Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
When interest rates start to rise, are you planning any portfolio changes?
Old 11-18-2011, 02:12 PM   #1
Thinks s/he gets paid by the post
jIMOh's Avatar
 
Join Date: Apr 2007
Location: Milford, OH
Posts: 2,085
When interest rates start to rise, are you planning any portfolio changes?

The lowering of interest rates over the last 5-10 years created a GREAT period to be a bond investor. Are you planning to make any changes now or in near future when the fed suggests they will raise short term interest rates?
__________________

__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
jIMOh 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 11-18-2011, 02:16 PM   #2
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,086
Quote:
Originally Posted by jIMOh View Post
The lowering of interest rates over the last 5-10 years created a GREAT period to be a bond investor. Are you planning to make any changes now or in near future when the fed suggests they will raise short term interest rates?
No.
__________________

__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 11-18-2011, 02:21 PM   #3
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 942
I figure I'll be most likely dead by the time the FED normalizes rates.

Oh, and by the way, I'm not expecting to die anytime soon

Reality is that the debt levels are so high at the government/private sector (more individuals than corporations) that the economy will not be able to stand significant increases in interest rate levels for years to come. Therefore, the FED will be maintaining ZIRP for the foreseeable future. Get used to it...
__________________
LARS is offline   Reply With Quote
Old 11-18-2011, 02:22 PM   #4
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
Quote:
Originally Posted by Alan View Post
No.
Same here ...
__________________
rescueme is offline   Reply With Quote
Old 11-18-2011, 02:58 PM   #5
Thinks s/he gets paid by the post
73ss454's Avatar
 
Join Date: Oct 2004
Location: LaLa Land
Posts: 4,378
Quote:
Originally Posted by LARS View Post
I figure I'll be most likely dead by the time the FED normalizes rates.

Oh, and by the way, I'm not expecting to die anytime soon

Reality is that the debt levels are so high at the government/private sector (more individuals than corporations) that the economy will not be able to stand significant increases in interest rate levels for years to come. Therefore, the FED will be maintaining ZIRP for the foreseeable future. Get used to it...

Isn't that the truth!
__________________
Work is something you do to get enough $ so you don't have to....Me.
73ss454 is offline   Reply With Quote
Old 11-18-2011, 03:15 PM   #6
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,846
Quote:
Originally Posted by Alan View Post
No.
Quote:
Originally Posted by rescueme View Post
Same here ...
+2

Investing and life are both too complicated for me to time respond to the markets to any great extent. I guess if I did then I would sell bonds and buy real estate, but I'd rather stay put since I feel comfortable with my present AA.

I did come very, very close to doing that last summer - - selling bonds and using that money to buy another house to live in, before selling my present home. That would have been for personal life satisfaction rather than as an investment move. But I chickened out due to the rocky economy and somebody else bought the house. Sour grapes, it just didn't feel like home to me anyway.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Old 11-18-2011, 03:19 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,376
Quote:
Originally Posted by LARS
I figure I'll be most likely dead by the time the FED normalizes rates.

Oh, and by the way, I'm not expecting to die anytime soon

Reality is that the debt levels are so high at the government/private sector (more individuals than corporations) that the economy will not be able to stand significant increases in interest rate levels for years to come. Therefore, the FED will be maintaining ZIRP for the foreseeable future. Get used to it...
I was about to lump some cash into a 5 year CD about a year ago that paid 3.75%. Then I thought what idiot would tie up their money for that. I know the answer to that question now.... Me. If I could go back in time!
__________________
Mulligan is online now   Reply With Quote
Old 11-18-2011, 03:32 PM   #8
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,426
Quote:
Originally Posted by Alan View Post
No.
Could you be more specific?
__________________
MichaelB is online now   Reply With Quote
Old 11-18-2011, 03:45 PM   #9
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,426
Quote:
Originally Posted by jIMOh View Post
The lowering of interest rates over the last 5-10 years created a GREAT period to be a bond investor. Are you planning to make any changes now or in near future when the fed suggests they will raise short term interest rates?
The only change I would make would be to shift some allocation from fixed income to equities, but that would be triggered by falling stock prices, not rising rates.
__________________
MichaelB is online now   Reply With Quote
Old 11-18-2011, 03:55 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,017
Rising interest rates would lead me to increase my investments in 5 year GICs (CDs) rather than bonds. I would consider both to be Fixed Income.
__________________
Meadbh is offline   Reply With Quote
Old 11-18-2011, 04:10 PM   #11
Thinks s/he gets paid by the post
DFW_M5's Avatar
 
Join Date: Sep 2003
Posts: 4,982
I might be inclined to rebuild my CD ladder if and when such rates go up. The last holding of my previous CD ladder expires in 2013.
__________________
DFW_M5 is offline   Reply With Quote
Old 11-18-2011, 05:22 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Hmmm - sort of involuntarily. Target Retirement 2015 so my asset class shifts toward inflation protected and shorter term as the clocks on - but slowly.

Remember the early days of this forum? This is where the posters who understand duration, concave, convex and that sort of stuff leap forward to post.

So far the Fed is hanging in there but Mr Market may have other plans. I'm old enough to remember the 70's and 80's thrills and chills inflation/interest wise.



heh heh heh - stay tuned.
__________________
unclemick is offline   Reply With Quote
Old 11-18-2011, 05:27 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
And then there is skewness and co-skewness.



heh heh heh - less we forget.
__________________
unclemick is offline   Reply With Quote
Old 11-18-2011, 05:37 PM   #14
Thinks s/he gets paid by the post
JPatrick's Avatar
 
Join Date: Jun 2005
Posts: 2,494
Will take a look at CD's and I-Bonds.
__________________
JPatrick is offline   Reply With Quote
Old 11-18-2011, 06:31 PM   #15
Recycles dryer sheets
IBWino's Avatar
 
Join Date: May 2006
Posts: 423
Why not consider short duration bond funds instead of CDs? Vanguard's short-term investment grade bond fund is yielding >1.7% with a duration of 2.2 years. Currently, the best CD rates at our local banks are running at 1% for 24 months.
__________________
IBWino is offline   Reply With Quote
Old 11-18-2011, 07:57 PM   #16
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,086
Quote:
Originally Posted by MichaelB View Post
Could you be more specific?
I have lots of bonds within Wellesley and Target Retirement Funds in VG and Fidelity.

The only bond fund I'm invested in is a VG short term bond fund which should recover well enough for my needs in a rising interest environment.

The only individual bonds I hold are I-Bonds.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 11-19-2011, 08:56 AM   #17
Thinks s/he gets paid by the post
grasshopper's Avatar
 
Join Date: Oct 2010
Posts: 1,670
Quote:
Originally Posted by IBWino View Post
Why not consider short duration bond funds instead of CDs? Vanguard's short-term investment grade bond fund is yielding >1.7% with a duration of 2.2 years. Currently, the best CD rates at our local banks are running at 1% for 24 months.
+1 I have moved to the short end of duration with my bonds.
__________________
grasshopper is online now   Reply With Quote
Old 11-19-2011, 08:59 AM   #18
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,426
Quote:
Originally Posted by Alan View Post
I have lots of bonds within Wellesley and Target Retirement Funds in VG and Fidelity.

The only bond fund I'm invested in is a VG short term bond fund which should recover well enough for my needs in a rising interest environment.

The only individual bonds I hold are I-Bonds.
Sounds reasonable. Thanks
__________________
MichaelB is online now   Reply With Quote
Old 11-19-2011, 09:21 AM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,411
I'm in VBTLX and HABDX, which have relatively long durations (5.2 and 6.6, respectively) and are 40% of my portfolio.

If interest rates rise, that would likely be in response to an economic recovery. While the value of these bond funds would decline wouldn't one expect that equities would rise and offset the decline in bonds? (in theory anyway).
__________________
pb4uski is offline   Reply With Quote
Old 11-19-2011, 02:39 PM   #20
Thinks s/he gets paid by the post
jIMOh's Avatar
 
Join Date: Apr 2007
Location: Milford, OH
Posts: 2,085
Quote:
Originally Posted by IBWino View Post
Why not consider short duration bond funds instead of CDs? Vanguard's short-term investment grade bond fund is yielding >1.7% with a duration of 2.2 years. Currently, the best CD rates at our local banks are running at 1% for 24 months.
This is along the lines of what I am doing- focusing primarily on short term bonds with that part of my portfolio.
__________________

__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
jIMOh 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
Time to start planning IslandGardener Hi, I am... 5 09-13-2011 09:36 PM
Fixed Securities and Interest Rates chinaco FIRE and Money 6 09-11-2011 02:44 PM
Real Estate and interest rates calmloki FIRE and Money 9 08-06-2011 08:44 PM
Will CD Interest Rates Rise if Borrowing Rates Rise? John Galt III FIRE and Money 5 07-29-2011 12:58 PM
Low Interest Rates and Banks Investments chinaco FIRE and Money 4 07-16-2011 02:29 AM

 

 
All times are GMT -6. The time now is 07:21 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.