Bogleheads.org

[ I don't plan to sell any shares any time soon... Whenever I see any of my holding drops 1%, I just systematically increase my share positions. If it goes down tomorrow again, I will increase my share again. I have cash/MM ready for these Bad Days.. I will rebalance the whole portfolio by year-end...

Johm221122 wrote:You should have target allocation for your portfolio. Example 5% of total portfolio
John

Agreed--with rebalancing bands or some other rebalancing strategy.

Kevin

I guess nobody wants to discuss the relative merits of using 1% bank money markets vs 1.5% intermediate term bond index funds for the fixed income portion of the portfolio until the compensation for taking on duration start to improve. Even a 1.5% risk premium over T-bills or mutual fund MMs doesn'...

^Bummer! Well, this post has had almost 3,000 views (my blog post has had only about 240 views). Ken at DepositAccounts has had this on his list for awhile now, but I only noticed it being highlighted as one of the best 5-year CDs recently. I wonder how much of the swarm of business swamping them is...

Jack, with all of your qualifications, I don't actually think we disagree. My main disagreement was that you did not accurately characterize my original scenario as I stated it, whether or not you agree it's a scenario that appropriately illustrates the danger in misunderstanding the relationship be...

Whenever it drops more than 1%, I will just added more shares. I consider this is a "on sale" event. The more it drop, the more shares I will own. So your rebalancing band is 1% on the downside. What about the upside? How much does the REIT fund have to increase for you to sell shares? Di...

What you have neglected in your example is that while the NAV of the fund decreases by 1% initially, because the bonds in the fund are of short duration, they mature at PAR at the end of the next year so that the NAV is back to 100%. If you hold the fund for the duration, one year after the interes...

Just wondering - how specific were you able to be with regards to the (partial) transfer? Were you able to specify a specific amount from a specific fund. Not sure what the options are, and what the possible pitfalls are either. Did you have to interact with Vanguard at all? Every transfer form I'v...

I plan to rollover some of my Vanguard ST treasury to this 5-year CD. What is the best method? Did you request a distribution/rollover check from Vanguard with the payee = MACU fob yourself, and then mail the check to MACU? No, I avoid rollovers, and stick with direct custodian transfers. I describ...

Does anyone know whether Vanguard accepts "Docu Sign" for transfer forms. Seems as if Mountain America prefers this way of doing signatures. Don't really understand how this would work. My first experience with it and I know Vang does not accept fax. Yes. Both Vanguard and Fidelity accept...

The duration can also be interpreted as an approximate "safe holding time." Pretty good explanation of duration, except for this last statement, but it depends how you define "safe". This is the one that I think is flat-out wrong, and the one that misleads people into thinking t...

Since the statutory authority for the "full faith and credit" backing of FDIC is somewhat murky (http://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation#.22Full_Faith_and_Credit.22), it might be better to compare CDs to agency bonds of similar duration, rather than Treasuries. ...

One of tfb's recent blog posts had an informative point of view on why an advisor who earns their money as a percentage of assets under management (AUM) may not be motivated to provide unbiased advice on using CDs instead of bond funds. Bottom line is that to use CDs, you are likely to have to pull ...

Kevin My latest issue is the difference between a rollover form they e-mailed and a transfer. Perhaps, I misunderstand but feel I need transfer wording in the form. My rep seems to be using the words interchangeably. Sometimes the terms are used technically incorrectly. The key is the instructions ...

VNQ has been a massive cash cow over the past 4 years. It seemed like every time I re-balanced I was collecting milk. I guess it's time for some bag balm. There was a day within the last couple of years, IIRC, when it dropped about 10% in one day. I bought that day, attempting to bring my allocatio...

Could be, but I recently rebalanced (again) out of my REIT fund to bring it back to its target allocation (as part of raising cash for another CD purchase), and since then it looks like it went up about 5%. So after today's drop, the fund value will still be above what it was a few weeks ago. To reb...

As I get ready to purchase CDs, I realize that the total bond fund distributions are higher than the 2% that I can get for a cd right now. I am conflicted between staying the course until the distributions drop below the cd rate and the concern that the cd won't be available at the same rate when I...

Distribution yield is what got paid in the past, sec yield is what is likely to be paid in future. As old higher-yielding bonds mature and new lower-yield bonds are purchased instead, you expect yield in next year to be lower than yield in year before. Thus the difference. This is roughly true, but...

They asked me to request Vanguard to transfer funds based on my verbal request. If you are describing this accurately, it's absurd, and you must be dealing with an inexperienced or poorly trained rep. Ask to talk to someone else--perhaps a supervisor. This whole electronic system the credit union i...

why don't you look at vanguard brokered cd's. but make sure you know all the in's and outs of brokered cd's. a brokered cd operates like a bond with guaranteed principal and interest. every thing else acts like a bond You won't find any brokered CDs with anywhere near the attractive terms of non-br...

gerrym51 wrote:hey kevin is there a minimum on this cd.

$500. Thought I answered this already, but don't see it.

Kevin

I've spent time talking to a couple of Fidelity reps, one face-to-face, and one on the phone. Neither of them seemed to know much about portfolio theory. When I asked one where he got his training in investments, he said from Fidelity, and said something like "they teach us that our actively ma...

I think I would keep the job for at least a couple more years, and save like crazy. You can significantly increase your nest egg by doing so. Maybe when you get to a $2M portfolio, you could reconsider going with the lower-paying, more enjoyable job for a few more years.

Kevin

Another credit union I joined in the past told me not to worry about it--they would figure out how to qualify me, and they did. Based on the membership criteria I see for Southern Gas CU, I doubt this will work there: We proudly serve employees of the following groups (immediate family members such ...

If using "not sure" seems to work fairly well when joining credit unions, has anybody tried this at Southern gas credit union http://www.depositaccounts.com/cd/3-year-cd-rates.html They have 3year cd at 2.35% It doesn't necessarily work at all or even most credit unions. I joined another ...

Don't notice that much difference. I record it, and occasionally watch it, fast forwarding through most of it.

Kevin

I'm checking them out now and all appears good. To qualify for membership, one only has to have bought an appliance sometime during their lifetime. My transfers from other IRAs have been completed, and I can see, online, my money sitting happily in the 5-year CD. There were a couple of minor snafus...

Scooter57 wrote:So minimizing earnings to cut taxes seems silly to me.

Who proposed that? I think what we want is to maximize after-tax returns and after-tax income.

Kevin

Kevin, yes, I've been thinking of using CDs in taxable to free up some space for VSS and VTV in tax-advantaged (given that CD rates are ~1% nominal after-tax currently with best credit / default risk). Tax-advantaged space for me does not have as good of CD options (brokered CDs at best) and bond y...

if your positive you will break the cd early go with ally. if not i can see going to somewhere else.this fixation i see on this board is just about everyone thinks rate will go up in the near term. i don't think so Only if you're likely to break the CD in less than two years. The MACU CD comes out ...

So I have total bond market in a Roth IRA at Vanguard. I could "transfer" that Roth IRA to Mountain in order to take advantage of the CD being discussed? Thanks Xram Yes. You can do a partial or complete transfer of your Vanguard IRA (Roth or Traditional) to another custodian, such as MAC...

Ally Bank has a 5 year CD paying 1.54% with 2 month interest penalty for early withdrawal versus Mountain Credit's 6 month penalty, maybe the difference in interest rate at Ally and the early withdrawal rate at Mountain is a wash and Ally would be the better vehicle, just a thought. The Ally rate i...

Any thinking on Ulta Short Bond funds or ETFs (example: PIMCO Enhanced Short Maturity (MINT)) that are actively managed? Thanks You should look carefully at the fund. I'm generally averse to anything called "ultra short", because ultra short funds performed disastrously during the fiscal ...

I don't really have "new money", since I'm retired . Kevin You make that sound like a bad thing. :wink: Funny, I certainly didn't mean it that way. :o Thanks for the info, from one retired friend to another. :sharebeer Right on. Some people just don't understand how busy being retired can...

Good info, Kevin, thanks for sharing. So, are you using your remaining bond funds to rebalance, rebalancing with new money or some other method? Thanks Blues. Lately rebalancing has been from stocks to fixed income, so it hasn't been an issue. When I added to equities during the last couple of equi...

I tilt, all in taxable, except for REIT (if you want to consider that tilting) which is in an IRA. I have harvested enough tax losses to offset gains from rebalancing for many years. If you don't have losses carried forward to offset future gains, I think the degree to which you tilt in taxable depe...

I just published a blog post on my experience with opening an account at Mountain America Credit Union, and transferring money from other IRA accounts into a new IRA account at MACU to purchase one of their 5-year CDs: Kevin On Investing: Mountain America Credit Union 5-Year CD . I like to share thi...

I am in the limited term tax exempt fund, in a taxable account. Would a CD ladder give me a better yield - and how do i set that up with vanguard? I have a brokerage acct. Yes, you can definitely do much better with CDs than with that fund, especially if using SEC yield as your measure (if using di...

I now conclude that this is a very stupid investment. I can get 1% with stable asset value in a money market fund with one of my credit unions and in a savings account at Citizen's Bank. (It's a teaser rate, so every couple months I have to close the account and start a new one to keep getting it.)...

Is most of your portfolio tied up in 401K/403B plans, or do you have a fair amount in IRAs and taxable accounts? If the latter, then I would favor CDs over any bond fund, since you can get a comparable if not better yield with much less risk. If the former, then I would weight my fixed income toward...

Yes. I retired in 2007, and rebalanced into equities in 2008 and early 2009, although perhaps not completely back to my targets due to fear/caution. I recently rebalanced out of equities to get back to target. I also added to equities during the couple of 10%-20% corrections we have had since 2009. ...

If you have options outside of 401K/403B plans, like IRAs or taxable accounts, then I would hold a minimal amount of any short-term bond fund. Instead I would put a major chunk of my fixed income in 5-year CDs earning between 1.5% and 2.0% with reasonable early withdrawal penalties (60 days to 180 d...

I found a high-yield fixed income ETF that doesn't own any bonds with ratings lower than "B". It's the Powershares Fundamental High Yield Corporate Bond Portfolio (PHB) I wonder if this would be an apples-to-apples high yield bond fund in comparison to Vanguard High Yield Corporate Bond F...

... advisors who recommend against buying I Bonds, given today's lack of a better risk-free option and with all the benefits that come with I Bonds (tax-deferral, freedom from state and local taxes and the possible tax-free use for qualifying educational expenses) are probably doing so to line thei...

The advisors are clearly telling people no.. so more for us. http://articles.marketwatch.com/2013-02-12/finance/37051732_1_savings-bonds-series-i-savings-current-variable-rate $22 million total for the country from 2012 tax returns. After all the advisor doesn't make money from selling I-bonds, so ...

Her 401k has all institutional or signal shares of the Vanguard big 3: Total Stock Market Index, Total international, and Total Bond. Basically I'm setting up a TR fund in the 401k with the underlying funds to save her some $ on expense ratios over the years (although as discussed, I may substitute...

Although I think TR funds are great for simplicity, I would not use one in a multi-account portfolio. I would take advantage of the excellent funds available at Vanguard to get what I couldn't get in the 401K. Also, the TR fund makes tracking AA more complicated. That's me though. Given your sister'...

Thanks for all the feedback. The opinions are pretty one-sided, perhaps rare for the Bogleheads, but that makes it easier for me. 25% of her 401k allocation is for fixed income, so maybe I'll have her do 15% stable value and 10% Total Bond Market. I'll have to wait until her 401k plan lets her chan...

Yep, at least half of fixed income in the SV fund, if not all.

Kevin

RE: I Bonds and your EF, why not just count the appropriate portion of them as your EF and include the rest as fixed income in your portfolio (disclaimer; I haven't read the details of your situation lately, just the question I'm addressing here). Personally, I have never considered any part of my p...