Total Bond Index or Stable Value Fund ?

[Jpg1717]

I am 53 and retired 2 months ago with a government pension. My 457 and 401 k plans are balanced at 50/50. I am using my stable value fund 2.4 % guaranteed as my bond allocation. Should I be using a Vanguard total bond index instead ? Thanks for your advice.

 

[Henry Lili]

If you believe that interest rates will be going up stick to the stable value fund. It's price won't be impacted by rate increases while a total bond fund has a duration in or around 5 and will decrease in price by 5% for each point increase in rates. Last I looked, those funds were only yielding 2% or so. You are getting more yield in your stable value fund with out the interest rate risk.

 

[pb4uski]

I wish I had access to a stable value fund. 2.4% is a good rate. I would use a 2.4$ stable value fund for my entire bond allocation if I had one available to me.

 

[samclem]

. . .retired 2 months ago with a government pension.

Are you a retired federal employee with access to the TSP and the G Fund? If so, add that to your "things to watch" for holding your bond allocation. It yields 2.25% now (so not as good as your stable value fund), but it may do better as rates rise, and it has no interest rate risk and no credit risk.

 

[audreyh1]

I am 53 and retired 2 months ago with a government pension. My 457 and 401 k plans are balanced at 50/50. I am using my stable value fund 2.4 % guaranteed as my bond allocation. Should I be using a Vanguard total bond index instead ? Thanks for your advice.

If I had access to a stable value fund at 2.4% I would probably leave most of my bond allocation there for now.

 

[jim584672]

2.4% is not bad, I would stick with that, no interest rate risk.

 

[DEC-1982]

2.4% is not bad, I would stick with that, no interest rate risk.

+1

 

[Nunthewiser]

You are lucky to be able to get that rate. The Stable Value Fund I have most of our 401K in is yieding 1.5%. I would grab that until interest rates get above that and then consider CDs.

 

[seraphim]

I've used stable value funds in lieu of bonds (not completely) for the two years I've been retired. Been waiting for interest rates to rise. Once value drops and yield increases, I'll consider a rollover to bond funds. Right now, about 27% of my portfolio is in SV accounts.


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[Koolau]

I'm happy to have a stable value fund and I wish mine paid 2.4% right now. I would never intentionally give mine up. It's plodding, but never goes down. If interest rates do go up, my rate should go up rather than the value of current bonds going down. Obviously, you have to make sure your allocation to it is what you want. Yep. Stable Value rather than bonds makes me feel better. YMMV