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Relatively Safe Mutual Funds/ETFs
Old 10-06-2014, 03:48 PM   #1
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Relatively Safe Mutual Funds/ETFs

I am concerned that we will have a stock market and real estate correction and decided to put some funds in an investment that will not do poorly if the real estate and stock markets do poorly. While I am not a market timer and the plan is to be almost fully invested in well-diversified ETFs and mutual funds, I would like to have some very noncorrelated investments so that if there is a correction, I would have some funds available to take advantage of opportunities caused by the correction. Also I do not want to have a sizable amount sitting in cash so that I could be earning something on it.

Which mutual funds/ETFs would be recommended? I was thinking US treasuries would be relatively safe, and ppl would move to them in a recession, and was specifically looking at WHOSX, FLBAX, and FIBAX. I have to research the differences but maybe I will split some money into these 3. Thoughts? Other suggestions?P {*
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Old 10-06-2014, 05:09 PM   #2
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I hold merger arbitrage funds (MERFX and ARBFX) as a low correlation, limited downside piece of my portfolio. If we got into another disaster, they would be liquidated in order to go on a shopping spree.
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Old 10-07-2014, 05:37 PM   #3
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I am generally supportive of those intrepid investors who go contrary to conventional wisdom and allocate part of their portfolio to out of favor investments such as long term treasury bonds. But I would have to say that right now strikes me as one of the worst possible times to make such an investment. You are looking at buying bonds that have earned double digit returns in the past year, at the same time that yields on the 30 year t-bond has declined by nearly 1%. That's not to say that bonds couldn't continue to rally for some time to come, but it's clear that you've missed out on the easy profits. The right time to make this investment was late last year, not now.
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Old 10-07-2014, 06:41 PM   #4
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The funds I use to avoid sticking my neck out too far are

Fidelity Advisor Floating Rate Hi Inc I (FFRIX)
Vanguard Target Retirement Income Inv (VTINX)
Fidelity Spartan S/T Tr Bd Idx Fid Advt (FSBAX)
Vanguard Interm-Term Investment-Grde Adm (VFIDX)
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Old 10-08-2014, 10:37 AM   #5
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Quote:
Originally Posted by inquisitive View Post
I am concerned that we will have a stock market and real estate correction and decided to put some funds in an investment that will not do poorly if the real estate and stock markets do poorly. While I am not a market timer and the plan is to be almost fully invested in well-diversified ETFs and mutual funds, I would like to have some very noncorrelated investments so that if there is a correction, I would have some funds available to take advantage of opportunities caused by the correction. Also I do not want to have a sizable amount sitting in cash so that I could be earning something on it.
But you are a market timer. Everything you write here indicates so.

Best solution - invest according to your risk tolerance and leave it alone, except for rebalancing.
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Old 10-08-2014, 12:59 PM   #6
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I would think VNQ will do bad when rates go up... I don't know about stocks. I don't know who does.

In any case something like high rated/low fees SCHO will be extremely safe and that is why it has almost no return with current rates
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Old 10-08-2014, 01:11 PM   #7
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Quote:
Originally Posted by inquisitive View Post
Which mutual funds/ETFs would be recommended? I was thinking US treasuries would be relatively safe, and ppl would move to them in a recession, and was specifically looking at WHOSX, FLBAX, and FIBAX. I have to research the differences but maybe I will split some money into these 3. Thoughts? Other suggestions?P {*
BTW WHOSX has huge fees and FLBAX/FIBAX will not be safe when interest rate goes up.

Safe will be cash and Short Term US Treasuries. I think people in long term treasures are in a riskier place then people with stock like KO or CL or PG.
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Old 10-08-2014, 02:40 PM   #8
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Remember when you sell you create either short or long term gains.....so, maybe you have to pay taxes. And, if you are in a high income bracket consider muni bonds. They gain and lose less than traditional bonds.......I'm speaking of mutual bond index funds.....as interest rates head up or down. Other than that I keep enough cash around so I don't have to sell and I don't become a market timer of sorts.......good luck.....look at muni's, keep a little cash and live with the results. I don't know any other way.
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Old 10-08-2014, 04:02 PM   #9
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Buy rental property and become a landlord.
While last time the housing crisis caused the financial crisis, I cannot think of a time where a stock market crash caused a housing crisis.
Even during the depression, my grandmother rented out rooms in her house as people needed a place to rent.
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Old 10-08-2014, 08:15 PM   #10
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Remember when you sell you create either short or long term gains.....so, maybe you have to pay taxes. And, if you are in a high income bracket consider muni bonds. They gain and lose less than traditional bonds.......I'm speaking of mutual bond index funds.....as interest rates head up or down. Other than that I keep enough cash around so I don't have to sell and I don't become a market timer of sorts.......good luck.....look at muni's, keep a little cash and live with the results. I don't know any other way.
Any thoughts on specific particularly safe muni funds or ETF's? I am thinking of safety on two fronts, potential for default as well as rising rate sensitivity.
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Old 10-10-2014, 04:34 AM   #11
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Aggressive: VOO 90% / AGG 10%
Conservative: VOO 28% / AGG 72%

Still the same ETF's.

I echo the notion that you should not try to time the market. Just stay constantly diversified (rebalance). Stick to your game plan.
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