) and a bit of GNMAs. Overall duration is about 4.8 and weighted average yield is about 2.7% compared to a duration of 5.2 and a yield of 1.6% for Vanguard Total Bond (all as of a month or so ago).

Also, I'm still thinking about redeploying my fixed income to Guggenheim Bulletshares.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is offline   Reply With Quote
Old 01-22-2013, 12:54 PM   #27
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by Lsbcal View Post
Are you talking about long term bonds here? The 30 year Treasury is at 3%.
Yes, long term bonds. Cash is yielding about 1% now, and as you say 30 year Treasuries are yielding about 3%, so the difference, 2%, is what I was referring to.

Quote:
Originally Posted by Midpack View Post
So what's the alternative in the interim, acknowledging that equity corrections have always been larger though not coincident by any means (nor should they be)?

Not arguing, asking your (or like minded others) view...
Sorry, the only "alternatives" to the longer-term bonds are the ones already discussed here--cash, shorter duration bond funds, fixed end-point bond funds (BulletShare, etc). I think three points are important to reinforce:
1) Duration is very important. Everyone reading this board knows that, but an uninformed investor wanting shelter from a risky stock market might very well think that a 20 year bond issued by the government is less risky than a shorter term one. A longer guaranteed return sounds safer to most folks than a shorter guaranteed return.
2) The very small difference in return between cash and even mid-term bonds comes at a big risk. The rush to the exits will be a stampede--everyone has the same idea and is already waiting in the starting blocks to scram. It's a classic unstable positive feedback situation. Take this risk for a couple of percent per year? (and almost everyone agrees that it's a 2-3 year play at max)
3) (Philosophical point): The present situation is not the result of traditional market forces, so I'd argue that those who vary their "normal" AA to stay out of mid- to long-term bonds right now are not market timing. The bond market is being artificially manipulated by the Fed to keep interest rates low. The rates today aren't purely the result of the billions of tiny buy and sell signals that usually set them, they are the result of the decisions of a few central planners. It makes sense to recognize that the game has changed and that it's not smart to rely on the "Wisdom of the Market" as an arbiter of value and risk in this situation. When market forces resume, watch out.
__________________

__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 09:45 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.