Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 02-19-2011, 01:17 PM   #21
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,947
Thinking about a 401k loan against my bond allocation which is in a proxy for Pimco Total Bond and using proceeds to pay down mortgage.
__________________

__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-19-2011, 02:36 PM   #22
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,967
I'm still at 64/26/10 and almost all my bond holdings are PIMCO Total Return. I feel a little trapped with bonds poised to fall and money markets returning nothing. Seems counterintuitive to move to an asset class with almost ZERO return...
__________________

__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Old 02-20-2011, 05:37 AM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
Quote:
Originally Posted by Midpack View Post
I'm still at 64/26/10 and almost all my bond holdings are PIMCO Total Return. I feel a little trapped with bonds poised to fall and money markets returning nothing. Seems counterintuitive to move to an asset class with almost ZERO return...

I think there is a consensus that interest rate will head upward and many are preparing for that event.

But... Playing defense could wind up being worse.

Of course... one might wind up in the same spot either way unless they were lucky on the timing of the move (oops.. did I say timing).

Often a tactical defensive move (i.e., preservation of capital) has an opportunity cost (or even a real out of pocket cost) to it.
__________________
chinaco is offline   Reply With Quote
Old 02-20-2011, 07:55 AM   #24
Confused about dryer sheets
 
Join Date: Feb 2011
Posts: 2
I like HYG. A high yield junk bond fund. I wouldn't get into it now. I did 2 years ago when it was low priced. So the value has gone up, but I am still getting a great return. If it's value goes way down I will buy some more and hold as long as they keep paying me that great dividend check every month.
__________________
groundhog is offline   Reply With Quote
Old 02-20-2011, 01:01 PM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
easysurfer's Avatar
 
Join Date: Jun 2008
Posts: 7,885
My bond fund strategy: Vanguard Total Bond Market Index Fund.

Plus own some EE savings bonds back from the days of w*rk and monthly payroll deductions.

I'll have to double check, but I think the first one matures in around 2013. I'll just take the cash on these each month.
__________________
Have you ever seen a headstone with these words
"If only I had spent more time at work" ... from "Busy Man" sung by Billy Ray Cyrus
easysurfer is offline   Reply With Quote
Old 02-21-2011, 08:56 AM   #26
Recycles dryer sheets
 
Join Date: Mar 2007
Posts: 92
Thank you for all of the replys and opinions. Not exactly unanimous, but enough folks thinking like me to make some small changes. I think I will shift some out of my intermediate and total bond funds into short term and also a TIPS fund. It seems like every day there are inflation hints. Today it was oil prices. When oil goes up, so does virtualy everything else.

I have a "fixed" fund that I've held onto after retirement and also a few I-bonds from the 1% fixed days. I've been very thankful for these through these times of low interest rates.
__________________
"I’d like to live as a poor man with lots of money." Pablo Picasso
roger r is offline   Reply With Quote
Old 02-21-2011, 09:24 AM   #27
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
Currently...

HYG - 5%
LQD - 5%
IEI - 5%
TIP - 10%
BSV - 5%

Cash - 10%
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Old 02-21-2011, 11:14 AM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 5,676
I've looked at the bond history going back to the 1950's. Did you know that rates moved up somewhat slowly from 1954 through 1970 before accelerating in the great inflation of the 1970's? Here is a picture of the "triangle" for intermediate Treasuries: 5-Year Treasury Constant Maturity Rate (GS5) - FRED - St. Louis Fed

What was interesting to me is the winner in the period 1950 to 1980 was CASH over 2yr Treasuries and 5yr Treasuries. That is cash like in Vanguard Prime Money Market. Almost the mirror opposite of what we've come to see as the norm in recent decades.

Anyway, in the spirit of this thread here is my current allocation:

older Ibonds paying 3.4% fixed
Vanguard Short Term investment grade
Pimco Total Return

My strategy is to move between cash, short term Treasuries and Intermediate Treasuries based on trailing returns over the last 9 months or so. Backtesting shows this worked OK over 60 years. Although this is market timing, it seems to beat intuition and guesses.
__________________
Lsbcal is offline   Reply With Quote
Old 02-21-2011, 12:07 PM   #29
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
Quote:
Originally Posted by HFWR View Post
Currently...

HYG - 5%
LQD - 5%
IEI - 5%
TIP - 10%
BSV - 5%

Cash - 10%
Also have a 5% stake in PCRIX, which ups my TIPs exposure.
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Old 02-21-2011, 12:28 PM   #30
Recycles dryer sheets
In-control's Avatar
 
Join Date: Mar 2007
Posts: 319
I do the age ratio. I'm ~ 50 so I am 50% in Bonds and 50% in Stocks. My bonds are divided into 10% Corp. Bond Fund, 20% Total Bond fund and the rest is CD's in various US banks which equal 5 years of living expenses. You may think me very conservative but it has held well over this difficut time and I sleep well.
__________________
Just Trekking thru!
In-control is offline   Reply With Quote
Old 02-21-2011, 12:53 PM   #31
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,017
All my bonds are Canadian. To understand why, see Niall Ferguson's 2010 Niarchos Lecture.

http://www.petersoninstitute.org/pub...guson-2010.pdf
__________________
Meadbh is offline   Reply With Quote
Old 02-21-2011, 05:09 PM   #32
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Brat's Avatar
 
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 5,913
I am kicking 70 (hard) and have too high a % in cash equivalents doing next to nothing. I am thinking about purchasing some Fidelity Capital & Income with IRA money. Comments please.
__________________
Duck bjorn.
Brat is offline   Reply With Quote
Old 02-21-2011, 05:16 PM   #33
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,967
Quote:
Originally Posted by Brat View Post
I am kicking 70 (hard) and have too high a % in cash equivalents doing next to nothing.
I have more cash than I'd like (10%) and even more (26%) in bonds (that are certain to lose some value when interest rates rise - only question is when). Odds are you will turn out to be the smarter between the two of us. Best of luck...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Old 02-21-2011, 09:01 PM   #34
Thinks s/he gets paid by the post
GregLee's Avatar
 
Join Date: Oct 2010
Location: Waimanalo, HI
Posts: 1,881
Quote:
Originally Posted by lsbcal View Post
What was interesting to me is the winner in the period 1950 to 1980 was CASH over 2yr Treasuries and 5yr Treasuries.
That is less interesting than it might seem, since bond prices in 1980-81 were exceptionally low. See this Time cover story from Monday, Mar. 24, 1980, http://www.time.com/time/magazine/ar...921854,00.html , "Inflation and interest rates, both topping 18%, are so far beyond anything that Americans have experienced in peacetime—and so far beyond anything that U.S. financial markets are set up to handle—as to inspire a contagion of fear." So the particular period you choose has a peculiar ending point.
__________________
Greg (retired in 2010 at age 68, state pension)
GregLee is offline   Reply With Quote
Old 02-21-2011, 10:03 PM   #35
Thinks s/he gets paid by the post
 
Join Date: Nov 2009
Posts: 3,857
Quote:
Originally Posted by groundhog View Post
I like HYG. A high yield junk bond fund. I wouldn't get into it now. I did 2 years ago when it was low priced. So the value has gone up, but I am still getting a great return. If it's value goes way down I will buy some more and hold as long as they keep paying me that great dividend check every month.
This is just what I did. When I ERed and left my company just over 2 years ago (see my signature line), I was able to buy a huge chunk of shares at rock-bottom prices from a high yield bond fund (Fidelity Focused High Income Fund) which buys bonds rated at or just below investment grade. Because I was able to buy about 25%-30% more shares than I originally anticipated, my monthly dividend check has been higher than I originally budgeted despite the slight drop in the monthly dividends per share. I use the relatively small monthly dividends from another bond fund to add shares to this bond fund.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline   Reply With Quote
Old 02-22-2011, 09:53 AM   #36
Full time employment: Posting here.
Retire Soon's Avatar
 
Join Date: Nov 2005
Posts: 655
My bond strategy is zero percent allocation to bonds.
__________________
"I went to the woods because I wished to live deliberately... and not, when I came to die, discover that I had not lived."

--Henry David Thoreau
Retire Soon is offline   Reply With Quote
Old 02-22-2011, 12:11 PM   #37
Thinks s/he gets paid by the post
Free To Canoe's Avatar
 
Join Date: May 2008
Location: Cooksburg,PA
Posts: 1,738
Like many others, I am staying in cash versus new bond purchases.


Free to canoe
__________________
Free To Canoe is offline   Reply With Quote
Old 02-22-2011, 05:32 PM   #38
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,812
I'm retired with a significant non-COLA'd pension. So inflation is my biggest risk. I'm exclusively in TIPS. I can argue that with the historically low real interest component I should get out, wait for prices to fall, then buy back in. But I'm sure that I don't know how to time the market. I could lose more by sitting on the sidelines than I would make with an eventual increase in prices.
__________________
Independent is offline   Reply With Quote
Old 02-22-2011, 06:27 PM   #39
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 5,676
Quote:
Originally Posted by GregLee View Post
That is less interesting than it might seem, since bond prices in 1980-81 were exceptionally low. See this Time cover story from Monday, Mar. 24, 1980, Jimmy Carter vs. Inflation - TIME , "Inflation and interest rates, both topping 18%, are so far beyond anything that Americans have experienced in peacetime—and so far beyond anything that U.S. financial markets are set up to handle—as to inspire a contagion of fear." So the particular period you choose has a peculiar ending point.
Yes around 1980 was the peak of the interest rates. My adult life experiences consisted of the 1970's inflation and then the long (erratic) rate slide to here. But the point is that we're back to early 1950 rates, not at those peak rates. See the link I posted to that Fed graph.

So I think the lesson is to not expect that extra kick that intermediate or long term bonds have given in the past.

Here is some info from the past:
Quote:
1954 to 1962
cash 3.0%
2yr Treasury 2.6% (mid point of 1yr and 3yr Treasury yields)
5yr Treasury 2.3%
5yr Treasury rate change +1.9%

1963 to 1972
cash 5.1%
2yr Treasury 4.7%
5yr Treasury 4.3%
5yr Treasury rate change = + 1.8%
__________________
Lsbcal is offline   Reply With Quote
Old 02-22-2011, 09:37 PM   #40
Recycles dryer sheets
 
Join Date: Jun 2008
Posts: 63
1/3 Vanguard Tips fund
1/3 Vanguard Intermediate Treasuries
1/3 Vanguard Total Bond Market Index

I follow the 110 - age = equity %

I hold Vanguard TSM & Vanguard Total international index funds for my equity portion in about a 70/30 ratio.

Take your risks with equites and stay high quality in bonds.
__________________

__________________
Democracy will cease to exist when you take away from those who are willing to work and give to those who are not. - Thomas Jefferson
tsturbo is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Your current view of Bond Funds molly FIRE and Money 49 09-24-2009 01:56 PM
Prime Money Market Fund vs. Total Bond Fund two4theroad FIRE and Money 2 04-10-2008 01:46 PM
Bond Fund and Money Market Fund Tax Treatment Question terminator FIRE and Money 4 03-01-2007 07:56 AM
TIPS: Buy Bond or Bond FUND? Pros & Cons please! Jane_Doe FIRE and Money 67 11-20-2006 09:29 PM
Bond strategy question Van FIRE and Money 17 05-17-2006 09:03 AM

 

 
All times are GMT -6. The time now is 02:24 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.