Managed Fixed Income Funds

[stephenson]

Hi All,

I did one of the Fidelity sponsored webinars today addressing the spot just above MMF with slightly higher yields and risk.

Featured a PIMCO rep discussing the topic in a generally reasonable manner.

First, do many of you find this form of "education" useful?

And, second, what do you use as a higher yield alternative to MMFs when you don't expect to need the funds for a year or so?

I am figuring out ways to keep busy following my last day of work ...

 

[Whisper66]

My fixed income funds are my buffer in case of a severe market correction so I don't take a huge risk with them. In my taxable accounts, I keep enough to cover about 1-1.5 year's worth of expenses in Vanguard's VMLUX (Limited Term, Tax Exempt). I then add enough to cover another 2-3 yrs in Vanguards VWIUX (Intermediate Term, Tax Exempt), also in taxable account. In the event of a severe market correction, we will use these funds to avoid selling equities at the dip.

Should also mention that I have other funds in my tax deferred/exempt accounts that I set aside for "fixed income". These funds I don't expect to use for years. Sometimes those are in bond funds of some sort. At other times, I sink those funds into dividend aristocrats that have taken a price hit that I believe is only temporary. When they come back up in value, I typically would sell them off and move back to bonds.

 

[brewer12345]

For non-immediate need money that I want to keep safe, I play the hot money CD game. Be patient and keep your eyes open and you will routinely run across a foolish credit union or bank a couple of times a year that is willing to offer rates way, way over market and often with a small early surrender penalty. Generally these opportunities allow you to lock in 3 to 7 year money that is FDIC insured and with a modest surrender penalty (6 to 12 months of interest).

 

[COcheesehead]

You are splitting hairs when talking about investments like this. At the end of the day the interest is equal to a Big Mac.

 

[brewer12345]

You are splitting hairs when talking about investments like this. At the end of the day the interest is equal to a Big Mac.

Not sure about that. I am 5 years into a 10 year CD at 5% interest and I can bail any time I like for a 1 year interest penalty.

 

[COcheesehead]

Not sure about that. I am 5 years into a 10 year CD at 5% interest and I can bail any time I like for a 1 year interest penalty.

Yes, you are the anointed one. Do you really expect something like that is going to be available to the masses?
I also personally think your post is BS.

 

[brewer12345]

Yes, you are the anointed one. Do you really expect something like that is going to be available to the masses?

Something quite that good? Not likely. Well above market and safe as houses? Absolutely. At least once a year I see smoking hot deals in the CD world. Keep some cash handy and keep your eyes open. In the next 6 to 12 months something very attractive will pop up.

 

[COcheesehead]

Something quite that good? Not likely. Well above market and safe as houses? Absolutely. At least once a year I see smoking hot deals in the CD world. Keep some cash handy and keep your eyes open. In the next 6 to 12 months something very attractive will pop up.

That is at the same level as EM debt.

 

[brewer12345]

That is at the same level as EM debt.

Did you just compare US Gubmint insured CDs with EM debt? Perhaps I am missing something.

Right now Navy Federal is offering 2% CDs for 17 months.

 

[COcheesehead]

Did you just compare US Gubmint insured CDs with EM debt? Perhaps I am missing something.

Right now Navy Federal is offering 2% CDs for 17 months.

You misunderstand, you stated 5%, that EM debt level. 2% is pedestrian and a money loser with inflation at its current tick.

 

[brewer12345]

You misunderstand, you stated 5%, that EM debt level. 2% is pedestrian and a money loser with inflation at its current tick.

I said above market, that is it. The alternative to such options is a money market at well under 1% a year.

 

[jazz4cash]

Not sure about that. I am 5 years into a 10 year CD at 5% interest and I can bail any time I like for a 1 year interest penalty.

Actually you guys are talking about two different things. The funds discussed are basically juiced up ultra short (2 yrs or less) bond funds. The extra yield is marginal maybe enough for the whole Big Mac meal.

I'm holding some of those CDs also and they look much much better than the funds being discussed but I can't find anything today as sweet as what I bought 5-7 yrs ago. I will likely stick with the CDs since I am somewhat committed to a ladder that averages out to ~3%.

 

[jazz4cash]

Hi All,



I did one of the Fidelity sponsored webinars today addressing the spot just above MMF with slightly higher yields and risk.



Featured a PIMCO rep discussing the topic in a generally reasonable manner.



First, do many of you find this form of "education" useful?



And, second, what do you use as a higher yield alternative to MMFs when you don't expect to need the funds for a year or so?



I am figuring out ways to keep busy following my last day of work ...

Glad you asked! I attended the webinar also and actually considered posting a notice here to foster discussion. I do enjoy the Fido webinars as a starting point for further research. My overall takeaway is to stick with CDs as much as possible. 2nd choice would be the funds discussed(pending additional research followed by online savings account (~1%). Basically I see no use whatsoever for MM funds but they were the baseline for the discussion today. My personal baseline is an online savings account.

 

[brewer12345]

Actually you guys are talking about two different things. The funds discussed are basically juiced up ultra short (2 yrs or less) bond funds. The extra yield is marginal maybe enough for the whole Big Mac meal.

I'm holding some of those CDs also and they look much much better than the funds being discussed but I can't find anything today as sweet as what I bought 5-7 yrs ago. I will likely stick with the CDs since I am somewhat committed to a ladder that averages out to ~3%.

My point was more that the risk-reward for hot money CDs is far better than short term corporates.

 

[audreyh1]

Yes, you are the anointed one. Do you really expect something like that is going to be available to the masses?
I also personally think your post is BS.

I'm not sure why you think that. Brewer has been collecting hot CDs for years.

3% with 180 days interest penalty was recently available to "the masses". You just have to keep an eye out.

FDIC insured high yield savings and CDs have been beating short-term and intermediate term bond funds recently without the credit risk exposure. You have to compare.

Much more difference than a "Big Mac".

 

[jazz4cash]

My point was more that the risk-reward for hot money CDs is far better than short term corporates.

I got your point and I agree but the deals today are not as good. I have a 4pct CD maturing next month and the best replacement I can find is 3pct for 84 mos w/ 6mo EWP. I'll also get some of the NFCU 17 mo CDs. I'm hoping rates will tick up on April Fools Day.

 

[jazz4cash]

Just for clarification, the Pimco funds mentioned (in order of duration, I believe) are PAIUX MINT PSHDX LDUR and PLDDX.

 

[Dawg52]

I'm not sure why you think that. Brewer has been collecting hot CDs for years.

3% with 180 days interest penalty was recently available to "the masses". You just have to keep an eye out.

FDIC insured high yield savings and CDs have been beating short-term and intermediate term bond funds recently without the credit risk exposure. You have to compare.

Much more difference than a "Big Mac".

Yeah I have some of those 5% cd's and I'm just your average Joe. But I admit, I don't care to open up ton's of online accts to do so. Penfed has had good deals but not much recently.

 

[stephenson]

Thanks to everyone for their thoughts and experience ... I've got a couple of the small NFCU CDs and it feels pretty good, but the numbers are small

What's the story with cheesehead ... this is a serious and friendly discussion ... why so negative?

 

[COcheesehead]

Thanks to everyone for their thoughts and experience ... I've got a couple of the small NFCU CDs and it feels pretty good, but the numbers are small

What's the story with cheesehead ... this is a serious and friendly discussion ... why so negative?

Sorry for the negativity.

 

[OAG]

Local CU here in OH has 2.54 and 2.64% APY 6 Yr CD's (6 month EWP)(yes restrective by location). It is a Coop type instution that has a profit sharing provision whereby ever Jan they give a "bonus" based on profit and member's level of participation (pretty unique benefit).

PFCU recently raised there long term rates.

NFCU has the best rate for a 17 month CD (as previously mentioned).

At PFCU (and maybe NFCU) you can borrow up to 90% of a CD's value at 2% above the CD's interest rate; so an example is a $100K CD paying 2% will get you basically a $90K "Loan" at 4%. Can't do that everywhere and another reason for me to shy away from Brokered CD's.

I am sure everyone is aware NFCU has really relaxed the membership requirements recently.

 

[brewer12345]

I am sure everyone is aware NFCU has really relaxed the membership requirements recently.

News to me. What are the new ways to get in?

 

[JohnnyBGoode]

Hi All,

I did one of the Fidelity sponsored webinars today addressing the spot just above MMF with slightly higher yields and risk.

Featured a PIMCO rep discussing the topic in a generally reasonable manner.

First, do many of you find this form of "education" useful?

And, second, what do you use as a higher yield alternative to MMFs when you don't expect to need the funds for a year or so?

I am figuring out ways to keep busy following my last day of work ...

Kinda off topic, but how did you find out about the webinar? I actually have a fair bit of $$$ at FIDO and would expect that I would get notifications about things like this.

Now normally I would be happy to get less marketing material from a company not more, but in this case it feels like I might be missing out.

 

[jazz4cash]

Kinda off topic, but how did you find out about the webinar? I actually have a fair bit of $$$ at FIDO and would expect that I would get notifications about things like this.



Now normally I would be happy to get less marketing material from a company not more, but in this case it feels like I might be missing out.

I am not the OP but I get emails from Fido and recently Vanguard also. If you check out the section called Learning Center on Fido's website it shows a calendar of upcoming events.

 

[jazz4cash]

News to me. What are the new ways to get in?

High(er)-rate CD deals

I just saw this for the first time. Not sure if it is new or maybe I just missed it.



https://www.depositaccounts.com/blo...ify-navy-federal-credit-union-membership.html

http://www.early-retirement.org/forums/showthread.php?p=1830763