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Old 05-17-2020, 09:55 AM   #21
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MM yields fell to almost zero following the 2008-09 meltdown, for exactly the same reason they seem headed there this time. We shouldn’t be surprised or “ticked off” that it seems about to happen again. I’d be surprised if this is the last time, so plan accordingly. I moved all my cash to online savings after 09, not great but far better than any MM fund.
The regular MM funds at Fidelity are already at 0.01% yield excepting the Prime type MM funds.
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Old 05-17-2020, 10:08 AM   #22
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Originally Posted by audreyh1 View Post
The regular MM funds at Fidelity are already at 0.01% yield excepting the Prime type MM funds.
Current SEC yields:
VMMXX (Prime MM) 0.43%
VMFXX (Fed MM) 0.33%

VFIRX (Short Term Treasury, duration =2.2yrs) 0.60%
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Old 05-17-2020, 10:21 AM   #23
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brewer12345, thanks for your reply-

Age 62.
Avoiding principal is a goal, not imperative.

ie: Shortfall created by low MM rates isn't blowing up my retirement.
Just makes me want to do something about the large proportion of assets not "working" at current MM rates.
I feel the same way sometimes about our cash, and then I go into town for a short drive. I think the hardest thing about investing is patience. It applies to getting in as much as getting out. Sometimes when I think I'm losing, I'm actually winning. 'Missing out' can be a blessing.

In the short-term it seems logical for conservative investors to wait until the path forward is more clear. If we go into deflation and a depression, then yields may be much higher than the bank interest rates. If we start up an inflationary spiral, then interest rates will be forced to follow, and you can get your higher return, but potentially lower yield.

I'm giving myself until late July/early August to think about investing in the market again. The Fed is muddying the water terribly right now. I think we're in a much more bearish situation, and I'd like to see what happens to the job market. There will be major disruptions taking place. If consumption is the engine of our economy, how many cylinders did we fry?

I think some serious economic restructuring will take place as a result of behavioral changes adopted during the lockdown - i.e. working from home - that may ultimately prove very beneficial in the long-run, but painful in the near-term. (Just imagine the massive square footage of office space Twitter will be giving up! More are sure to follow.)
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Old 05-17-2020, 07:39 PM   #24
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I feel the same way sometimes about our cash, and then I go into town for a short drive. I think the hardest thing about investing is patience. It applies to getting in as much as getting out. Sometimes when I think I'm losing, I'm actually winning. 'Missing out' can be a blessing.

In the short-term it seems logical for conservative investors to wait until the path forward is more clear. If we go into deflation and a depression, then yields may be much higher than the bank interest rates. If we start up an inflationary spiral, then interest rates will be forced to follow, and you can get your higher return, but potentially lower yield.

I'm giving myself until late July/early August to think about investing in the market again. The Fed is muddying the water terribly right now. I think we're in a much more bearish situation, and I'd like to see what happens to the job market. There will be major disruptions taking place. If consumption is the engine of our economy, how many cylinders did we fry?

I think some serious economic restructuring will take place as a result of behavioral changes adopted during the lockdown - i.e. working from home - that may ultimately prove very beneficial in the long-run, but painful in the near-term. (Just imagine the massive square footage of office space Twitter will be giving up! More are sure to follow.)

+1

Agree patience is key, and that the water is currently very muddy.
Content to wait for it to clear while absorbing info and investigating all options, with no set timeline to make a decision.
Having a very conservative portfolio helps me sleep while trying to verify the course from here.
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Old 05-22-2020, 04:03 PM   #25
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I would avoid new investments in dividend funds right now. I've read that many corporations will be cutting or eliminating dividends.

The Expense Ratio for VIG is 0.06%; it's only 0.03% for VTI. The YTD yield for VIG is <16.83%>, and for VTI is <20.85%>. So, for new investments, there's more of an upside potential for VTI. VIG is made up of only 183 stocks, and is less diversified than VTI's 3,513. For more details, here's a comparison from VG:

https://personal.vanguard.com/us/fun...vigatingFrom=4
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Old 05-22-2020, 04:07 PM   #26
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I am a bit younger than you but am living off an income stream of 4%. it has actually increased this year as I trade in CD's for other options.

My allocation:
53% Dividend paying blue chips (i.e KO, JPM, JNJ, DUK, MMM, etc). No one stock greater than 2.5%
15% preferred stocks (these went on sale big time in April). Again, mostly blue chip
banks and utilities.
15% municipal bonds. My target is 3% tax free with these.
17% CDs and Cash.

It takes work but you can get there. Most of this income is pretty well protected from market volatility.
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Old 05-22-2020, 04:54 PM   #27
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Smart doing Roth conversions in the 12% bracket. Hopefully you can convert it all before RMDs kick in. With sufficient cash flow, consider the trade off of taking SS earlier than full retirement age and investing it vs. delaying it and consuming current asset ballance.
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Old 05-22-2020, 04:59 PM   #28
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Ally offers 1.3% on a no penalty CD which is similar to a MM fund.

Some dividend stocks are relatively safe. High rated utilities, Waste Management, J&J, etc.

I don't like corporate bonds. Those rated AA don't pay squat and you'll lose principal if rates rise.
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Old 05-24-2020, 05:28 PM   #29
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Approx 2yr since retirement. Began in "won game" mode, content with being mostly in MM earning 2.4%, and an annual yld with stock/BND holdings approx = annual expenses. Plan was to ride that indefinitely, while moving into a greater (but not high) proportion of stock when great opportunities presented.

Now, with MM 0.5% yld, my total yld is down by 60%, probably going lower, and could stay low many years (yes: who really knows!) If I knew MM ylds will return to 2.5% in 2yr then I'd ride this out, but a long low yld timeline seems likely. Taking SS would make up most of the lost yld, but plan to continue Roth conversions the next few years and prefer not taking SS for awhile.

Considering options -mainly SCHD, Schwab U.S. Dividend Equity ETF or VIG, Vanguard Dividend Appreciation ETF. Did add some stock during the mid-March sale, but the train left the station before lower limit orders hit. Now considering VTI/VIG, maybe at 50/50, instead of just VTI. Current ylds nearly equal (just <2%), but prefer the 2.5-3% range. Therefore including SCHD's 3.73% yld in the mix is tempting.

My simple analyses: companies in VIG are stronger to face C19-related challenges, and that the total market VTI has a larger ratio of companies that will be more impacted by C19. The growing VIG dividend outpacing inflation would also be nice.

The shortfall created by MM yields dropping thru the floor again isn't a disaster, but does tick me off that after years of "saving to win" now need more stock than preferred just to "chase" a measly 2.5-3% total yield!

Therefore, considering the Transgression of investing for dividends (focus on div growth). I'm not convinced it's a slam dunk that VTI total return will appreciably exceed VIG's in years ahead.

If another drop soon, may take the opportunity to move into some VIG/VTI (IMO, mkt is ahead of itself with "Happy Times Are Here Again"). Otherwise DCA into them.

No fast moves till think this over more. Aware that another big drop after buying these ETF's can erase many years of gains by the higher yld! Less stock is my Sleep At Night Formula, but have owned stocks many years and don't panic-bail ie: 2008/09, 2020. If decide I gotta add a larger proportion of stock in VIG/SCHD/VTI, then able to ride the Buy/Hold roller-coaster.

Any feedback appreciated!
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Old 05-24-2020, 05:47 PM   #30
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Welcome to my world. The world where everything is manipulated to boost investors that are not using fixed income in retirement.

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Old 05-24-2020, 06:52 PM   #31
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I feel like we will still be fine with fixed income, even at current rates. We based our retirement plan on pretty low expectations - a zero real return. Inflation has been .3% for the last 12 months and our household expenses have gone down with not going out much and no travel. Plus we plan to refinance soon which will lower our mortgage payments.

Most of our TIPS and CDs bought in previous years are still well above zero real returns. The short term broker CDs I have been buying recently are all above .3%, the current inflation rate, so I feel like our retirement plan is still better than on target.
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Old 05-24-2020, 07:00 PM   #32
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I feel like we will still be fine with fixed income, even at current rates. We based our retirement plan on pretty low expectations - a zero real return. Inflation has been .3% for the last 12 months and our household expenses have gone down with not going out much and no travel. Plus we plan to refinance soon which will lower our mortgage payments.

Most of our TIPS and CDs bought in previous years are still well above zero real returns. The short term broker CDs I have been buying recently are all above .3%, the current inflation rate, so I feel like our retirement plan is still better than on target.
Yea we still have a lot of cd’s,some high quality individual bonds and Ibonds but am worried about replacing them. Time will tell.
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Old 05-24-2020, 07:16 PM   #33
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Yea we still have a lot of cd’s,some high quality individual bonds and Ibonds but am worried about replacing them. Time will tell.

At some point I suspect the news cycle will have deflation fears and TIPS rates will rebound. I made some money last recession on those fears and am hoping history will repeat itself. Otherwise all I need is to make a blended 0% real return to stay on plan and with inflation at .3% and my existing CD and TIPS ladder yields that is very achievable.
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