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12-29-2018, 08:11 AM
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#1
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Full time employment: Posting here.
Join Date: May 2015
Location: Atlanta suburbs
Posts: 633
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2018 Bond Market return
The year is not over but I am pretty happy with the bond market returns as of now. Vanguard Total Bond Market Index is showing -0.24% today.
When I did a back-of-the-envelope calculation at the beginning of the year, I thought that with a duration of about 6 years, 4 quarter point increases would produce a loss of -6% and a yield of around 3-3.5% would deliver a return of around -2.5%. It just shows these calculations are never as simple as that. I do understand a short-term rate increase does not equate to a long-term rate increase or a total market rate but still ...
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12-29-2018, 10:50 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 28,070
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Funny how quickly bond funds appreciate when we have a sudden and sharp correction.
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Retired since summer 1999.
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12-29-2018, 11:26 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 10,734
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So while the fund spit out some payments it dropped -1.95 YTD.
Vanguard Total Bond Market Index Fund ETF Shares (BND) Total Returns
So basically, you would have been better off keeping the money under the mattress.
I like CD's a lot better now.
__________________
Fortune favors the prepared mind. ... Louis Pasteur
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12-29-2018, 11:33 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 7,406
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Big ERN is fairly negative on bond funds in its current state. Just one opinion.
Will be interesting over the next 5 years for example, which asset (CD's vs. Bond Funds) has a better total return with similar duration.
__________________
TGIM
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12-29-2018, 12:15 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 28,070
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Quote:
Originally Posted by Sunset
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Huh? Money stuck in the mattress does not spit out payments. BND is down 0.37% YTD total return, and won’t take much to break even.
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Retired since summer 1999.
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12-29-2018, 01:49 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Syracuse
Posts: 2,875
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I'll admit it.
I bought a managed bond fund last year and it is in positive territory.
__________________
“No, not rich. I am a poor man with money, which is not the same thing"
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12-29-2018, 02:23 PM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2004
Location: Laurel, MD
Posts: 5,588
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This news justifies my decision to use CD's instead of bonds for FI allocation several years ago. Last time I checked, the CD's were slightly lagging the bond fund index, but the steady returns just feel better. Now, if I could just figure out how to rebalance out of CD's.....
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...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
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12-29-2018, 02:38 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 10,734
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Quote:
Originally Posted by audreyh1
Huh? Money stuck in the mattress does not spit out payments. BND is down 0.37% YTD total return, and won’t take much to break even.
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But money in the mattress is not down at all YTD.
I have some BND and am disappointed, and I have some CD's which makes me feel better
__________________
Fortune favors the prepared mind. ... Louis Pasteur
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12-29-2018, 04:50 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Oct 2017
Location: Brighton
Posts: 1,629
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Quote:
Originally Posted by Sunset
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That is the return from 11/30/18, things improved since then to -.24 nav
They were going up while stocks were tanking, Cash can't do that.
__________________
Retired May 13th(Friday) 2016 at age 61.
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12-29-2018, 07:02 PM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2004
Location: Laurel, MD
Posts: 5,588
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Quote:
Originally Posted by VanWinkle
They were going up while stocks were tanking, Cash can't do that.
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Oh yes it can!
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
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12-29-2018, 08:44 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Oct 2017
Location: Brighton
Posts: 1,629
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Quote:
Originally Posted by jazz4cash
Oh yes it can!
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?
__________________
Retired May 13th(Friday) 2016 at age 61.
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12-30-2018, 06:17 AM
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#12
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Full time employment: Posting here.
Join Date: May 2015
Location: Atlanta suburbs
Posts: 633
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Quote:
Originally Posted by Sunset
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The thoughts that influence my fixed income investments are:
Long term
Simplicity
Low cost
I don't know if CDs will beat a bond market index long term but maybe they will. But then I have to manage them, and I am trying to avoid that.
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12-30-2018, 06:26 AM
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#13
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Full time employment: Posting here.
Join Date: May 2015
Location: Atlanta suburbs
Posts: 633
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Quote:
Originally Posted by Dtail
Big ERN is fairly negative on bond funds in its current state. Just one opinion.
Will be interesting over the next 5 years for example, which asset (CD's vs. Bond Funds) has a better total return with similar duration.
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The articles I have read in the past show that bonds and bond funds do better than CDs over the long run. And I don't have to manage them (for an acceptable fee that is below 0.10%).
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12-30-2018, 07:15 AM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: Stuck in the mud somewhere in the NJ swamp
Posts: 6,835
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These are personal performance results, and don't necessarily agree with published information for the funds.
VBTLX (AA 7.5%)
3.6% - 10 years
1.9% - 5 years
1.3% - 3 years
-1.4% - 1 year
VNJTX tax free muni fund (AA 2.5%)
5.2% - 10 years
4.4% - 5 years
3.5% - 3 years
1.5% - 1 year
VWIAX Wellesley (AA 5.0%)
5.3% - 5 years
5.4% - 3 years
0.7% - 1 year
Stable Value Fund (AA 5%)
1.69% - 10 year
1.66% - 5 year
1.91% - 3 year
2.27% - 1 year
Discover (AA 2.5%)
2.00%
Diversified fixed income is one strategy. And of course, the future is unknown. Good time to review all, and make adjustments in 2019!
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12-30-2018, 08:19 AM
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#15
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Thinks s/he gets paid by the post
Join Date: Jun 2016
Posts: 1,262
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My wife understands CDs.
In addition to yield, one of my investing goals to balance is to leave an estate my wife is comfortable with when I'm gone.
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12-30-2018, 08:26 AM
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#16
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Thinks s/he gets paid by the post
Join Date: Feb 2011
Location: NC Triangle
Posts: 4,717
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Like many, I have both traditional and Roth retirement accounts. I want a healthy representation of bonds and am slowly adjusting holdings using rebalancing/withdrawals so that bonds are in the traditional account and stocks in the Roth.
The assumption is that stocks will have higher growth over the long run. Ignoring 2018 and similar, of course!
__________________
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12-30-2018, 10:04 AM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2012
Location: Peru
Posts: 6,337
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Not sure if this qualifies as a Bond Market Return, 'cuz I don't know the terminology, but our older Ibonds are still giving just about 5%.
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If you want others to be happy, practice compassion. If you want to be happy, practice compassion.
--Dalai Lama XIV
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12-30-2018, 10:26 AM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2006
Location: west coast, hi there!
Posts: 7,224
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I threw in the bond towel and bought some TIPS to be held to maturity in retirement accounts. Should get a bit over 1% real return. Nice complement to my old iBonds of 2001. I just don't want to worry about the FI portion of our portfolio for a few years. Now all I have to worry about are the equities. 
I see that our VFSUX short term IG bonds have 0.94% YTD returns. I sold the VFIDX intermediate term IG which have had a lousy -0.71% YTD returns in order to buy the TIPS.
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12-30-2018, 10:27 AM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2006
Location: west coast, hi there!
Posts: 7,224
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Quote:
Originally Posted by imoldernu
Not sure if this qualifies as a Bond Market Return, 'cuz I don't know the terminology, but our older Ibonds are still giving just about 5%.
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Yes they are definitely bonds. You are a long term winner there. Congrats.
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12-30-2018, 10:38 AM
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#20
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Thinks s/he gets paid by the post
Join Date: Dec 2014
Posts: 2,449
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I sold some bond funds as they were starting not to perform
pimix - flat when I sold it- may be improving now
FFrhx, SAMBX, - (plus two other bank loan funds (about 3%) -- sold them as they started rolling over.
individual bonds (varies) 2.5% or so.
I bonds (not a clue... but the ones from 2000 should have done well.
I avoided normal bond funds this year because I expected rising rates.
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