|
|
11-27-2015, 10:23 AM
|
#41
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
|
Quote:
Originally Posted by mathjak107
the problem is even getting zero real return can be a challenge .
|
I-bonds and individual TIPS (5 - 30 years) all return at least zero real return right now:
United States Government Bonds - Bloomberg
Ten year TIPS are at inflation + .59%.
The liability matching strategy does not imply a 100% portfolio of TIPS, inflation adjusted annuities and I-bonds - only enough, along with other income like SS, pensions, and rental income to meet your essential retirement living expenses, such as food, housing and medical care. The around the world cruise money can be invested in riskier assets, if you like. Then as Bernstein puts it, if your riskier investments don't do as well, at least you're not pushing a shopping cart under an overpass.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
|
|
|
|
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!
|
11-29-2015, 02:46 PM
|
#42
|
Thinks s/he gets paid by the post
Join Date: Aug 2004
Location: St. Louis
Posts: 2,179
|
Quote:
Originally Posted by photoguy
Is total bond return giving negative real returns? Just looking at vanguard's performance summary of total bond (VBTLX) seems to show zero or positive real return over 1,3,5,10 year periods. (I'm just eyeballing it)
|
Those 1, 3, 5, 10 year periods involved net declining interest rates, for the most part. Which means that total real return involved capital gains (realized and unrealized). If there is any upward movement in rates, your return will almost certainly be negative real return, since there will be zero capital gains to speak of to contribute to your total return (and likely capital losses).
Perhaps rates will barely nudge up, and will stay as-is for the next 3 years. If so, at best you have nominal rates which are even to or a little under inflation, since you (again) still have zero capital gains to speak of.
__________________
Dryer sheets Schmyer sheets
|
|
|
11-30-2015, 08:04 AM
|
#43
|
Thinks s/he gets paid by the post
Join Date: Jun 2010
Posts: 2,301
|
Quote:
Originally Posted by MooreBonds
Those 1, 3, 5, 10 year periods involved net declining interest rates, for the most part. Which means that total real return involved capital gains (realized and unrealized). If there is any upward movement in rates, your return will almost certainly be negative real return, since there will be zero capital gains to speak of to contribute to your total return (and likely capital losses).
|
I understand your point but I took Mathjak's statement about returns (based on his wording and example) to be actual returns we've experienced and not future expected returns. Perhaps I mis-interpreted him.
However, rates have already gone up -- we saw a step up in 2013 and total bond is still positive in real terms over the past 3 years. I have no doubt that going forward returns will be crappy but I don't believe they will be negative when averaged over a few years.
|
|
|
11-30-2015, 08:30 AM
|
#44
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,145
|
I don't worry about getting a positive real return from the fixed income portion of my portfolio. It's there for stability, and safety during periods of market turmoil. Which means it's going to hold a good amount of higher quality bonds, and they don't yield as much as riskier bonds do.
During good equity market years, some of the gain in equities is trimmed to grow the bond portion. During bad equity market years, the bond portion will be trimmed somewhat to restore the equity portion.
The equity portion plays the role of keeping up with inflation, and for that reason at least half of the portfolio is in equities. But equities are a rollercoaster compared to bonds, and since we're retired and living off our investments, we prefer to have that rollercoaster smoothed by fixed income, which includes bonds.
BTW - total return investor, if you didn't already figure that out. I don't worry about what anything is yielding.
__________________
Retired since summer 1999.
|
|
|
11-30-2015, 02:11 PM
|
#45
|
Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
|
Quote:
Originally Posted by audreyh1
I don't worry about getting a positive real return from the fixed income portion of my portfolio. It's there for stability, and safety during periods of market turmoil. Which means it's going to hold a good amount of higher quality bonds, and they don't yield as much as riskier bonds do.
|
This shows how much retirement planning has changed in the last generation. There was a time when fixed income was expected to produce real returns and was the default for retirement....stocks were just too risky.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
|
|
|
11-30-2015, 02:21 PM
|
#46
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2011
Posts: 8,418
|
Quote:
Originally Posted by nun
This shows how much retirement planning has changed in the last generation. There was a time when fixed income was expected to produce real returns and was the default for retirement....stocks were just too risky.
|
A very astute observation! Yeah....I had aunts who got by quite nicely clipping coupons. Today, they might be more challenged.
(As a side note, I once mentioned "clipping coupons" to someone. They thought that things were so desperate that the folks were clipping grocery coupons)
__________________
Living well is the best revenge!
Retired @ 52 in 2005
|
|
|
12-01-2015, 07:23 AM
|
#47
|
Full time employment: Posting here.
Join Date: Sep 2014
Posts: 645
|
Quote:
Originally Posted by marko
(As a side note, I once mentioned "clipping coupons" to someone. They thought that things were so desperate that the folks were clipping grocery coupons)
|
😄LOL!
Have the day you deserve, and let Karma sort it out.
Sent from my iPad using Early Retirement Forum
|
|
|
12-01-2015, 08:06 AM
|
#48
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,145
|
Quote:
Originally Posted by nun
This shows how much retirement planning has changed in the last generation. There was a time when fixed income was expected to produce real returns and was the default for retirement....stocks were just too risky.
|
I think these folks were ignoring inflation while spending their interest or dividends.
__________________
Retired since summer 1999.
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|