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02-25-2021, 03:09 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Jul 2008
Location: Weatherford, Texas
Posts: 1,213
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Investment advice
I have $100,000.00 cash in a savings account I want to invest. I am looking for 2% - 3% return and want a conservative investment..I'm thinking intermediate term corporate bond fund but I don't know how to research them..Are there other options? What funds are good and what are their symbols?
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02-25-2021, 03:55 PM
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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: Mar 2013
Location: Limerick
Posts: 5,633
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Quote:
Originally Posted by lawman
I have $100,000.00 cash in a savings account I want to invest. I am looking for 2% - 3% return and want a conservative investment..I'm thinking intermediate term corporate bond fund but I don't know how to research them..Are there other options? What funds are good and what are their symbols?
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Interest rates are rising rapidly, so a bond fund may not be the best place at this time. Maybe a few short term individual bonds that you hold to maturity would be a better option, so you’d get your principal back. I’ll be doing that in April when a number of CDs are maturing.
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02-25-2021, 03:58 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Jul 2008
Location: Weatherford, Texas
Posts: 1,213
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Quote:
Originally Posted by Dash man
Interest rates are rising rapidly, so a bond fund may not be the best place at this time. Maybe a few short term individual bonds that you hold to maturity would be a better option, so you’d get your principal back. I’ll be doing that in April when a number of CDs are maturing.
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Would that be better than a short term ETF?
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Life is good. Then you die.
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02-25-2021, 04:26 PM
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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: Mar 2013
Location: Limerick
Posts: 5,633
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Quote:
Originally Posted by lawman
Would that be better than a short term ETF?
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That’s up to you. A short term bond fund may not have drastic moves, but may lose a bit as you can see in this graph. Holding investment grade individual bonds will likely return all your principal when they mature. If you create a ladder, you can replace the maturing bonds with higher interest bonds if rates continue to climb.
IMG_3258.JPG
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02-25-2021, 04:37 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Jul 2015
Posts: 1,103
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What a fund with only about 30% equities, like Vanguard Target Retirement Income fund (VTINX). The return has been 8% over the last decade. If this is too high, just heavily salt with cash (online savings account, money market fund). The basic idea is to use 15-30% equities to give your yield, then bonds and cash so you sleep at night. Obviously, can be implemented in other ways, like 15% total market, then the rest in bonds and cash.
I think it's great you can live with 2-3% yield. You don't have to swing for the fences!
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02-25-2021, 04:38 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Aug 2015
Posts: 1,890
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Is there a specific purpose for this money or is it part of your overall portfolio?
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Consistently sets low goals and fails to achieve them.
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02-25-2021, 04:38 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Jul 2008
Location: Weatherford, Texas
Posts: 1,213
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Quote:
Originally Posted by Dash man
That’s up to you. A short term bond fund may not have drastic moves, but may lose a bit as you can see in this graph. Holding investment grade individual bonds will likely return all your principal when they mature. If you create a ladder, you can replace the maturing bonds with higher interest bonds if rates continue to climb.
Attachment 37889
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Individual bonds scare me..I worry about default. I owned Enron stock.
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Life is good. Then you die.
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02-25-2021, 04:44 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Jan 2013
Location: SoCal, Lausanne
Posts: 4,408
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Quote:
Originally Posted by lawman
I have $100,000.00 cash in a savings account I want to invest. I am looking for 2% - 3% return and want a conservative investment..I'm thinking intermediate term corporate bond fund but I don't know how to research them..Are there other options? What funds are good and what are their symbols?
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Put limit orders on corporate notes below par. I posted a short list of some of the notes that I bought last March in the Preferred Stock thread today. I always buy when there is panic selling by bond funds. I'm looking at 1 to 3 year notes (maturities from 3/21 through 4/24). The coupons range from 4.25% to 7.5%. I always buy well below par with limit orders so my yields are much higher. Avoid bond funds but use them to time your purchase. Bond fund yields are far too low. Most of bond funds are down YTD, but my individual corporate notes are up YTD. Bond funds have been loading up with low yield corporate notes over the past 6 months and those notes are the first ones to sink when rates move up.
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02-25-2021, 04:46 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2013
Location: Limerick
Posts: 5,633
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Quote:
Originally Posted by lawman
Individual bonds scare me..I worry about default. I owned Enron stock.
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Muni bonds are another option, and government/municipal entities that are investment grade rarely default.
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02-25-2021, 04:49 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 4,344
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Quote:
Originally Posted by corn18
Is there a specific purpose for this money or is it part of your overall portfolio?
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This is a good question, as it helps understanding of what this $100K is intended for.
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You can't spend yourself to prosperity.
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Retired Aug 2, 2017; age 53
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02-25-2021, 05:01 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Mar 2007
Posts: 1,854
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You might be able to get a private placement annuity with an insurance company for about 2%. I think the minimum term I've seen is 3 years. The only risk is default risk, so pick a good insurer.
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02-25-2021, 05:03 PM
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#12
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Thinks s/he gets paid by the post
Join Date: Jul 2008
Location: Weatherford, Texas
Posts: 1,213
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Quote:
Originally Posted by corn18
Is there a specific purpose for this money or is it part of your overall portfolio?
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No..I don't plan to spend it however since I have capital gains in all my older investments this would be the one I would use should I need funds..
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02-25-2021, 05:39 PM
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#13
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Thinks s/he gets paid by the post
Join Date: Aug 2015
Posts: 1,890
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Quote:
Originally Posted by lawman
No..I don't plan to spend it however since I have capital gains in all my older investments this would be the one I would use should I need funds..
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So it's just part of your fixed income allocation. I'm a three fund boglehead so my canned answer would be BND.
But last year I moved from TBM and put all my fixed income into my 401k Stable Value Fund (SVF) that is currently paying 2.2%.
If you don't have access to an SVF, and you don't need the money right away, just put it in BND and don't worry about it. Everyone hates low rates AND they don't want bond yields to increase because their bond funds/ETFs would go down. That's silly. Bond funds may go down, but they will recover. If you definitely need the money in less than 3-5 years, just put it in a savings account or CD.
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Consistently sets low goals and fails to achieve them.
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02-25-2021, 05:44 PM
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#14
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Thinks s/he gets paid by the post
Join Date: Jul 2008
Location: Weatherford, Texas
Posts: 1,213
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Quote:
Originally Posted by corn18
So it's just part of your fixed income allocation. I'm a three fund boglehead so my canned answer would be BND.
But last year I moved from TBM and put all my fixed income into my 401k Stable Value Fund (SVF) that is currently paying 2.2%.
If you don't have access to an SVF, and you don't need the money right away, just put it in BND and don't worry about it. Everyone hates low rates AND they don't want bond yields to increase because their bond funds/ETFs would go down. That's silly. Bond funds may go down, but they will recover. If you definitely need the money in less than 3-5 years, just put it in a savings account or CD.
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What about IGSB?
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02-25-2021, 05:46 PM
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#15
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Thinks s/he gets paid by the post
Join Date: Jul 2008
Location: Weatherford, Texas
Posts: 1,213
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I'm heavy invested in bond funds..I"ve been wishing for higher rates for many years..I love it when my bond fund share price goes down as that gives me hope that interest rates will soon go up...
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Life is good. Then you die.
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02-25-2021, 05:49 PM
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#16
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Thinks s/he gets paid by the post
Join Date: Aug 2015
Posts: 1,890
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Quote:
Originally Posted by lawman
What about IGSB?
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Sounds like you are chasing yield. That's ok but it comes with risk. IGSB is yielding 3% and BND is yielding 2.57%. IGSB dropped 11% in Mar 2020 and BND dropped 5%. Not sure what you gain with IGSB other than volatility and 0.43% yield.
__________________
Consistently sets low goals and fails to achieve them.
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02-25-2021, 11:17 PM
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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 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 16,973
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Quote:
Originally Posted by lawman
I'm heavy invested in bond funds..I"ve been wishing for higher rates for many years..I love it when my bond fund share price goes down as that gives me hope that interest rates will soon go up...
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Then you will love BND, as it's dropping like crazy. Seems like 1/2% per day
Eight months of this and it'll be at zero
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Fortune favors the prepared mind. ... Louis Pasteur
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02-26-2021, 04:27 AM
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#18
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Thinks s/he gets paid by the post
Join Date: Dec 2015
Location: Michigan
Posts: 4,939
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Quote:
Originally Posted by lawman
Individual bonds scare me..I worry about default. I owned Enron stock.
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You can't get the 2-3% with stable principle with a fund. Pick a company you are not worried about with a good credit rating.
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"The mountains are calling, and I must go." John Muir
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02-26-2021, 07:32 AM
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#19
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Thinks s/he gets paid by the post
Join Date: Jul 2008
Location: Weatherford, Texas
Posts: 1,213
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Quote:
Originally Posted by DrRoy
You can't get the 2-3% with stable principle with a fund. Pick a company you are not worried about with a good credit rating.
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I researched bonds on my Schwab account... All I found was bonds yielding much less than 1% on three year bonds..
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02-26-2021, 07:54 AM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2017
Location: City
Posts: 10,308
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Quote:
Originally Posted by lawman
I researched bonds on my Schwab account... All I found was bonds yielding much less than 1% on three year bonds..
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Call the bond desk with your question.There are good guys there and they aren't paid on commission.
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