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Old 09-14-2013, 09:45 PM   #41
Thinks s/he gets paid by the post
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Originally Posted by rayvt View Post

By holding on to a bond to maturity vs. selling at a loss brfore maturity all you are doing is changing the shape of your time-valued total return -- you are not changing the NPV at all.
Everything comes to he who waits........

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Retired Mar 2014 at age 52
Target AA: 70% equity funds / 28% TIAA-Traditional/ 2% cash
Target WR: 0.0%,
Income from pension, rent, and eventually SS
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Old 09-15-2013, 10:16 AM   #42
Recycles dryer sheets
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Join Date: Mar 2013
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Originally Posted by brewer12345 View Post
It is amazing to me how something as simple as bonds can confuse so many people.
It is amazing to me how something as simple as bonds can confuse ME most of the time. I think instead of "confused about dryer sheets" my avatar should say "confused about bonds"

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Old 09-24-2013, 03:02 AM   #43
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bond funds are generally buying and selling all the time so in a rising rate scenerio higher interest bonds are being added all the time as bonds mature or are sold off..

you will always be behind the curve in a bond fund if rates keep rising but if they level off eventually the extra interest over x amount of years that equal the funds duration will make you whole again.

throw in rebalancing and reinvestment and you can come out with nice profits down the road.

do you know if you had an equal mix of gold,stocks , cash and bonds and if you bought the gold at the highest peak back in the 1980's and just reblanced once a year that your gold and equities would have been worth almost the same at one point before gold slid back.

you couldn't have bought your gold at a worse time yet the gold actually nudged out the s&p 500's growth before gold slid back.
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Old 09-24-2013, 08:37 AM   #44
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Agree with her but it is certainly not rocket science...just understanding the math.

Whole life...never bought it. Group term did the trick. Far more coverage at a fraction of the cost. And for the insurance salespeople...yes I love my wife and kids which is why I went with term insurance. It provided the greatest dollar coverage bang for the buck in those early years when coverage was essential.

Immediate annuity? The math screams no...wait until we have a little will come. Then the math works a little better.

Bond fund? Yes, but it is a very short term bond funds. We don't do the long term ones in this climate. Perhaps if we get some inflation and the rates go up we will change our perspective.

Is she a genius? IMHO no, she has common sense and understands math. A big problem is that people no longer think for themselves or bother to do the research. And many are simply too lazy to follow the 'trust but verify' method when dealing with so called advisors. Many of whom should not be in the business let alone looking after other people's financial well being.

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