Fixed Income Investing II

[Montecfo]

^^^

I appreciate it. However we have a diverse community. Some folks have all or most of their investments in fixed income.Nwirh different objectives such folks find high yield interesting and may demand high coupons as they desire income.

So you will see folks have a variety of perspectives and objectives.

 

[USGrant1962]

OK, so something like CUSIP 03588JBF8 looks good to me. I'm in MD and double tax free is what I'm looking for. This one is a 4% coupon for $99, AAA rated, callable in 10 years so would be a 10-rung on a ladder in my view.

I want most of the return to be in the coupon to avoid taxes (at 32.5% marginal state and Federal) as opposed to the price, which gain is taxable, right?

Am I looking at this correctly?

 

[imbatman]

OK, so something like CUSIP 03588JBF8 looks good to me. I'm in MD and double tax free is what I'm looking for. This one is a 4% coupon for $99, AAA rated, callable in 10 years so would be a 10-rung on a ladder in my view.

I want most of the return to be in the coupon to avoid taxes (at 32.5% marginal state and Federal) as opposed to the price, which gain is taxable, right?

Am I looking at this correctly?

Thanks for this post, I am also in MD and had a saved screen for that state and wasn't seeing this result and so realized somehow my screener was only pulling those with Sinking Fund Protection (which this does NOT have). I know theoretically what that does (kind of another call but mandatory and random as to whose are selected, in this particular bond case, it is at par and towards the end of the life of the bond) but haven't thought through it yet (most write-ups portray it as an overall investor protection). Otherwise this seems reasonable for a 4% (about 6.5% for you) AAA 20-year, 10-year call protection. Seems pretty decent for your particular purpose IMO.

Yes - if you buy below par, it is either capital or ordinary gains, depending on the de minimus calculation....so income via coupon is simplest / safest for tax purposes.

 

[Montecfo]

ADP jobs report came out stronger than expected at 324k jobs.

Last month's blockbuster 497k report (since revised down to 455k) caused bond yields to spike briefly until the DOL report came out with a much lower figure.

Watch for that today. History could repeat.

Private sector added 324,000 jobs in July, well above expectations, ADP says

https://www.cnbc.com/2023/08/02/pri...ations-adp-says.html?__source=androidappshare

 

[jazz4cash]

Also in MD and using a screener on Fido but 03588JBF8 Anne Arundel Cnty has maturity of 2052 which is beyond my screener settings. I’d really like to be no more than 25 yrs but maybe its time for me to reconsider.

 

[COcheesehead]

I just my bond screens and nothing jumps out yet as overly attractive. Will keep an eye on it.

 

[Montecfo]

When the treasury sale allocation comes out later today, if it tilts to bonds more than it has recently that could have effect also.

Recent auctions heavily allocated to bills.

 

[Marc]

When the treasury sale allocation comes out later today, if it tilts to bonds more than it has recently that could have effect also.

Recent auctions heavily allocated to bills.

$42B in 3yr, $38B in 10yr, and $23B in 30yr.

 

[rkser]

+1 My weighted average maturity right now is 2.5 and I'd like to extend it to 3.5 or more... ultimately perhaps even 5.0 if we get a positive yield curve... as I reinvest the proceeds of maturities. If I had an evenly balanced 7 year ladder, I'm way overweight in 2023 to 2025 maturities and underweight in 2026 to 2030 maturities, meaning that I should be reinvesting proceeds in 2026-2030 maturities. Right now, I can find decent GSE offerings that mature in 2026-2030 in the 5-6% YTM, but a lot of them are callable and I'm trying to manage my call risk as well.

Right now I'm about 50% callable and want to stay at 50% or less, but if a callable will pay me a 150 bps premium then I'm inclined to take the risk.

Do you just use CDs or do you use Treasuries too ?
Do you use the Fidelity auto roll feature CD (or Treasury) Builder ?

I am trying to learn here & take 1 step at a time, have a lot to learn on the fixed income side of the portfolio,

I realize it is not as cut & dry as VTI & VXUS.

 

[Car-Guy]

SWVXX is up to 5.12% this morning. Keeps ticking up. I may need to update my prediction of it hitting 5.2 this month.

 

[Montecfo]

$42B in 3yr, $38B in 10yr, and $23B in 30yr.

What about bills versus bonds?

 

[COcheesehead]

SWVXX is up to 5.12% this morning. Keeps ticking up. I may need to update my prediction of it hitting 5.2 this month.

FZDXX hit that yield today as well.

 

[Marc]

What about bills versus bonds?

$46B in 17wk, $70B in 4wk, and $80B in 8 wk; amounts for 13, 26, and 52 wk announced tomorrow.

As federal net interest payments through June are $494B I think (IMHO) that the only way out is to let inflation run very high for very long. I am very afraid of that scenario.

My prediction is Y/Y CPI will run at 3.3% for July and 3.6% for August; I think we get the first print next week.

Marc

 

[Montecfo]

It's a big concern. Do you like TIPS as a hedge?

 

[d.davis]

RBC has a 10yr 5.5% w/ 5yr cp. 78014RPM6



Sent from my moto g power using Early Retirement Forum mobile app

 

[erkevin]

RBC has a 10yr 5.5% w/ 5yr cp. 78014RPM6



Sent from my moto g power using Early Retirement Forum mobile app

TDA is not showing that one.

 

[imbatman]

It is in Fidelity (new issue) but still 5.5% meh....I do appreciate the 5-year call protection though, hope more of the like is coming

 

[PhotoAviation61]

RBC has a 10yr 5.5% w/ 5yr cp. 78014RPM6

Small data point if anyone interested.

I just bought new issue RBC 10yr 5.7% w/5yr call protection 2 weeks ago. 78014RPB0 (7/19/2033)

 

[Earl E Retyre]

RBC has a 10yr 5.5% w/ 5yr cp. 78014RPM6

Is Royal Bank of Canada FDIC insured?

 

[aja8888]

Is Royal Bank of Canada FDIC insured?

FDIC is for U.S. banking, not Canada.

 

[COcheesehead]

Is Royal Bank of Canada FDIC insured?

No, it’s a bond.

 

[GravitySucks]

So far, what I've been doing is the following. If the fund has an average years to maturity of 7 years, then in the 7th year of the bond ladder I buy fewer individual securities. It's not perfect, but it's roughly good enough.

Does anyone have this problem and is there a better way to look at the issue?

I’m doing the same. There may be a better way but seems logical/good enough to me.

 

[ER604me]

FZDXX hit that yield today as well.

Vanguard Settlement Fund, VMFXX, is at 5.22%

 

[jazz4cash]

Andrews FCU called to discuss maturity options for a CD maturing at the end of the month. They pushed for face to face meet and I just happened to be on that side of town. Shoulda seen this coming….an index annuity pitch. The worst part is they could not set up IRA savings to hold the CD proceeds at maturity.

 

[RetiredAndLovingIt]

Andrews FCU called to discuss maturity options for a CD maturing at the end of the month. They pushed for face to face meet and I just happened to be on that side of town. Shoulda seen this coming….an index annuity pitch. The worst part is they could not set up IRA savings to hold the CD proceeds at maturity.

I've ran into the same thing. I'm discovering that my credit unions seem to have zero interest in retaining my IRA business. They're offering great Promo CD rates at 5.25% but rate does not apply to IRA CD's. The highest IRA CD rate was less than 1% recently at Frontwave and when I complained about it she offered to have someone contact me who she was sure to get me a better rate and next thing I got an e-mail from their wealth management department. This has happened to me at 2 different credit unions now, so I've been moving my IRA's to Fidelity as they mature.