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Old 03-18-2018, 05:57 AM   #21
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My Fido guy told me about it last fall. At that time the return was 2.2% if I remember correctly. I thought about it but did not go with it. My last corp bond purchase was about 9 yrs, BBB- @ 4.3%.
Yep, the Fidelity rep had misquoted the return from this strategy, and it turns out to only net 2.2%. I see no advantage to this approach, so I am starting to shift out of some of my bond funds into CD ladders.
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Old 03-18-2018, 07:16 PM   #22
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I run my own ladder. Fidelity gives you all the tools to build and manage a ladder so this program seems like its for someone who does not want to DIY. The fees seem high for something that isn’t all that difficult to do.
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Old 03-19-2018, 06:52 AM   #23
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I run my own ladder. Fidelity gives you all the tools to build and manage a ladder so this program seems like its for someone who does not want to DIY. The fees seem high for something that isnít all that difficult to do.
Their tool is easy to use, but selecting the best choices from their inventory is not that easy without research and knowledge of the bond market. Anyhow, returns do not look that favorable to go this route at this time.
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Old 03-19-2018, 07:00 AM   #24
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Their tool is easy to use, but selecting the best choices from their inventory is not that easy without research and knowledge of the bond market. Anyhow, returns do not look that favorable to go this route at this time.
Iíll do one quick plug for a DIY bond ladder and then Iíll leave it alone.
Pick a duration
Pick a rating
Check third party price data
Donít put all your eggs in one basket/industry
Buy and repeat over whatever timeframe you desire.
I buy quality and stay short, 2 years ish.
Use their bond analyzer to manage the ladder to see when issues will come due and what cash flow you are generating.
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Old 03-19-2018, 07:45 AM   #25
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So what are you seeing for current yields for quality and short duration?

I'm comparing to 2 year CDs that yield ~2.5%
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Old 03-19-2018, 08:22 AM   #26
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So what are you seeing for current yields for quality and short duration?

I'm comparing to 2 year CDs that yield ~2.5%
My ladder yields 4.18%. Average maturity 1.7 years.
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Old 09-03-2020, 02:48 PM   #27
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My Fido advisor also recommended the Core Bond Strategy. Looking at the fact sheet, returns for the Core Bond Strategy as of 7/31/2020 are 7% and 9% for YTD and 1 Yr. Does the group think a bond ladder is still a better option for an investor retiring in the next few years?

YTD and 1 yr returns on Aggregate Bond Index are 7.7 and 10%, why not invest here?
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Old 09-03-2020, 03:29 PM   #28
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My Fido advisor also recommended the Core Bond Strategy. Looking at the fact sheet, returns for the Core Bond Strategy as of 7/31/2020 are 7% and 9% for YTD and 1 Yr. Does the group think a bond ladder is still a better option for an investor retiring in the next few years?

YTD and 1 yr returns on Aggregate Bond Index are 7.7 and 10%, why not invest here?
Are you expecting that kind of return to continue? Do you understand why bond fund prices rise? (Hint: look at interest rates as a major factor)

btw I hold some Vanguard Core Bond Fund, so I'm on your side, more or less. I'm thinking about whether I should still be holding that right now. It's only a small part of my portfolio, ~3%, so I'm not too worried.
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Old 09-03-2020, 04:06 PM   #29
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Fidelity Core Bond Strategy

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My ladder yields 4.18%. Average maturity 1.7 years.

Wjere do you get that?I see only 0.1% for 1 year and maybe 0.5% for 5 yr CD.
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Old 09-03-2020, 06:01 PM   #30
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Fidelity Core Bond Strategy

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Wjere do you get that?I see only 0.1% for 1 year and maybe 0.5% for 5 yr CD.


That post is from March 2018. Poster is referencing a bond ladder purchased over unspecified time period. Not comparable to CDs rates today that I presume you quoted.
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Old 09-03-2020, 06:23 PM   #31
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That post is from March 2018. Poster is referencing a bond ladder purchased over unspecified time period. Not comparable to CDs rates today that I presume you quoted.

Ahhhhh. Lol. Makes way more sense now.
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Old 09-03-2020, 06:37 PM   #32
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Wjere do you get that?I see only 0.1% for 1 year and maybe 0.5% for 5 yr CD.
LOL, that was my 2 year old post, but to clarify:
I own muni bonds, not CDís. At the time of the post I owned bonds bought over a 15 year time frame, though many within a 5 year window.
Since then I added more, great yields, during the panic sell off in March. There was about a 3 day window where muni bonds were at some of the best prices I have seen in years.
My yield is still over 4%, but my duration has expanded. I have a bunch out to 2027, but I also have some outliers into the 2030ís.
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Old 09-03-2020, 06:48 PM   #33
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Anyone buying a bond fund right now needs to understand the dynamics of interest rates. You will see erosion in the value of your investment if rates rise. Interest payments may remain equal or increase, but your initial investment will likely decrease, at least in the near term.
If you buy a bond, you have par, the value a bond will return to, short of default, which is usually $1000, while still getting the same interest payout.

Right now for the most part bonds suck, but if you feel the need to buy, I would buy individual issues because you are highly likely to get at least par, plus interest. With a fund? Not so much.
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Old 09-03-2020, 07:47 PM   #34
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Anyone buying a bond fund right now needs to understand the dynamics of interest rates. You will see erosion in the value of your investment if rates rise. Interest payments may remain equal or increase, but your initial investment will likely decrease, at least in the near term.
If you buy a bond, you have par, the value a bond will return to, short of default, which is usually $1000, while still getting the same interest payout.

Right now for the most part bonds suck, but if you feel the need to buy, I would buy individual issues because you are highly likely to get at least par, plus interest. With a fund? Not so much.
But if I buy a bond fund, it's composed of a number of different bond issues, many of which are at a higher rate than today, correct? So I'm getting a better yield than you are. As interest rates rise, the fund price will drop, but the fund will be buying new bonds at the rising rates as the old bonds mature, or have been sold.

Yes, it's totally true that you can hold a bond to maturity and get your $1000 back. But if interest rates take off, your stuck with this very low yield until maturity. I've heard people say they like bonds because they know everything: the rate they get, and that they'll get their money back. What they don't know is what a loaf of bread or a car will cost. The math is just as bad for a bond as for a bond fund. The only difference is the expense drag on the bond fund. I'll trade that for the easy liquidity of a bond fund. Maybe a bond is just as easy to liquidate?

Correct me where I'm wrong on this.
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Old 09-03-2020, 08:20 PM   #35
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But if I buy a bond fund, it's composed of a number of different bond issues, many of which are at a higher rate than today, correct? So I'm getting a better yield than you are. As interest rates rise, the fund price will drop, but the fund will be buying new bonds at the rising rates as the old bonds mature, or have been sold.

Yes, it's totally true that you can hold a bond to maturity and get your $1000 back. But if interest rates take off, your stuck with this very low yield until maturity. I've heard people say they like bonds because they know everything: the rate they get, and that they'll get their money back. What they don't know is what a loaf of bread or a car will cost. The math is just as bad for a bond as for a bond fund. The only difference is the expense drag on the bond fund. I'll trade that for the easy liquidity of a bond fund. Maybe a bond is just as easy to liquidate?

Correct me where I'm wrong on this.
Where to start...
First I can sell a bond at the drop of a hat. So liquidity is not an issue.
I own a ladder, so I can buy, like funds do, as bonds mature, only unlike funds, I can also NOT buy. I don’t have a charter. Right now, not purchasing much, if anything.
I also own long duration bonds, some paying 5% or more. So yield depends and inflation is the enemy of any investment.
Lastly, the big difference is par...there is no par for a fund. I know what I will get, when I will get it. With a fund, no way, Jose’.

I’ve owned funds, still do for things I cannot mange like high yield. I prefer individual bonds.
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Old 09-03-2020, 08:37 PM   #36
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But if I buy a bond fund, it's composed of a number of different bond issues, many of which are at a higher rate than today, correct? So I'm getting a better yield than you are. ... .
If you buy a bond fund, your yield for that purchase lot will be the market yield of the underlying bond portfolio at the time you purchase less the expense ratio assuming no changes in interest rates... this is because the fund is marked to market daily when NAVs are determined.
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Old 09-04-2020, 06:26 AM   #37
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YTD and 1 yr returns on Aggregate Bond Index are 7.7 and 10%, why not invest here?
Because you shouldn't believe returns from the last 8/12 months have anything to do with future performance.
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Old 09-04-2020, 07:10 AM   #38
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First I can sell a bond at the drop of a hat. So liquidity is not an issue.
It seems like you'd be taking rungs out of your ladder if you do this.
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Lastly, the big difference is par...there is no par for a fund. I know what I will get, when I will get it. With a fund, no way, Joseí.
I know this is a true statement, but I don't get why it's so important. I don't know what that money will be worth when I get it back years later.
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Old 09-04-2020, 07:39 AM   #39
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Is it a volatility issue? Bonds reduce the volatility that stocks have on your portfolio. Bond funds fluctuate in value with interest rate changes so they don't do as well to reduce volatility? Individual bonds actually fluctuate in value too, but less so as you get closer to maturity, when you get your money back. Is that it?
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Old 09-04-2020, 07:40 AM   #40
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Do not lose sight of using bonds as ballast in your portfolio when equities go into the tank. Trying to treat them with market timing in mind, where you are asking yourself will I make money on this over the short term, may be the wrong way to view bonds. From my perspective, they should be treated as part of your portfolios allocation, so choose something that aligns with your risk tolerance and rebalance periodically as the market changes. If you're worried about rising rates, look at shorter duration funds or maybe inflation protected bonds.
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