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Re: Thoughts on Defined Maturity Bond Funds?

rbrown04: sure, CDs are a great option right now and you will often see me recommending them, including in this thread, third post above yours. The discussion is more about situations where you can't use them (401k's, applies to lots of people), don't want to (extra work of having separate accounts)...
by ogd
Thu Nov 27, 2014 12:48 pm
 
Forum: Investing - Theory, News & General
Topic: Thoughts on Defined Maturity Bond Funds?
Replies: 12
Views: 822

Re: Corporate bond funds? Tips? Long term bond funds? Yes or

rai: you're welcome. You mentioned if inflation heats up, an intermediate fund would catch up to tips due to interest rates but wouldn't tips also increase interest rates on new additions to the tips fund as well as giving final payment adjusted for inflation making tips always better if inflation r...
by ogd
Thu Nov 27, 2014 12:42 pm
 
Forum: Investing - Help with Personal Investments
Topic: Corporate bond funds? Tips? Long term bond funds? Yes or no?
Replies: 17
Views: 1390

Re: Valuation of EE Savings Bonds

To get around this, I'll actually short Treasury bonds, typically via futures, against my EE bonds. So, you can actually get out of this trade at times, you just can't use the bonds as collateral, e.g., to buy an above-market CD. I won't claim to grasp the finer points of interest rate bets, but wh...
by ogd
Wed Nov 26, 2014 10:34 pm
 
Forum: Investing - Theory, News & General
Topic: Valuation of EE Savings Bonds
Replies: 43
Views: 2563

Re: Valuation of EE Savings Bonds

I appreciate the vote of confidence and agree that the option is likely to become worth less and less after the first five years or so. The option value is really derived from the first 2-4 years, when you have a chance to wait and see if rates on the secondary market increase enough to provide att...
by ogd
Wed Nov 26, 2014 9:29 pm
 
Forum: Investing - Theory, News & General
Topic: Valuation of EE Savings Bonds
Replies: 43
Views: 2563

Re: Corporate bond funds? Tips? Long term bond funds? Yes or

rai: on long bonds, see my answer to a very similar question asked recently: http://www.bogleheads.org/forum/viewtopic.php?f=10&t=151508&newpost=2272976#p2270521 . IMHO having a long horizon is not a good enough reason to hold long bonds, because you still take losses from interest rate risk...
by ogd
Wed Nov 26, 2014 9:00 pm
 
Forum: Investing - Help with Personal Investments
Topic: Corporate bond funds? Tips? Long term bond funds? Yes or no?
Replies: 17
Views: 1390

Re: Roth versus Traditional Debate

When dealing with this question you have to get used to thinking of tax rates as factors (in a product) not absolute amounts (terms in a sum). If you multiply by 0.75 on either side of 30 years of growth, the result is the same. If the factor at withdrawal is 0.82 (18% bracket), Traditional wins ev...
by ogd
Wed Nov 26, 2014 8:48 pm
 
Forum: Investing - Theory, News & General
Topic: Roth versus Traditional Debate
Replies: 17
Views: 1139

Re: Rising Interest Rates And Bond Funds?

We have a good historical example of interest rates rising. Reposting from another thread: http://www.bogleheads.org/forum/viewtopic.php?f=10&t=150281&newpost=2253108#p2252645 Between 2003 and 2007, five year yields rose from 2.08% to 5.16%. The return of Total Bond Market vs cash looked lik...
by ogd
Wed Nov 26, 2014 7:48 pm
 
Forum: Investing - Help with Personal Investments
Topic: Rising Interest Rates And Bond Funds?
Replies: 9
Views: 1043

Re: Roth versus Traditional Debate

I'll admit I could be making calculation/assumption mistakes, but my point is that if your contributions are the same, then Roth would win because it doesn't tax all the dividends/gains. Take the tax savings of Traditional and invest them in taxable, and you'll probably come out ahead. At the very ...
by ogd
Wed Nov 26, 2014 6:50 pm
 
Forum: Investing - Theory, News & General
Topic: Roth versus Traditional Debate
Replies: 17
Views: 1139

Re: Vanguard Money Market Fund - keep open ?

I would close it AND I wouldn't keep money in it. It is a useful account to have if you want to move money from your bank but don't want to immediately trade or want to get out of one investment and have the cash available to do something else. This is my recommendation too, assuming you meant &quo...
by ogd
Wed Nov 26, 2014 1:11 pm
 
Forum: Personal Finance (Not Investing)
Topic: Vanguard Money Market Fund - keep open ?
Replies: 17
Views: 1491

Re: Valuation of EE Savings Bonds

EE bonds are ridiculously hard to reason about. My position as of late has been: forget them, it's just not worth it. Here's an example of how twisted the math can get: Q: If person A buys a EE bond and person B is somehow offered, every year, the implied rate of that EE bond for its remaining term,...
by ogd
Wed Nov 26, 2014 1:00 pm
 
Forum: Investing - Theory, News & General
Topic: Valuation of EE Savings Bonds
Replies: 43
Views: 2563

Re: Vanguard Money Market Fund - keep open ?

Vanguard will not close this particular fund below the minimum initial requirement, presumably because of its expected use as cash. I haven't been all the way to zero, but routinely below $100 with no hint that they'd object.
by ogd
Tue Nov 25, 2014 1:23 pm
 
Forum: Personal Finance (Not Investing)
Topic: Vanguard Money Market Fund - keep open ?
Replies: 17
Views: 1491

Re: Been out of market since 2008 and can't get back in

This is a good talking-to by Barry Ritholtz that I usually recommend for reading to people in your situation: http://www.washingtonpost.com/business/missed-the-big-market-rally-heres-what-to-do-now/2013/06/14/b9b96894-d1e3-11e2-a73e-826d299ff459_story.html It's important to address the problem of yo...
by ogd
Tue Nov 25, 2014 1:17 pm
 
Forum: Investing - Help with Personal Investments
Topic: Been out of market since 2008 and can't get back in
Replies: 52
Views: 4871

Re: bond fund yield variation and the case for long-term fun

Putting aside the total return and opportunity cost (which are very important considerations) and looking at it from a cash flow perspective: if one invest X into a long-term muni bond fund and interest rates slowly rise would one be making 2% out of the original X and eventually, say 3% ? Total re...
by ogd
Tue Nov 25, 2014 1:09 pm
 
Forum: Investing - Theory, News & General
Topic: bond fund yield variation and the case for long-term fund
Replies: 18
Views: 1373

Re: bond fund yield variation and the case for long-term fun

My understanding is that a bond fund is like a giant bond ladder, the fund manager continuously buys new bonds ... snip Yes, this is accurate. ...so assuming that interest rates don't jump by a lot of all of sudden it should gradually climb to the newer rates. Moreover, presumably, new bonds are bo...
by ogd
Mon Nov 24, 2014 8:59 pm
 
Forum: Investing - Theory, News & General
Topic: bond fund yield variation and the case for long-term fund
Replies: 18
Views: 1373

Re: Vanguard Ultra-Short-Term Bond Fund coming in early 2015

...If you need small transactions for checks, accumulating dividends, sweep etc you absolutely hate floating NAV in a taxable account. Maybe "hate" is not a strong enough word -- "abhor"? "Loathe"? Either way, I'd be out of there tomorrow and would use my checking acco...
by ogd
Mon Nov 24, 2014 8:19 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard Ultra-Short-Term Bond Fund coming in early 2015.
Replies: 39
Views: 4219

Re: Vanguard Ultra-Short-Term Bond Fund coming in early 2015

Yet even though Vanguard is certain that investors will reject floating NAVs in a money market fund, Vanguard expects them to flock to an ultra-short bond fund, which has all of the same supposed deal-breaker problems. The difference is the purpose / expected usage of the fund. If you need small tr...
by ogd
Mon Nov 24, 2014 6:13 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard Ultra-Short-Term Bond Fund coming in early 2015.
Replies: 39
Views: 4219

Re: Advise on Muni Fund or Muni ETF

Thank you! Would it make sense to automatically invest in two muni funds: TFI (long) and SHM (short)? Nope. I'm not normally this definitive (as you might have noticed), but the numbers speak for themselves: even in a 40% tax bracket, SHM makes the same as a good savings account (0.56% vs 0.95% x 0...
by ogd
Mon Nov 24, 2014 5:49 pm
 
Forum: Investing - Help with Personal Investments
Topic: Advise on Muni Fund or Muni ETF
Replies: 3
Views: 352

Re: Advise on Muni Fund or Muni ETF

I checked out Vanguard’s VWLTX, and it looks good, but Schwab doesn’t allow automatic commission-free investments in that fund. Another options I consider are ETFs TFI and HYMB, they would be commission-free in Schwab. But expense ratios are 0.3 and 0.5 respectively compared to Vanguard’s fund 0.2 ...
by ogd
Mon Nov 24, 2014 4:50 pm
 
Forum: Investing - Help with Personal Investments
Topic: Advise on Muni Fund or Muni ETF
Replies: 3
Views: 352

Re: bond fund yield variation and the case for long-term fun

FWIW, it appears Vanguard will announce an ultra- short-term bond fund soon, probably today. I couldn't find a link on vanguard.com, but did find a cached version of the announcement on Google. The Google Cache link has the actual Vanguard link: https://personal.vanguard.com/us/insights/article/fun...
by ogd
Mon Nov 24, 2014 2:24 pm
 
Forum: Investing - Theory, News & General
Topic: bond fund yield variation and the case for long-term fund
Replies: 18
Views: 1373

Re: bond fund yield variation and the case for long-term fun

So if someone is invested for the very long term and only interested in the yield should one choose a long-term bund fund ? No, not at all. Interest rate risk does not magically disappear if you don't sell. In the interest of completeness, I should also answer the obvious question raised by the mes...
by ogd
Mon Nov 24, 2014 2:20 pm
 
Forum: Investing - Theory, News & General
Topic: bond fund yield variation and the case for long-term fund
Replies: 18
Views: 1373

Re: bond fund yield variation and the case for long-term fun

So if someone is invested for the very long term and only interested in the yield should one choose a long-term bund fund ? No, not at all. Interest rate risk does not magically disappear if you don't sell. It still causes you the same amount of losses, like so: Suppose you own a 30 year bond at 3%...
by ogd
Mon Nov 24, 2014 2:12 pm
 
Forum: Investing - Theory, News & General
Topic: bond fund yield variation and the case for long-term fund
Replies: 18
Views: 1373

Re: Why the differences between VBTLX and BND?

Any answer for my question about "distribution yield" being stated on vbtlx fact sheet but not bnd fact sheet? It is a big difference when dealing with such small yields. What do you mean, "a big difference"? How does it affect your choice? You should be looking at SEC yield any...
by ogd
Sat Nov 22, 2014 7:27 pm
 
Forum: Investing - Help with Personal Investments
Topic: Why the differences between VBTLX and BND?
Replies: 10
Views: 1037

Re: Movie dialog, "The Social Network." Hard to hear?

A few other things you can do to mitigate, with some audio systems, if you're not ready to go to subtitles: * Get a center speaker and turn it up, for the "overly realistic" scenes * Use volume compression. This is variously called "night mode", "volume leveling", "...
by ogd
Sat Nov 22, 2014 2:38 pm
 
Forum: Personal Consumer Issues
Topic: Movie dialog, "The Social Network." Hard to hear?
Replies: 14
Views: 1457

Re: Using Bond Funds for market pullbacks

Here's a concrete example for you: Vanguard's Asset Allocation Fund, which was doing tactical allocation, went all-in in equities in summer 2008, after the first leg of the pullback. Summer . A few years latter, it was shut down and good riddance. I am not familiar with this situation, but if I had...
by ogd
Sat Nov 22, 2014 2:19 pm
 
Forum: Investing - Theory, News & General
Topic: Using Bond Funds for market pullbacks
Replies: 19
Views: 820

Re: Using Bond Funds for market pullbacks

Yes, I agree completely if the equity market sits in a depressed state for years, then this would be a bad strategy. Here's a concrete example for you: Vanguard's Asset Allocation Fund, which was doing tactical allocation, went all-in in equities in summer 2008, after the first leg of the pullback....
by ogd
Sat Nov 22, 2014 1:20 pm
 
Forum: Investing - Theory, News & General
Topic: Using Bond Funds for market pullbacks
Replies: 19
Views: 820

Re: Using Bond Funds for market pullbacks

I guess that I view it as selling a bond fund that likely has not depressed in value and purchasing an equity that is 15% or 30% cheaper. Even if takes two or three years, the worst I lose out on is the monthly dividend the bond would have paid. Eventually I get back to my 75/25 AA and life goes on...
by ogd
Sat Nov 22, 2014 1:10 pm
 
Forum: Investing - Theory, News & General
Topic: Using Bond Funds for market pullbacks
Replies: 19
Views: 820

Re: Using Bond Funds for market pullbacks

What you are contemplating is a form of tactical asset allocation, i.e. having different allocations based on what the market is doing. The hole in your plan is that there are fund managers trying to do this very thing, and failing miserably: http://www.cbsnews.com/news/tactical-asset-allocation-ano...
by ogd
Sat Nov 22, 2014 12:55 pm
 
Forum: Investing - Theory, News & General
Topic: Using Bond Funds for market pullbacks
Replies: 19
Views: 820

Re: Diversification among Bonds?

a "Really Total Bond Market" doesn't exist because it's not really needed. It is needed because it is the o n l y benchmark for (active and passive) investors. It exists because it is (approximately) investable. Lots of active or passive funds invest in global portfolios of government bon...
by ogd
Fri Nov 21, 2014 5:44 pm
 
Forum: Investing - Theory, News & General
Topic: Diversification among Bonds?
Replies: 32
Views: 2886

Re: Diversification among Bonds?

Dandy: this is a great starter example for me to expand on how fixed income thinking is so different than stock market considerations, and how it's so entirely dependent on personal factors -- tax rate, equity allocation and availability. But to say fixed income diversification is basically a waste ...
by ogd
Wed Nov 19, 2014 5:08 pm
 
Forum: Investing - Theory, News & General
Topic: Diversification among Bonds?
Replies: 32
Views: 2886

Re: Playing interest rates on treasury bonds

This is a very advanced trade and with all due respect, the fact that you considered 1 share for 1 share as an option does not fit the level of expertise required. I would not consider this trade myself for the same reason. The proper ratio that would cancel out parallel moves in the curve (leaving ...
by ogd
Wed Nov 19, 2014 4:30 pm
 
Forum: Investing - Help with Personal Investments
Topic: Playing interest rates on treasury bonds
Replies: 1
Views: 183

Re: Poll: Net cost of your checking account annually?

I am in the fortunate $50+ profit camp here. No fees of any kind and interest YtD is $160 and my use is actually checking , i.e. a reasonable cushion of cash between deposits and bills and not a savings account. There are too few of us in this bucket. We need more people! Some of y'all from the -$50...
by ogd
Wed Nov 19, 2014 3:40 pm
 
Forum: Personal Finance (Not Investing)
Topic: Poll: Net cost of your checking account annually?
Replies: 44
Views: 2266

Re: how to make money like a billionaire

The other way in which billionaires are different, in addition to need/ability, is that most of them are heavily invested in the economy anyway, through their primary business. Leaving aside company founders, even a hedge fund manager's salary will eventually dry up if the economy goes down and stay...
by ogd
Wed Nov 19, 2014 2:51 pm
 
Forum: Investing - Theory, News & General
Topic: how to make money like a billionaire
Replies: 116
Views: 9571

Re: Diversification among Bonds?

Would this mindset change on the verge of retirement and starting the distribution phase? How about including a tips ladder and funding the continued rolling of a tips ladder 15 years out? Well, yes, what I said above should be restricted to "diversification among nominal bonds" (the OP o...
by ogd
Wed Nov 19, 2014 2:37 pm
 
Forum: Investing - Theory, News & General
Topic: Diversification among Bonds?
Replies: 32
Views: 2886

Re: Fund placement and expenses

Total $2,200/$300,000 = 0.73% weighted average ER Total $1,400/$300,000 = 0.47% weighted average ER For example, if stocks are expected to return 7% and bonds 4%, I keep thinking that 1% of 4% is 25% and therefore I should use the high ER in my stock fund. I think this thinking is incorrect and my ...
by ogd
Wed Nov 19, 2014 1:58 pm
 
Forum: Investing - Theory, News & General
Topic: Fund placement and expenses
Replies: 7
Views: 486

Re: Diversification among Bonds?

I think the value of bond diversification is frequently over-estimated by simple (and flawed) analogy with stocks. Bonds are most definitely not stocks. First off, in fixed income we have several assets that are for all intents and purposes 100% safe: Treasuries, bank products insured by FDIC and sa...
by ogd
Wed Nov 19, 2014 1:38 pm
 
Forum: Investing - Theory, News & General
Topic: Diversification among Bonds?
Replies: 32
Views: 2886

Re: 10 Reasons why Merriman dislikes Total Stock Mkt

It won't provide much protection in a bear market, but it will reduce the long term returns for young investors. That's the "glass half empty" view. How about the "glass half full": it won't reduce long term returns much, but it does provide some protection in a down market. Sud...
by ogd
Wed Nov 19, 2014 1:17 pm
 
Forum: Investing - Theory, News & General
Topic: 10 Reasons why Merriman dislikes Total Stock Mkt
Replies: 88
Views: 8235

Re: Investing In Currency?

If you want to "invest in currency" -- or let's call it "currency exposure" -- what you want is an asset that actually returns something. Otherwise, you have money earning zero expected *nominal* return, but with high volatility. From a risk efficiency perspective, this is very b...
by ogd
Wed Nov 19, 2014 1:07 pm
 
Forum: Investing - Theory, News & General
Topic: Investing In Currency?
Replies: 33
Views: 2179

Re: California Long Term Tax Exempt Fund - VCITX

For the stated purpose, I would say no. This fund is much longer than it looks from duration alone. It's a rather arcane discussion, but I can give you a short version: some of the bonds in the fund are callable , and likely to get called soon. Because of that, they are considered relatively short d...
by ogd
Tue Nov 18, 2014 6:35 pm
 
Forum: Investing - Help with Personal Investments
Topic: California Long Term Tax Exempt Fund - VCITX
Replies: 1
Views: 371

Re: CA int municipal bond fund vs. Vanguard int muni fund

Ilan, I might go against the grain here, but I'd recommend that you stay where you are or even move in the direction of more diversification, not less. Like you, I'm in a high tax bracket with a large chunk of bonds in taxable. My own determination on how to do this is to hold no more than 50% of to...
by ogd
Tue Nov 18, 2014 2:57 pm
 
Forum: Investing - Help with Personal Investments
Topic: CA int municipal bond fund vs. Vanguard int muni fund
Replies: 32
Views: 2238

Re: Investing in Bonds (VBMFX) now?

Thank you for your reply, what is your onion on Vbmfx total market bond duration 5.6 verse vbilx intermediate bond fund duration at 6.5 vbilx seems to have done better, but I was think of going with the total bond with a lower duration rate in case interest rates rise Thank you Either is fine. VBIL...
by ogd
Tue Nov 18, 2014 1:35 pm
 
Forum: Investing - Help with Personal Investments
Topic: Investing in Bonds (VBMFX) now?
Replies: 8
Views: 1600

Re: Gold And Silver As A Currency Hedge?

Remove the word gold after mining. Mining is dangerous, Coal Baron Indicted For Role In Mine Disaster, so should we stop all mining? Let's not get political, this is about investing. Yes, but we do not have huge vaults of coal sitting around doing nothing. If we did, and we still mined, I'd feel th...
by ogd
Mon Nov 17, 2014 9:30 pm
 
Forum: Investing - Help with Personal Investments
Topic: Gold And Silver As A Currency Hedge?
Replies: 125
Views: 10685

Re: Investing in Bonds (VBMFX) now?

I am at 100% stock with some longer term investment money , not retirement money. I want to move to a 80/20 , 20% bond, should I invest now in the VBMFX bond fund ? if interest rise any time soon ? or should I just put it in some shorter term bonds Yes, you should if 80/20 is your plan going forwar...
by ogd
Mon Nov 17, 2014 7:25 pm
 
Forum: Investing - Help with Personal Investments
Topic: Investing in Bonds (VBMFX) now?
Replies: 8
Views: 1600

Re: Why I Like Index Funds

One purported minus of index funds is that since they are capitalization-weighted, they buy more of the stocks that are popular and have gone up a lot in value. In that sense, they chase winners. This does seem to be a form of running with the crowd. Several counterpoints: 1) The funds do not actua...
by ogd
Mon Nov 17, 2014 7:16 pm
 
Forum: Investing - Theory, News & General
Topic: Why I Like Index Funds
Replies: 26
Views: 3928

Re: Gold And Silver As A Currency Hedge?

"Horses" were "transportation" for 10,000 years. Until they weren't, and they won't be ever again. They are now "entertainment". Just because something was among the few viable currencies in the dark ages of humanity, when one couldn't count on any particular society to...
by ogd
Mon Nov 17, 2014 6:04 pm
 
Forum: Investing - Help with Personal Investments
Topic: Gold And Silver As A Currency Hedge?
Replies: 125
Views: 10685

Re: Why I Like Index Funds

Could you now list the reasons to not be in an index fund? A more balanced approach to discussing index funds is necessary to see the whole picture. Basically, complete and impartial data is always appreciated. You are well suited to give newbies a complete picture. Here is the only negative: 1) An...
by ogd
Mon Nov 17, 2014 5:47 pm
 
Forum: Investing - Theory, News & General
Topic: Why I Like Index Funds
Replies: 26
Views: 3928

Re: Vanguard vs IB for investment and IRA

The benefits of Vanguard IMHO are two-fold: 1) Access to the Admiral mutual funds. The comparison page of funds vs ETFs is here: http://www.bogleheads.org/wiki/ETFs_vs_mutual_funds . Some people (like me) like the mutual funds much more than ETFs even as we understand and sometimes use the latter. 2...
by ogd
Mon Nov 17, 2014 1:17 am
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard vs IB for investment and IRA [Interactive Brokers]
Replies: 15
Views: 1742

Re: Explain purpose of bonds in low yields

Since interest rates are currently at rock bottom, bonds bought now have no price upside right? Like bonds purchased now could never really attain capital gains long term because lower yield bonds can't really occur or am I misunderstanding? This is beside the point, really. Bonds give you almost t...
by ogd
Mon Nov 17, 2014 1:03 am
 
Forum: Investing - Help with Personal Investments
Topic: Explain purpose of bonds in low yields
Replies: 10
Views: 820

Re: Guggenheim BulletShares High Yield Corporate ETFs

Ogd, You may be right, but checking in Morningstar, the average credit quality of BSJJ, HYG, and VWEHX (Vanguard High Yield Corporate fund) are the same, "B". Does that help you understand the risk? I am far from being an expert, but if Vanguard is considered a careful fund, then BSJJ can...
by ogd
Sat Nov 15, 2014 2:53 pm
 
Forum: Investing - Help with Personal Investments
Topic: Guggenheim BulletShares High Yield Corporate ETFs
Replies: 14
Views: 1171

Re: Guggenheim BulletShares High Yield Corporate ETFs

Sorry, but you are looking at the wrong ETF. The 2019 High Yield Corporate ETF is BSJJ, and had a SEC yield of 5.38%. Further, these instruments are specifically designed to be kept to maturity, so I do not see any point in discussing the impact of selling earlier. Ah, you are right. My bad. Howeve...
by ogd
Sat Nov 15, 2014 2:11 pm
 
Forum: Investing - Help with Personal Investments
Topic: Guggenheim BulletShares High Yield Corporate ETFs
Replies: 14
Views: 1171

Re: Guggenheim BulletShares High Yield Corporate ETFs

It's much simpler than that. BSCJ (the 2019 fund) pays 2.02% SEC yield and it will not make a penny more than that by 2019. It has considerable credit risk. It still has interest rate risk, in that if rates rise greatly in, say, 2016, you will not be able to take advantage of them. Only cash has no ...
by ogd
Sat Nov 15, 2014 12:49 pm
 
Forum: Investing - Help with Personal Investments
Topic: Guggenheim BulletShares High Yield Corporate ETFs
Replies: 14
Views: 1171
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