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Old 11-01-2010, 11:15 AM   #21
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What is the PenFed penalty? All I see is this verbiage:

"Disclosures

Note that a penalty will be imposed for early withdrawal from certificates. This fee could reduce your earnings."
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Old 11-01-2010, 11:22 AM   #22
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I found this very timely blog entry about early withdraw penalties. There's a possibility that some institutions reserve the right to refuse early withdraw or change their early withdraw penalties during the term of a long-term CD.

But there's a very handy table showing the yield AFTER early withdraw at various points of a 5-year Ally Bank CD versus a 7-year PenFed CD.

Long-Term CD Rates and Early Withdrawal Penalties - Updates and Concerns
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Old 11-01-2010, 11:29 AM   #23
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Originally Posted by moguls View Post
Where are the folks on this board investing new moneys for the fixed income portion of your portfolios?
I have NO clue about reseraching or buying individual issue bonds, and I really don't want to manage the CD ladder thing.
Money market needs no explanation right now. I do keep a small amount in VYFXX for low price tag emergencies.
I built up a nice stake in VWAHX over a decade, and finally achieved VWALX eligibility . I chose this one because it is a national muni fund (i.e. geographic diversification), and I do not mind paying Vanguard to think for me.
Other fixed income (and balanced) mutual funds include VMLTX, VBIAX, VWINX psssst , DODBX and DODIX.
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Old 11-01-2010, 12:02 PM   #24
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There is no VYFXX.

And a lot of those other funds are not fixed-income.
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Old 11-01-2010, 12:10 PM   #25
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Originally Posted by explanade View Post
What is the PenFed penalty?
Here, let me Google that for you:
Money on the sideline...
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Old 11-01-2010, 12:29 PM   #26
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There is no VYFXX.

And a lot of those other funds are not fixed-income.
No VYFXX? Hmmmmm
https://personal.vanguard.com/us/fun...FundIntExt=INT

There may be single state equivalents for your state via Vanguard.

For the rest, I would suggest you do some research. Yes, some contain stocks, but I was referencing them in the context of bonds in mutual funds for income.
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Old 11-01-2010, 01:08 PM   #27
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Here, let me Google that for you:
Money on the sideline...
Thanks, so it looks like the most recent 180 or 365 days of interest.

I guess the table in the link that I posted takes into account this policy.


VYFXX is not coming up in Morningstar or Google for that matter. Odd.
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Old 11-01-2010, 01:18 PM   #28
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...VYFXX is not coming up in Morningstar or Google for that matter. Odd.
I know. Very odd. I enter VYFXX as Cash in my M* portfolio for the lack of any other means to represent it.

VYFXX is TE for NYers only.
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Old 11-03-2010, 02:41 PM   #29
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Please note how bonds of various duration reacted to the actual announcement of QE2 today.
TLT (20-year Treasuries) was up 2.5% in the last 5 days, but is now down 1%, for a loss of 3.5% so far from today's high.
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Old 11-03-2010, 04:13 PM   #30
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Please note how bonds of various duration reacted to the actual announcement of QE2 today.
TLT (20-year Treasuries) was up 2.5% in the last 5 days, but is now down 1%, for a loss of 3.5% so far from today's high.
Longer duration bonds rallied recently after Goldman suggested that the Fed would have to buy all the way out to the 30-yr part of the curve. Instead, it looks like they're staying closer to an average 5 year duration.

Any reaction today has more to do with reality of the program vs. expectations. The big QE2 market impact already happened, most notably with a meaningful increase in inflation expectations, which is exactly what the Fed wants.
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Old 11-04-2010, 10:09 AM   #31
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I highly recommend reading this: Individual Bonds vs a Bond Fund - Bogleheads
Nice page, if somewhat pro-Fund. I do not recall encountering the distinction between a rolling and a non-rolling ladder before.

In its terms, my primary bond investment strategy is to use a rolling ladder of TIPS, with the intent to convert it to a non-rolling ladder in the event of a severe economic crisis (such as losing my job). I supplement my ladder with some bond funds for liquidity and diversification.

I must admit, the extremely low real rates on TIPS these days make using CDs with short early withdrawal penalties a bit tempting. However, I really prefer a more passive hold forever, or at least to maturity strategy. If I bought a CD with plans to redeem it early if rates rose, I would have slipped into market timing interest rates. I don't want to start debating should I redeem this week, or wait a week because rates are going up so fast. The risk of driving myself crazy, or shooting myself in the foot financially seems too high.
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Old 11-04-2010, 10:23 AM   #32
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If I bought a CD with plans to redeem it early if rates rose, I would have slipped into market timing interest rates.
I understand the "set and forget" simplicity of a ladder and that may very well be sufficient reason to stick with that strategy. But I wouldn't consider CDs to be a market timing instrument. Their putability and superior yield makes them preferable to similar maturity treasuries regardless of what interest rates do. I'm not buying CDs because I'm betting interest rates go up, or down, or stay the same. My returns will be higher in all three cases, no market timing required.

Of course that analysis compares CDs with vanilla treasuries. TIPS are a whole 'nother kettle of fish.
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