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01-05-2009, 07:35 AM
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#1
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Recycles dryer sheets
Join Date: Aug 2006
Posts: 232
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Bonds but no Treasuries?
My wife caught the "famous" Jim Cramer this morning on the Today Show & he was saying to stay out of Treasuries but buy bonds (didn't say what kind). Then he said if you need the money for retirement take it out of stocks. So I asked my wife the timeline on when you need it & where the heck are we suppose to put it. He didn't answer that question.
So my questions to everyone are:
If I'm trying to have a lazy portfolio following the Fund Advice
Fundadvice Ultimate Buy & Hold - Lazy Portfolios - MarketWatch.com
then where should I put the allocation to Tips & Treasuries that they suggest?
They suggest 20% Intermediate Term Treasuries
12% Short Term Treasuries
8% Tips
How is everyone here allocating the bond portion of their portfolio?
Thanks,
ADUM
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01-05-2009, 07:53 AM
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#2
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Recycles dryer sheets
Join Date: Aug 2005
Posts: 380
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Bonds in 2009: Waiting by the exits - Yahoo! Finance
The above link suggests that the market for treasuries is one that should be avoided in the short run.
I have a substantial laddered portfolio in brokerage CD's. I have some TIPs in my IRA, which were purchased at opportune moments when bond prices were down.
My advisor (hourly paid) doesn't like my approach, and keeps telling me to buy more bonds. I don't see the point. However, I have some cd's maturing in Jan, and it looks like the current market rate for 5 year brokerage cd's is down in the 3.5% range, which is low. Pen Fed is paying 4.5%, but the $250k guarantee limit won't last that long.
Anyway, unless you buy individual treasuries, and hold them to maturity, as interest rates rise, and/or the flight to quality eases, you could have substantial losses in treasury mutual funds. And, in the meantime, you earn nothing because of the low rates.
A better approach is to use a MMFfor your short term stuff, and something like Vanguard Inter bond fund for longer. It is paying about 4.59% with a 5-7 year avg maturity.
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01-05-2009, 09:19 AM
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#3
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Moderator Emeritus
Join Date: May 2007
Posts: 12,901
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I don't own any treasuries right now. If I want a short/intermediate term investment paying decent yields and guaranteed by the government, I'd rather buy CDs. Why buy a 5-year treasury yielding 1.7% when you can get a CD yielding 3%+? Both are ultimately backed 100% by the government. As for longer term investments, there is no way I am lending money to the government for 30 years in return for a measly 2.8% a year.
I own a mixture of CDs, GNMAs, corporates, munis and TIPS.
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01-05-2009, 12:17 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Aug 2007
Posts: 1,224
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My bond allocation is split between short, int term treasuries and TIPS in equal proportions. I'm not currently buying any as they have done well this past year while my equities took a pounding. All new money is going into equities currently.
DD
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01-06-2009, 06:57 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2008
Location: East Nowhere, 43N Latitude, NY
Posts: 9,037
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I don't own any TIPS. I just never looked at them too closely.
My bonds are a combo of
EE (1996-7 vintage),
I (2004-6 vintage), and
munis solely in VNYTX and VWAHX (fund shares are vintage 2003-8).
__________________
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
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01-06-2009, 07:02 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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First rule of investing: ignore Jim Cramer or suffer the consequences.
On the subject of bonds, the treasury market is effectively pricing in zero inflation for the next 10 years. How likely do you think that is? Instead, I would buy CDs, TIPS, and investment grade corporates.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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01-06-2009, 07:34 PM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
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In the beginning, I watched Kramer as entertainment, but the novelty has worn off.
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01-06-2009, 07:46 PM
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#8
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Full time employment: Posting here.
Join Date: Oct 2007
Location: New York
Posts: 898
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You might investigate a muni ladder.
I like TIPs and iBonds too.
__________________
Money's just something you need in case you don't die tomorrow.
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01-06-2009, 08:45 PM
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#9
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Full time employment: Posting here.
Join Date: Mar 2007
Posts: 577
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Own some I-Bonds (for kids college) and if they don't use them up I like them for our retirement.
I'm trying to buy my way to just individual TIPS as the bond portion of my portfolio.
__________________
I highjacked a rainbow and crashed into a pot of gold - Bon Jovi
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01-06-2009, 11:28 PM
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#10
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Recycles dryer sheets
Join Date: Jul 2007
Location: East Bay CA/Long Island NY
Posts: 167
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Quote:
Originally Posted by Maurice
You might investigate a muni ladder.
I like TIPs and iBonds too.
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I agree, in NY muni's pay more than treasuries. With the tax break on these, the yield look great.
Our ladder extends to 3 years max, due to inflationary fears.
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01-08-2009, 02:48 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Aug 2004
Location: Houston
Posts: 1,448
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I switched out of Vanguard's Total Bond Market Index (VBMFX) fund today. It had 33% treasuries and 41% government backed mortgages. Moved into the intermediate term corporate bond fund (VFICX).
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