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Total Bond Index or Stable Value Fund ?
07-27-2015, 07:52 PM
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#1
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Recycles dryer sheets
Join Date: May 2015
Location: Toledo
Posts: 52
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Total Bond Index or Stable Value Fund ?
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.
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07-27-2015, 08:44 PM
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#2
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Recycles dryer sheets
Join Date: Oct 2009
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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.
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07-27-2015, 08:54 PM
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#3
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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.
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07-27-2015, 09:01 PM
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#4
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 Quote:
Originally Posted by Jpg1717
. . .retired 2 months ago with a government pension.
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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.
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07-27-2015, 09:08 PM
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#5
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Quote:
Originally Posted by 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.
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If I had access to a stable value fund at 2.4% I would probably leave most of my bond allocation there for now.
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Retired since summer 1999.
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07-28-2015, 03:09 AM
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#6
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Thinks s/he gets paid by the post
Join Date: Feb 2014
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2.4% is not bad, I would stick with that, no interest rate risk.
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07-28-2015, 06:17 AM
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#7
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Full time employment: Posting here.
Join Date: May 2015
Location: Atlanta suburbs
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Quote:
Originally Posted by jim584672
2.4% is not bad, I would stick with that, no interest rate risk.
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+1
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07-28-2015, 06:47 AM
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#8
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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.
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07-28-2015, 07:29 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Mar 2012
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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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07-28-2015, 08:56 AM
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#10
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Jul 2008
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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
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