Fixed Income Portfolio Questions

T

ToneGod

Dryer sheet wannabe
Joined
Apr 3, 2018
Messages
22
Location
Sioux Falls
1st.. do you sell off shares of bond funds like stocks for income ? No real time frame or anything? (excluding ladders)
2nd ... looking at 25% PIMIX, 25% PCN, 25% SPFPX, 25% cash.

How can I improve that? Thanks All
 
Take the divs from your bonds and stocks. If you need more for the year, sell based on maintaining your AA. That could be neither, either, or both, depending.

-ERD50
 
I collect all interest dividends distributions in cash, but I don’t withdraw them until next Jan when I take my annual income and then rebalance.
 
audreyh1 said:
I collect all interest dividends distributions in cash, but I don’t withdraw them until next Jan when I take my annual income and then rebalance.
Click to expand...

That's what we do except we might do it in a few steps, a bit in January then September and, if we see the checking account running low, again in November.

In any case we just draw the interest/dividends having banked them throughout the year in a MM; haven't had to sell any shares in the past 14 years.
 
ToneGod said:
1st.. do you sell off shares of bond funds like stocks for income ? No real time frame or anything? (excluding ladders)
2nd ... looking at 25% PIMIX, 25% PCN, 25% SPFPX, 25% cash.

How can I improve that? Thanks All
Click to expand...

I have up to 5% of my nestegg in cash in an online savings account.

Inflows are principally taxable account dividends and transfers from taxable accounts to replenish the fund as part of our annual rebalancing.

Outflows are transfers to a local credit union account that we use to pay our bills and occasional ATM withdrawals. Most of the aforementioned transfers are an automatic monthly transfer.... our monthly "paycheck".

The rest of the portfolio is 60% equities and 35% fixed income. When I rebalance I first sell taxable account equities as needed to bring the cash back up to 5%, then sell equities or fixed income and buy fixed income or equities as needed to rebalance in my tax-deferred accounts.
 
I would suggest that the compensation to bondholders for corporate credit risk and interest risk is pretty skinny right now. I don't find it especially attractive, so I mostly avoid corporate credit risk (investment grade and junk) and interest rate risk (long durations and negatively convex bonds with extension risk) at this time. When bondholders are paid handsomely for bearing the risk, I will belly up to the bar big time. In the meantime, I am hiding out in CDs, floating rate bond funds (FLRN), and treasury floaters. 5 year TIPS are beginning to get attractive vs. the alternatives.
 
pb4uski said:
I have up to 5% of my nestegg in cash in an online savings account.

Inflows are principally taxable account dividends and transfers from taxable accounts to replenish the fund as part of our annual rebalancing.

Outflows are transfers to a local credit union account that we use to pay our bills and occasional ATM withdrawals. Most of the aforementioned transfers are an automatic monthly transfer.... our monthly "paycheck".

The rest of the portfolio is 60% equities and 35% fixed income. When I rebalance I first sell taxable account equities as needed to bring the cash back up to 5%, then sell equities or fixed income and buy fixed income or equities as needed to rebalance in my tax-deferred accounts.
Click to expand...

Our situation is very similar to PB4’s.

All of our inflows (taxable account dvds & interest, pensions, consulting income) go into our Fido share account (starting in FZDXX - a MM fund to get more yield). We pay bills from there. We wash dvds & interest into the share account because we’re paying taxes on it anyway.

The rest of the portfolio is 60% equities & 35% fixed income. When rebalancing, we sell taxable equities first, trying to fill up the zero Cap Gains bucket while doing so; we choose to fill the zero Cap Gains bucket instead of doing Roth conversions. See this thread for the rationale. http://www.early-retirement.org/for...doing-roth-conversions-90648.html#post2006947
 
I mostly retain cash as needed from maturing bonds in the ladder.
 
brewer12345 said:
I would suggest that the compensation to bondholders for corporate credit risk and interest risk is pretty skinny right now. I don't find it especially attractive, so I mostly avoid corporate credit risk (investment grade and junk).....
Click to expand...

I have about 10% in a high yield bond fund. Rode it down from 8% yield and now it's chugging back up at almost 6% right now.

With the exception of 2008-09 the price has held fairly steady over the past 18 years but at least in this fund I'm more interested in the income than the price.
 
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