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06-19-2022, 09:17 AM
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#121
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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: 38,145
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Quote:
Originally Posted by COcheesehead
Fidelity’s government bond MM SPAXX is paying .59% and the treasury one FDRXX is paying .66%.
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And the Premium MM FZDXX is paying 0.86%
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Retired since summer 1999.
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06-19-2022, 09:22 PM
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#122
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2009
Posts: 5,308
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Quote:
Originally Posted by daylatedollarshort
You may consider just buying a $1K Treasury at auction or CD new issue and start out with a short duration just to get the hang of it, and then invest more as you feel more comfortable. That is what I do. Like this year I started buying my first zero coupon Treasuries, so I made a small test run first to get comfortable before I started toying with our life savings. I'm sure if you called their customer support they would walk you through the process.
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When you "their" customer support -- who do you mean? Is this something I can do through Fidelity or Vanguard? That is what I am looking for ... something I can do at Fidelity and Vanugard. To be clear all of our money is in IRAs at those places and I don't want to take money out of the IRAs to do this.
And, no, I am not looking to specifically do the money market since I know it doesn't really pay anything. Although perhaps better right now than the bond funds I guess
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06-19-2022, 09:42 PM
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#123
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Quote:
Originally Posted by Katsmeow
When you "their" customer support -- who do you mean? Is this something I can do through Fidelity or Vanguard? That is what I am looking for ... something I can do at Fidelity and Vanugard. To be clear all of our money is in IRAs at those places and I don't want to take money out of the IRAs to do this.
And, no, I am not looking to specifically do the money market since I know it doesn't really pay anything. Although perhaps better right now than the bond funds I guess
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Yes, Vanguard or Fidelity customer support should be able to walk you through the process. We have individual TIPS, CDs and Treasuries in our Fidelity IRAs. I've had to call Fidelity for other types of help, like setting up automatic withdrawals, and the rep took me through the process screen by screen.
You can start here: How to Trade Fixed Income Securities in Your Fidelity Account - Fidelity
and here: "Strategically located nationwide, our fixed income specialists work with you and your financial consultant to provide bond strategies and trading expertise when you need it." https://fixedincome.fidelity.com/ftg...erviceSolution
Just keep in mind they may also try to steer you to a comparable fund or ETF instead because they probably make more money off those with ongoing expenses, but most of those aren't going to have maturity dates.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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06-20-2022, 12:07 AM
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#124
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
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Quote:
Originally Posted by Freedom56
Many funds have sector allocation and duration allocation rules. So the lowest coupon debt is sold first and eventually the higher coupon debt of the same duration is sold later. Here is an example of a low coupon debt that no sane person would buy. It's carries a 0.55% coupon with a 5 year duration when it was issued and yet morons running bond funds bought it up at issue price and some even bought higher than par value. It has 3 years of duration left at has dropped to 90 cents on the dollar.
https://finra-markets.morningstar.co...ol=AAPL5030515
Whereas this one has a coupon of 2.75% but has about the same duration and has held up better.
https://finra-markets.morningstar.co...ol=AAPL4562450
I personally wouldn't buy either but the example illustrates that eventually the higher coupon debt eventually is sold to meet redemptions.
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I don't own any bond, let alone follow the bond market. Out of curiosity, I looked at the above two bonds, and saw that the 1st one at 0.55% coupon was offered in Aug 2020, while the 2nd one at 2.75% coupon was sold in 2017.
Back in mid 2020, there were no vaccines, no treatments for COVID. Ten-year Treasury was 0.5%. I guess it's not too absurd then to buy such low interest bonds.
It shows how things can change so drastically in just a couple of years. Who knows what the next 2 years will bring?
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
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06-20-2022, 05:36 AM
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#125
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Recycles dryer sheets
Join Date: Jun 2011
Posts: 297
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Yes I hold bond funds but I don't sell them. I let the interest re-invest which buys new bonds at lower price as interest rates go up. As long as I'm not selling, I am at peace with bond funds.
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06-20-2022, 06:19 AM
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#126
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Full time employment: Posting here.
Join Date: Nov 2017
Location: solomons
Posts: 851
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i still have bonds
FAGIX - 251K / FTBFX - 135K
since Jan this has been my reinvested dividends...
1015/912/1061/1045/1136
Actually have thought about withdrawing them, but I don't need $$$ so this let's me buy cheap for when I need to RMD them in 10 years....
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06-20-2022, 07:08 AM
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#127
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2005
Posts: 6,192
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Quote:
Originally Posted by f35phixer
i still have bonds
FAGIX - 251K / FTBFX - 135K
since Jan this has been my reinvested dividends...
1015/912/1061/1045/1136
Actually have thought about withdrawing them, but I don't need $$$ so this let's me buy cheap for when I need to RMD them in 10 years....
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Including reinvesting dividends fagix is still down 13% ytd .
Ftbfx down 12% with reinvesting .
So reinvesting helps but it can be like peeing in the ocean.
The higher the dividends go the more nav can fall .
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06-20-2022, 08:07 AM
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#128
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Thinks s/he gets paid by the post
Join Date: Oct 2017
Location: Tellico Village
Posts: 2,622
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Quote:
Originally Posted by mathjak107
Including reinvesting dividends fagix is still down 13% ytd .
Ftbfx down 12% with reinvesting .
So reinvesting helps but it can be like peeing in the ocean.
The higher the dividends go the more nav can fall .
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I happen to like peeing in the ocean!!! Where do you think those
warm currents come from......
__________________
Retired May 13th(Friday) 2016 at age 61.
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06-20-2022, 01:24 PM
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#129
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Recycles dryer sheets
Join Date: Oct 2018
Posts: 246
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Quote:
Originally Posted by retired1
Yes I hold bond funds but I don't sell them. I let the interest re-invest which buys new bonds at lower price as interest rates go up. As long as I'm not selling, I am at peace with bond funds.
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+ I agree!
I also hold Wellesley and Wellington in my IRA account which also have substantial amount of bond. Wondering if anyone sold these
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Retired at 52. Preferred AA 60/40
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06-20-2022, 01:32 PM
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#130
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,021
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Quote:
Originally Posted by Eucerin
Wondering if anyone sold these
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No, and I have no plans to sell either of them or any other investment any time soon. Patience in the market is difficult to practice but has an excellent track record.
__________________
Numbers is hard
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06-20-2022, 01:40 PM
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#131
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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1 year Treasuries 2.8% yield, no risk of losing principal. Government guaranteed. Compare that to current bond fund yields and risk of NAV going down even further than the current -12% YTD.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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06-20-2022, 01:55 PM
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#132
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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 daylatedollarshort
Y
Just keep in mind they may also try to steer you to a comparable fund or ETF instead because they probably make more money off those with ongoing expenses, but most of those aren't going to have maturity dates.
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Also keep in mind that they may steer you to bonds that nobody wants and will try to dump them on you at inflated prices and pocket the spread. I get regular cold calls from Fidelity bond specialists asking if I am interested in buying certain issues. Some are brand new issues that they are having problems selling at the coupon rate and some are issues where they have too much inventory (due to a lack of demand). I see these cold calls as a red flags. These cold calls have become more frequent during the past month.
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06-20-2022, 02:07 PM
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#133
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Quote:
Originally Posted by Freedom56
Also keep in mind that they may steer you to bonds that nobody wants and will try to dump them on you at inflated prices and pocket the spread. I get regular cold calls from Fidelity bond specialists asking if I am interested in buying certain issues. Some are brand new issues that they are having problems selling at the coupon rate and some are issues where they have too much inventory (due to a lack of demand). I see these cold calls as a red flags. These cold calls have become more frequent during the past month.
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A rep from one of the big no load mutual fund companies talked an elderly relative of ours into buying a 2% annuity at the beginning of the year with a cold call. Of course these guys knew rates were going up back then and they would make a lot of money locking elderly investors at 2%. Shameless.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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06-20-2022, 02:33 PM
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#134
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,714
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Quote:
Originally Posted by REWahoo
No, and I have no plans to sell either of them or any other investment any time soon. Patience in the market is difficult to practice but has an excellent track record.
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+1
I also think the upcoming decade will be favorable for actively managed mutual funds such as Wellington and Wellesley.
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06-20-2022, 03:07 PM
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#135
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2005
Posts: 6,192
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Quote:
Originally Posted by daylatedollarshort
1 year Treasuries 2.8% yield, no risk of losing principal. Government guaranteed. Compare that to current bond fund yields and risk of NAV going down even further than the current -12% YTD.
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Except comparing a 1 year treasury to a bond fund with a 6 year weighted duration isnt the same thing .
Try selling a 6 year individual treasury bought at the same time the bond fund was bought and you will be down about the same …
Hold the bond fund the same 6-7 years as the duration and odds are you will end up with the rate you had the day you bought just like buying an individual bond
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06-20-2022, 03:19 PM
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#136
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Quote:
Originally Posted by mathjak107
Except comparing a 1 year treasury to a bond fund with a 6 year weighted duration isnt the same thing .
Try selling a 6 year individual treasury bought at the same time the bond fund was bought and you will be down about the same …
Hold the bond fund the same 6-7 years as the duration and odds are you will end up with the rate you had the day you bought just like buying an individual bond
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If you had sold your bond fund at the beginning of the year and switched to short term Treasuries, you would be averaging around 2% for the year instead of losing -12% (or possibly more) for the year. Bond math is bond math.
Bond funds can make more or less than individual bonds because they don't have a maturity date. They often do better than individual bonds when rates are going down, like this past decade, and worse when rates are rising. So if you sell when you know with almost 100% certainty, like this year, that rates are going to start to rise, you can come out ahead by selling them before the NAV drops. This is like the Monty Hall problem. The odds between the doors aren't equal, because Monty knows ahead of time which door has the goat.
Related post - Article from back in January saying the worst investments for 2022 will be long term bond funds because of rising interest rates - Why are bond prices and bond fund navs doing this? - Early Retirement & Financial Independence Community (early-retirement.org)
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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06-20-2022, 03:21 PM
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#137
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2005
Posts: 6,192
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Quote:
Originally Posted by daylatedollarshort
If you had sold your bond fund at the beginning of the year and switched to short term Treasuries, you would be averaging around 2% for the year instead of losing -12% (or possibly more) for the year. Bond math is bond math.
Bond funds can make more or less than individual bonds because they don't have a maturity date. They often do better than individual bonds when rates are going down, like this past decade, and worse when rates are rising. So if you sell when you know with almost 100% certainty like this year that rates are going to start to rise, you can come out ahead by selling them before the NAV drops.
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If only this and only that .
If I sold all my stocks at the high and shorted the market I would be quite wealthy too .
All that counts is what we do
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06-20-2022, 03:33 PM
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#138
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Quote:
Originally Posted by mathjak107
If only this and only that .
If I sold all my stocks at the high and shorted the market I would be quite wealthy too .
All that counts is what we do
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Stocks aren't bonds. With bonds we have a good idea of the direction of interest rates when the Fed tells us ahead of time their plans. This year we knew they were going to have 6 - 7 rate increases because they told us early in the year they were going to do that.
All that counts is what we do? Early in the year I sold all my long term bond funds and moved to short term Treasuries, and posted frequently here about the planned 6 -7 rate increases.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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06-20-2022, 03:35 PM
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#139
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2005
Posts: 6,192
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Not really true …
Take a look at history .
The last 40 years every time the fed raised rates on the short end more than 1% , intermediate term bonds and longer term bonds went up in value , not down after an initial knee jerk reaction that had them fall in reaction to the increases .
They ended the year up
Only one exception , 1994 when the fed raised short term rates and intermediate and longer fell .
So no , we can’t predict and if anything , Peter lynch commented that calling stocks direction is far easier then calling bonds.
The left is the feds increase that year , the right the total retun on intermediate term bonds
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06-20-2022, 03:44 PM
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#140
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Moderator Emeritus
Join Date: Apr 2011
Location: Conroe, Texas
Posts: 18,731
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Quote:
Originally Posted by mathjak107
Not really true …
Take a look at history .
The last 40 years every time the fed raised rates on the short end more than 1% , intermediate term bonds and longer term bonds went up in value , not down after an initial knee jerk reaction that had them fall in reaction to the increases .
They ended the year up
Only one exception , 1994 when the fed raised short term rates and intermediate and longer fell .
So no , we can’t predict and if anything , Peter lynch commented that calling stocks direction is far easier then calling bonds.
The left is the feds increase that year , the right the total retun on intermediate term bonds
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You have to keep an eye on the FED, especially between meetings when they employ Jawboning! And if things get out of control, they can implement a few tools like yield curve control and price controls. They are sneaky and always work from a position of being reactionary to the previous data.
The problem with the FED and other Central Banks is they may have a forward plan (WAG), but it's so flexible that they can change it anytime.
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*********Go Yankees!*********
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