But my Bond Funds really are doing well...

[Shabber2]

Nothing I find ever seems to tell the real story about mutual fund gains. Example, this is some bond funds I moved into at the beginning of the year. It seems that charts, Google Finance, Yahoo Quotes, my online brokerage site all don't reflect the fact that in a mutual fund where a normal investor is reinvesting dividends, the actual yeilds are much higher than shown. These funds are up 6521/180000 or 3.62%. This is reality. For some reason, the online comunity never computes this stuff right. They just look at the differences in share price and run with it. Shouldn't there be a site that shows real data so we can compare apples to apples. What good is it not factoring in dividends? Help me understand. Am I crazy?

My stupid brokerage account shows the account only going up $5709. Ridiculous and WRONG!

CurrentBONDS Bought Bought Cost03/12/08DaysGainAnnualizedInterm BondVFITX $ 90,000 01/04/08 $ 11.44 $93,386.00 68 $ 3,386.00 20.19%Short BondVFISX $ 54,000 01/07/08 $ 10.69 $55,224.00 65 $ 1,224.00 12.73%TIPSVIPSX $ 36,000 01/07/08 $ 12.62 $37,911.00 65 $ 1,911.00 29.81% $ 180,000 $ 186,521 $ 6,521

 

[Shabber2]

Easier to read

BONDS Bought Cost BOUGHT on Value 03/12/08 Days Gain
Interm Bond VFITX $90,000 01/04/08 $11.44 $93,386.00 68 $3,386.00
Short Bond VFISX $54,000 01/07/08 $10.69 $55,224.00 65 $1,224.00
TIPS VIPSX $36,000 01/07/08 $12.62 $37,911.00 65 $1,911.00
$180,000 $186,521 $6,521

 

[W2R]

To me, the question is: What will the current economic mess really do to bond dividends? Predictions have been a little unsettling.

My Wellesley (~60% bonds) that I bought in January and February is maintaining its value nicely, and quarterly dividends are due later this month. Should be interesting.

 

[TromboneAl]

What you want is a "Growth of $10,000" type chart. Here's an example from Vanguard:

 

[jIMOh]

This is why an investor needs to track their own IRR. I have a few equity income funds and the same issue exists- quarterly dividend payments mean I did not lose as much as yahoo suggested I lost.

 

[Shabber2]

quarterly dividend payments mean I did not lose as much as yahoo suggested I lost.

Exactly! So Joe investor looks at mutual fund performance, but is not seeing the whole story. This seems crazy to me.

 

[Lsbcal]

If you are looking for solutions here are two:
1) see Morningstar yearly total returns and compare in a spreadsheet
2) Fidelity has a comparison tool that I just ran into today, hopefully this link works for you: Fidelity Investments: Just put in the fund you want to compare. I believe this shows results with distributions included.

 

[RockOn]

One of the only places I know that accurately keeps up with dividends and distributions in it's pricing is called Investors Fast Track. It is a great service but you pay for it.

Mutual Funds, Stocks, ETFs - Exchange Traded Funds


When you want it for free, you get exactly what you pay for, unfortunate as that is.

If anyone knows of a free source that keeps things up to date, I'd sure like to know about it. Look at the high yield bond funds, they pay a significant amount monthly, Yahoo mildly tries to keep up with that.

 

[Ronnieboy]

Are these bond funds in taxable accounts or through a IRA/401(k)?

 

[Lsbcal]

Here is the M* site performance page: Vanguard Total Bond Market Index Report (VBMFX) | Total Returns

Of course, it does not give you a direct chart compare like the Fidelity page above.

 

[Alan]

Why funds drop just before a dividend

To me, the question is: What will the current economic mess really do to bond dividends? Predictions have been a little unsettling.

My Wellesley (~60% bonds) that I bought in January and February is maintaining its value nicely, and quarterly dividends are due later this month. Should be interesting.

BTW, if you happen to look at your balance just before the dividends post you'll see that they have dropped by an amount equal to the dividend about to be paid.

For those that don't really know why this is, it is 2 reasons and dividend paying stocks behave the same way:

If a company or fund is worth $10B and they are about to give away $100M in cash then the value of the company is about to drop by $100M so the share price is adjusted to reflect this.

It also stops speculators from buying a load of shares just before the dividends are paid and then selling the shares immediately afterwards.

 

[freebird5825]

To me, the question is: What will the current economic mess really do to bond dividends? Predictions have been a little unsettling.

My Wellesley (~60% bonds) that I bought in January and February is maintaining its value nicely, and quarterly dividends are due later this month. Should be interesting.

this is one I own that I'm watching very closely...

VWAHX yield TTM increased slightly since Dec 2007. approx 0.3% if memory serves correctly.
YTD total return is -1.3%.

no surprises.

 

[W2R]

BTW, if you happen to look at your balance just before the dividends post you'll see that they have dropped by an amount equal to the dividend about to be paid.

For those that don't really know why this is, it is 2 reasons and dividend paying stocks behave the same way:

If a company or fund is worth $10B and they are about to give away $100M in cash then the value of the company is about to drop by $100M so the share price is adjusted to reflect this.

It also stops speculators from buying a load of shares just before the dividends are paid and then selling the shares immediately afterwards.

Thanks - - this is interesting to me, since this is the first quarter for me to see dividends from Wellesley and I did not know what to expect. Too bad! I had hoped that they were decreasing share price evenly (subtracting the dividends evenly) throughout the quarter. Thanks for the explanation, too.

this is one I own that I'm watching very closely...

VWAHX yield TTM increased slightly since Dec 2007. approx 0.3% if memory serves correctly.
YTD total return is -1.3%.

no surprises.

Interesting.. thanks.

Maybe what we can expect from Wellesley, then, would be a drop in share price and not much change in dividend amounts. Sounds like a great time to buy would be coming up (though I really can't buy any more right now since I should stick with my plan).

 

[freebird5825]

re Interesting.. thanks.

Maybe what we can expect from Wellesley, then, would be a drop in share price and not much change in dividend amounts. Sounds like a great time to buy would be coming up (though I really can't buy any more right now since I should stick with my plan).

as painful as this market is, i'm looking at it as a real test of the portfolio AA. I'm no expert at this investing stuff. i just read a lot and go with what makes sense for me.

i am just chomping at the bit to buy more of existing MFs...but my disposable income now won't support that. not with school and income taxes looming over me poor little head. argh.

possibly one of the lesser known effect of FIRE? i.e less extra income for investing.

 

[W2R]

as painful as this market is, i'm looking at it as a real test of the portfolio AA. I'm no expert at this investing stuff. i just read a lot and go with what makes sense for me.

Same here. Although I have been reading a lot on the diehards and morningstar forums, and the diehards booklist, I don't have the years of investment experience that some on this board have. Somebody pointed out that if we are posting here, we probably know more about investing than 99% of the general public. I don't know if that is comforting or not, though!

Right now I want to gradually get fully invested in the market, and see how my AA works for me (or not) in the next 20 months or so before ER. Then if there are problems, I will have to figure out how to deal with them.

i am just chomping at the bit to buy more of existing MFs...but my disposable income now won't support that. not with school and income taxes looming over me poor little head. argh.

possibly one of the lesser known effect of FIRE? i.e less extra income for investing.

On the other hand, that's because you already have your FIRE nestegg fully invested and in place! Nothing wrong with that.

 

[freebird5825]

Same here. Although I have been reading a lot on the diehards and morningstar forums, and the diehards booklist, I don't have the years of investment experience that some on this board have. Somebody pointed out that if we are posting here, we probably know more about investing than 99% of the general public. I don't know if that is comforting or not, though!

On the other hand, that's because you already have your FIRE nestegg fully invested and in place! Nothing wrong with that.

i would call that scary, considering the magnitude of the small investor funds out there on the market.

i often miss the obvious. it's been a real transtion in the mind. i'm still a baby at this FIRE thingie. 1 year anniv is April 1st. i still think in terms of saving & investing, which is good considering my long time horizon til the daisies come up.

if i haven't said so, i enjoy your posts about being a fed employee and the benefits. i had a bad experience where i w*rked and it's refreshing to see someone who isn't being bashed.

 

[ziggy29]

as painful as this market is, i'm looking at it as a real test of the portfolio AA. I'm no expert at this investing stuff. i just read a lot and go with what makes sense for me.

Proper asset allocation certainly saved my bacon in 2001-02. With "the market" down 12% in 2001 and 22% in 2002, I lost 1.8% and 5.4% respectively. Small caps, REITs and gold funds all performed very well in that time.

Of course, so much less is working now. My gold stock allocation (GDX) is up more than 20% this year, but every other equity asset class I have is well into the red. Just the same, the S&P is still 5% worse than I am for the year. It's times like this when you really appreciate the value of diversification.

 

[W2R]

i would call that scary, considering the magnitude of the small investor funds out there on the market.

i often miss the obvious. it's been a real transtion in the mind. i'm still a baby at this FIRE thingie. 1 year anniv is April 1st. i still think in terms of saving & investing, which is good considering my long time horizon til the daisies come up.

I plan to keep saving and investing at least to some extent after I retire, though investing may happen more when I am rebalancing than otherwise.

if i haven't said so, i enjoy your posts about being a fed employee and the benefits. i had a bad experience where i w*rked and it's refreshing to see someone who isn't being bashed.

Thanks. I enjoy your posts, too. A former fed who is articulate and knows about the rings on old mag tapes? What's not to like there. There aren't many of us, so that's pretty cool.

But not being bashed? Hmm, guess that depends on what is meant. My job is not ideal, by any means (too much politics in the politics, I suppose), and in a sense it is a huge ego-basher. I can really relate to Khan's post about his ego being stomped to death at his government job (at least I have a window, though, instead of being in the basement like Khan). If I was younger I would have quit years ago, but I am wearing the "golden handcuffs" since at 59 I am too old to start over. I feel we are fortunate because benefits in industry are vanishing and we feds still have at least some pension and health benefits.

Personally I am also fortunate to be a fed, in that I had continuous paychecks and a job throughout the post-Katrina times here. So many in my community didn't and with the destruction to pay for, found themselves in terrible financial situations.

But overall, I wouldn't say that the work is as fascinating or the pay as high as in industry. Still I am proud of the quality of our work and the way my agency conducts itself (which I wouldn't be able to say if working for most other agencies), and being a federal employee is great for security junkies like me.

 

[freebird5825]

Proper asset allocation certainly saved my bacon in 2001-02. With "the market" down 12% in 2001 and 22% in 2002, I lost 1.8% and 5.4% respectively. Small caps, REITs and gold funds all performed very well in that time.

Of course, so much less is working now. My gold stock allocation (GDX) is up more than 20% this year, but every other equity asset class I have is well into the red. Just the same, the S&P is still 5% worse than I am for the year. It's times like this when you really appreciate the value of diversification.

you did well. those were ugly years...
i adopted a 50/50 balanced portfolio in summer 07 as a cautious measure when i FIREd in spring 07. i had been running at approx 65/35. nobody told me to do the balanced thing.
i looked at it as more of a math probability problem than any kind of crystal ball that the market was going to start going kerplunk in 3Q07.
i figured my odds were 50-50 that either stocks or bonds would do well for one year. just a dumb engineer's guess. toss the coin. i'm not joking for once. this is really how i thought it out.
my asset allocation is pretty good (i'm too lazy to log onto M* and see what it is).
i am also seeing red ink, but only 5.7% down YTD overall according to M*'s assessment of my portfolio performance.
just riding it out...

 

[freebird5825]

i still can't get Quote to work, so i have to cut and paste...

re want2retire - I plan to keep saving and investing at least to some extent after I retire, though investing may happen more when I am rebalancing than otherwise.
ditto. just not at the pre-FIRE level. still DCAing.

Thanks. I enjoy your posts, too. A former fed who is articulate
translated "talks too much" LOL just picking on myself. it's allowed
and knows about the rings on old mag tapes? RING TOSS!!!
What's not to like there. There aren't many of us, so that's pretty cool.
sounds like we need a population count. any biologists on the board? we need an independent species assessment.

But not being bashed?... I can really relate to Khan's post about his ego being stomped to death at his government job (at least I have a window, though, instead of being in the basement like Khan).
i stayed smarter, leaner, faster. i just kept standing up and taking the bullets. and grinning at them while they kept shooting. made them nutz. it's a great way to deal with bullies. look 'em in the eye and never flinch. but it has costs.

and i had no windows either. that is not trivial. lack of sunlight for extended periods can affect people's behavior. makes mean people worse...makes good guys like Khan and a gal like me want to seek peace and quiet and no stress when we escape.

If I was younger I would have quit years ago, but I am wearing the "golden handcuffs" since at 59 I am too old to start over. I feel we are fortunate because benefits in industry are vanishing and we feds still have at least some pension and health benefits.
hear hear...some of my benefits are survivor benefits. i made lemonade out of lemons and got the hell out.
Personally I am also fortunate to be a fed, in that I had continuous paychecks and a job throughout the post-Katrina times here. So many in my community didn't and with the destruction to pay for, found themselves in terrible financial situations.
ah, NOLA territory. i hadn't noticed your location.
But overall, I wouldn't say that the work is as fascinating or the pay as high as in industry. Still I am proud of the quality of our work and the way my agency conducts itself (which I wouldn't be able to say if working for most other agencies),
don't get me started...LOL
and being a federal employee is great for security junkies like me.
AMEN

 

[Alan]

Maybe what we can expect from Wellesley, then, would be a drop in share price and not much change in dividend amounts. Sounds like a great time to buy would be coming up (though I really can't buy any more right now since I should stick with my plan).

If you have your dividends re-invested then at least you have bought a few more shares

 

[W2R]

If you have your dividends re-invested then at least you have bought a few more shares

So true!

 

[Alan]

Maintaining your AA during bad years takes mental fortitude. During the 90's I annually sold shares from stock funds and bought bond funds even though there was lots of hype of a new paradigm and Dow 30,000 etc. It worked well 'cos my losses in 2000 and 2001 were only 2% and 4.5%. However, 2002 was tough to keep re-balancing as I was down 11% that year but the following year was up 20.7%

Around that time I heard an interview with a manager from one of the Pension funds for a megacorp. The interviewer asked him what his secret was because just before the stock melt down he sold $MM's of stocks and bought bonds, then just before stocks came back he sold $MM's of bonds and bought stocks.

His explanation that he was no financial wizard, he was simply following the AA laid down by the trustees of the pension fund. And re-balancing when they got 5% out of kilter.

 

[FIREd]

I have been pretty happy with Wellesley myself, though I expected it to perform a bit better with bonds prices having gone up like they have in the past few months. However, not making much money is still better than losing a lot of it. The only thing is that Wellesley has performed so well since October (relative to the rest of my portolio) that I haven't been able to add money to it as per my asset allocation model. It's just too rich right now compared to everything else...

 

[Alan]

I have been pretty happy with Wellesley myself, though I expected it to perform a bit better with bonds prices having gone up like they have in the past few months. However, not making much money is still better than losing a lot of it. The only thing is that Wellesley has performed so well since October (relative to the rest of my portolio) that I haven't been able to add money to it as per my asset allocation model. It's just too rich right now compared to everything else...

In the 5 years I have been investing in Wellesley I've done the equivalent of 8.8% year on year, but as you can see from my returns it has fluctuated by as much as 9%, although no negative returns on any given year.

2003 10.74%2004 12.60%2005 3.65%2006 11.39%2007 6.00%