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Old 12-23-2009, 03:08 PM   #21
Confused about dryer sheets
 
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Originally Posted by Dennis View Post
Ditto Timwalsh..
and if retired and /or have enough $ saved up? If Treasuries ever go bck to "the good ol' days" of 7%+ again? and especially 9% or more as in the Carter Days? It will be adios Equity and Bonds and hello Treasuries..Ladder them LT one's and you're good to go, no matter How great the Market is doing, for that will be for the short term..

past 30 yrs, S&P only ave 9.5% apy..
If they do go back to 7% or 9% buy them then. I agree.
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Old 12-24-2009, 02:15 AM   #22
Confused about dryer sheets
 
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I'd like to add that if you invest in bonds now you can lessen your exposure to swings in the bond market through short term bonds (2-3 years to maturity).

Close on 23 December 2 and 3 year Treasuries were:

2 year yield: .91%
3 year yield: 1.49%

cd's seem to be a better route to safely park your money short term...

Current cd rates from USAA:
18 month 1.90%
2 year 2.20%
5 year 3.01%
7 year 3.85%

again, good luck.
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Old 12-24-2009, 07:33 AM   #23
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For us the pain with managing is spanning across different accounts. We've got:

My 401k
My rollover IRA
My Roth IRA
Wife's 457
Wife's rollover IRA
Wife's Roth IRA
Joint taxable account

Then the added fun of trying to value wife's pension and how much that should impact our asset allocation.

I'd love having to balance between only two accounts taxable and non.
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Old 12-24-2009, 08:53 AM   #24
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Originally Posted by 3504PIR
I'm saying that now is a horrible time to buy bonds... if you buy bonds today, when the yield goes up, you lose money. Thus my burning money comment... If they do go back to 7% or 9% buy them then.
Isn't that market timing too?

How is that any different from looking at the Gordon equation and P/E10 and saying that "now is a horrible time to buy stocks." Because by historical measures, it still is. The S&P 500 is yielding ~2% (much less than it did even at the top of the 1929 bubble) with a P/E10 over 20 (nearly as high as the top of the 1960's bull market). The Gordon equation predicts only a 3.0-3.5% long-term real return. If you buy stocks today, and the yield goes up (i.e. we have another big sell-off), you lose money that way too.

Inflation, deflation, another crash, another rally, etc. all seem equally possible to me. All I'm doing is throwing up my hands and admitting that I can't predict the future. Thus, I'm wary about parking much more than 60% of our savings in any one asset class.

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Originally Posted by 3504PIR
You're talking about holding 50% bonds at the age of 23. I"m not talking about everybody. You've put or are planning to put your TSP money in the 2020 fund. Are you retiring in 2020?
I'm talking about maybe 40% bonds, or 35% via Wellington. I'm looking at the 2020 fund because it fits that allocation. We could tap that money as early as 2030, and I'm looking at that fund too which is 30% bonds.

The bonds held in the TSP G-Fund (heavily used by the Life Cycle funds), by the way, don't behave like normal bonds. They aren't allowed to decline in value with interest rate hikes. The only risk is inflation risk.

Tim
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Old 12-24-2009, 10:55 AM   #25
Confused about dryer sheets
 
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That actually sounds good and I'm not trying to take away from the point of your original post with my double tangent on bonds. 70% 30% split would be fine or even 40% bonds if they are all in the 2020 fund and those aren't allowed to lose value with price changes.

As to whether or not I am advocating market timing by saying not to buy Treasury bonds, the distinct difference is that the value of bonds have nowhere to go but down and the yield to go up.

On a side note, I wasn't aware of the G-fund bonds fact you stated. Could you post a link that I could look at? I am a recently retired Infantry Officer with a TSP account and couldn't find that, which would be excellent information to have.

Again, sorry to derail your thread but I was trying to get my point across on Treasuries.
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Old 12-24-2009, 12:20 PM   #26
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On a side note, I wasn't aware of the G-fund bonds fact you stated. Could you post a link that I could look at? I am a recently retired Infantry Officer with a TSP account and couldn't find that, which would be excellent information to have.
http://www.tsp.gov/rates/fundsheet-gfund.pdf

It is helpful to know what your main employment benefits are. Access to the G Fund is considered by many/most to be one of the major benefits for federal civilian employees and military.
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Old 01-08-2010, 05:48 PM   #27
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So, if you invest in a balanced fund do you include this in your overall asset allocation or do you treat them separately?

In otherwords, say you have a 100K in a balanced fund that aims to have 60% equities/ 40% bonds. In your overall portfolio AA totals, would you add 60K to equities and 40K to bonds? Or just count them outside of your overall allocation.
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Old 01-08-2010, 05:54 PM   #28
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I would break it out to the appropriate asset category, not leave it separate.
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Old 01-08-2010, 05:59 PM   #29
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So, if you invest in a balanced fund do you include this in your overall asset allocation or do you treat them separately?

In otherwords, say you have a 100K in a balanced fund that aims to have 60% equities/ 40% bonds. In your overall portfolio AA totals, would you add 60K to equities and 40K to bonds? Or just count them outside of your overall allocation.
Periodically I check to see what the exact % equities in Wellesley is (38.62% stocks right now). From that I figure out how much of my Wellesley is in equities and how much is in fixed. Each time I compute my AA (45:55, equities:fixed), I add the corresponding parts of my Wellesley to the equities and the fixed portions.
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Old 01-08-2010, 06:01 PM   #30
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Quote:
Originally Posted by easysurfer
So, if you invest in a balanced fund do you include this in your overall asset allocation or do you treat them separately?

In otherwords, say you have a 100K in a balanced fund that aims to have 60% equities/ 40% bonds. In your overall portfolio AA totals, would you add 60K to equities and 40K to bonds? Or just count them outside of your overall allocation.
Our entire investment portfolio (i.e. everything except for our short-term cash reserves) is now 65/35 with about half of that in a balanced "one-stop-shop" fund. Over time, as we contribute more to the TSP and IRA's, the balanced funds will account for a greater share of our portfolio. Now only our taxable investments are broken up into multiple funds (muni bonds and total stock market).

EDIT: I'm keeping track of things exactly as W2R just said.

Tim
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Old 01-08-2010, 06:40 PM   #31
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Come to think of it, when I had a 401K I used to invest in a balanced index fund (60/40) and did just that -- took a percentage of the total amount and add them to their corresponding equity/bond totals.

Thanks for keeping me honest!
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