## Search found 9264 matches

Wed May 23, 2018 10:39 pm
Forum: Investing - Theory, News & General
Topic: 5 yr CD up to 3.41% APY, NO EWP for seniors in IRA, but with catch
Replies: 19
Views: 3198

### Re: 5 yr CD up to 3.41% APY, NO EWP for seniors in IRA, but with catch

Here are my rough calculations on the net yield this would be for me if I broke my 2.7% CD, assuming EWP of six months of interest = 1.35%. Net interest rate for first year is 4.2% - 1.35% = 2.85%, then for next four years I earn 4.2%. So for the 5-year period, net yield is: ( (1+2.85%) * (1+4.2%)^4...
Wed May 23, 2018 9:44 pm
Forum: Investing - Theory, News & General
Topic: 2-year CDs at Vanguard and Fidelity Today
Replies: 203
Views: 27329

### Re: 2-year CDs at Vanguard and Fidelity Today

I did some more work, trying to see if I could work out the yield to worst assuming different call dates, and using the spreadsheet XIRR function. I couldn't think of an easier way to do it, since the coupon rate changes. The closest I could come was an IRR of 3.03% if called on 5/20/2020, so a coup...
Wed May 23, 2018 7:35 pm
Forum: Investing - Theory, News & General
Topic: 2-year CDs at Vanguard and Fidelity Today
Replies: 203
Views: 27329

### Re: 2-year CDs at Vanguard and Fidelity Today

CUSIP 48125YZ98 Here's what I see when I search for this CUSIP at Vanguard. There are 10 available with minimum quantity 1. Coupon is 1.25%, and ask price is 96.857. Maturity date is 5/20/21, so basically a 3-year CD. Yield to maturity is 3.332% and yield to worst is 3.011%. The fact that YTW is lo...
Wed May 23, 2018 6:43 pm
Forum: Personal Consumer Issues
Topic: Tesla Autopilot, worth it?
Replies: 31
Views: 1988

### Re: Tesla Autopilot, worth it?

MotoTrojan wrote:
Wed May 23, 2018 10:57 am
Add it later on. It’ll extend that new car feeling. It’s just a software change.
A software change plus \$1,000 more than if you get it when you buy.

Kevin
Wed May 23, 2018 6:41 pm
Forum: Investing - Theory, News & General
Topic: 5 yr CD up to 3.41% APY, NO EWP for seniors in IRA, but with catch
Replies: 19
Views: 3198

### Re: 5 yr CD up to 3.41% APY, NO EWP for seniors in IRA, but with catch

Not wanting to hijack but I see you are active on this thread and you see seem to be the go to person on this topic Achieva FCU in Florida is offering 5 year CD within an IRA at 4.2% APY with a minimum of \$75k. Becoming a member is reasonably easy and inexpensive. I do not know what the EWP is but ...
Tue May 22, 2018 11:28 pm
Forum: Investing - Theory, News & General
Topic: 5 yr CD up to 3.41% APY, NO EWP for seniors in IRA, but with catch
Replies: 19
Views: 3198

### Re: 5 yr CD up to 3.41% APY, NO EWP for seniors in IRA, but with catch

Lower bid ask spreads only matter if you sell before maturity. Comparable or higher TEY in taxable is my bigger reason.

At any rate, staying short term is consistent with your outlook.
Tue May 22, 2018 7:18 pm
Forum: Investing - Theory, News & General
Topic: 2-year CDs at Vanguard and Fidelity Today
Replies: 203
Views: 27329

### Re: 2-year CDs at Vanguard and Fidelity Today

Is a multi-step coupon (CD) just a step up CD (different yields for later time periods)? I always thought the owner controlled if and when the step up occurred and I'm not sure how that would work with a secondary CD through Vanguard. Would the yield Vanguard shows take that all into account? Thank...
Tue May 22, 2018 6:33 pm
Forum: Investing - Theory, News & General
Topic: Do I understand duration correctly?
Replies: 33
Views: 2409

### Re: Do I understand duration correctly?

The graph may be misleading, but in the opposite way you state. The bond yields represent returns for the subsequent 1 or 3 year periods, while the inflation line is for the previous year. So the real yield of the bond is relative to the CPI change a year later--even better than just eyeballing the ...
Tue May 22, 2018 11:31 am
Forum: Investing - Theory, News & General
Topic: Do I understand duration correctly?
Replies: 33
Views: 2409

### Re: Do I understand duration correctly?

Note a rolling investment in short instruments does not work because you can't predict the available yield at reinvestment. Although technically this is correct if you really want to match the duration of the bond to the duration of the liability (nominal or real), historically rolling short-term b...
Tue May 22, 2018 10:14 am
Forum: Investing - Theory, News & General
Topic: 5 yr CD up to 3.41% APY, NO EWP for seniors in IRA, but with catch
Replies: 19
Views: 3198

### Re: 5 yr CD up to 3.41% APY, NO EWP for seniors in IRA, but with catch

I don't believe that past history necessarily has predictive value, but there is some potential rational explanation for such a pattern when it comes to Treasury yields, and if the pattern is real it does seem like some time soon the trend is due for a reversal with rising rates. That sometime may ...
Mon May 21, 2018 9:32 pm
Forum: Investing - Theory, News & General
Topic: Do I understand duration correctly?
Replies: 33
Views: 2409

### Re: Do I understand duration correctly?

Note a rolling investment in short instruments does not work because you can't predict the available yield at reinvestment. Although technically this is correct if you really want to match the duration of the bond to the duration of the liability (nominal or real), historically rolling short-term b...
Mon May 21, 2018 8:30 pm
Forum: Investing - Theory, News & General
Topic: Bond Yields and Federal Funds Rate
Replies: 30
Views: 2410

### Re: Bond Yields and Federal Funds Rate

For example, if I use the most recent 1-year and 2-year CMT yields of 2.32% and 2.55%, solving for Yf1n in the above equation for n=2 indicates that the 1-year yield would have to increase to 2.78% in one year for the return of holding a 2-year Treasury to maturity to equal the return of rolling 1-...
Mon May 21, 2018 7:24 pm
Forum: Personal Consumer Issues
Topic: Tesla Autopilot, worth it?
Replies: 31
Views: 1988

### Re: Tesla Autopilot, worth it?

Personally, I would not buy a Tesla without it. I've been using AP1 on Model S since December 2015, and have loved it. Have been using AP2 on a newer Tesla since December 2017, and I'd say it's on par with AP1 if not a bit better after an update a month or two ago. And it keeps getting better. For m...
Mon May 21, 2018 5:00 pm
Forum: Investing - Help with Personal Investments
Topic: Vangaurd Municipal Money Market VMSXX 1.39%
Replies: 76
Views: 7209

### Re: Vangaurd Municipal Money Market VMSXX 1.39%

Similar conclusion by simply looking at YTD returns: Prime MM 0.61%, Muni MM = 0.46% = 0.61% * (1-24%).

Kevin
Mon May 21, 2018 4:53 pm
Forum: Investing - Help with Personal Investments
Topic: Vangaurd Municipal Money Market VMSXX 1.39%
Replies: 76
Views: 7209

### Re: Vangaurd Municipal Money Market VMSXX 1.39%

I compared the past 3 months. The Muni MM returned 23.8% less than Prime. So a toss up for those in the 24% bracket, not worth it for those under, but worth it for those over. I calculated averages from 12/15/2017 through 5/18/2018, choosing the start date as when the first big upswing of the previ...
Mon May 21, 2018 2:19 pm
Forum: Investing - Help with Personal Investments
Topic: Vangaurd Municipal Money Market VMSXX 1.39%
Replies: 76
Views: 7209

### Re: Vangaurd Municipal Money Market VMSXX 1.39%

Any easy way to adjust for the cyclical effect so I can see if it's worth it? You'd think this would be a published number. There's no way to compare without it. I kind of addressed this in this post earlier in the thread: https://www.bogleheads.org/forum/viewtopic.php?f=1&t=246263#p3935760. This s...
Mon May 21, 2018 2:11 pm
Forum: Investing - Theory, News & General
Topic: Bond Yields and Federal Funds Rate
Replies: 30
Views: 2410

### Re: Bond Yields and Federal Funds Rate

To add to this, the Federal Reserve themselves say that the Federal Funds Rate does not drive longer term bond yields & interest rates anymore. They've written dozens, maybe hundreds by now!, papers and blogs about it. If you search for "Greenspan conundrum" on some of the local Federal Reserve web...
Mon May 21, 2018 10:26 am
Forum: Investing - Help with Personal Investments
Topic: Ally No Penalty CD @1.75% vs VMMXX @ 1.87%
Replies: 26
Views: 3225

### Re: Ally No Penalty CD @1.75% vs VMMXX @ 1.87%

Interesting, I did not know funds transferred into Prime MM are subject to 7-10 day hold even when used to buy other mutual funds.. To clarify, you can use cash transferred into a money market fund from an external bank to buy shares of another mutual fund immediately , just as you could have bough...
Sun May 20, 2018 8:08 pm
Forum: Investing - Help with Personal Investments
Topic: Ally No Penalty CD @1.75% vs VMMXX @ 1.87%
Replies: 26
Views: 3225

### Re: Ally No Penalty CD @1.75% vs VMMXX @ 1.87%

There should be no debate about the ER--SEC yield is net of ER--period. Anyone who says or thinks otherwise just doesn't understand SEC yield. You can actually prove that for yourself if you want. I describe money market SEC yield in more detail in this post, and in a subsequent post show you can ca...
Sun May 20, 2018 7:50 pm
Forum: Investing - Theory, News & General
Topic: CDs in Vanguard IRA
Replies: 2
Views: 398

### Re: CDs in Vanguard IRA

If you're planning on having CDs be a large part of your portfolio, I'd consider Fidelity too. I usually find better CD rates at Fidelity on the secondary market, and sometimes even their new-issue rates seem to increase a little before Vanguard. Fidelity also has excellent customer service, and we ...
Sun May 20, 2018 7:41 pm
Forum: Investing - Theory, News & General
Topic: Bank Interest Rates — when will they go up?
Replies: 25
Views: 2761

### Re: Bank Interest Rates — when will they go up?

travelogue wrote:
Sun May 20, 2018 5:08 pm
Thanks for the perspective and information, everyone! I’ve been watching the equity markets react to rate changes and was just wondering when other rates might move as well.
I think we've shown that many of them have been moving.

Kevin
Sun May 20, 2018 7:39 pm
Forum: Investing - Help with Personal Investments
Topic: Vangaurd Municipal Money Market VMSXX 1.39%
Replies: 76
Views: 7209

### Re: Vangaurd Municipal Money Market VMSXX 1.39%

Still puzzling to me is why the CA mm yield (and presumably national muni?) is going down, whereas the Prime mm and other rates are going up. I am not aware of any adverse muni news that cause the muni market to change so much in the opposite direction. Anyone has a guess? If you review the thread,...
Sun May 20, 2018 7:36 pm
Forum: Investing - Help with Personal Investments
Topic: Vangaurd Municipal Money Market VMSXX 1.39%
Replies: 76
Views: 7209

### Re: Vangaurd Municipal Money Market VMSXX 1.39%

This may be a silly question but I am planning to swap my VMSXX to the Prime Market Fund, do I lose the accumulated interest for the month? I bought VMSXX on 5/2. I would almost certainly think I would get the interest since that is earned by me but who knows sometimes some of these rules are nonse...
Sun May 20, 2018 7:32 pm
Forum: Investing - Theory, News & General
Topic: Bond Yields and Federal Funds Rate
Replies: 30
Views: 2410

### Re: Bond Yields and Federal Funds Rate

My understanding of the EH is more about it explaining the shape of the yield curve based on expectations of future short term rates, as opposed to being good at predicting future short term rates. I'd think that the failure to accurately predict future rates is an explanation for liquidity preferen...
Sun May 20, 2018 4:11 pm
Forum: Investing - Theory, News & General
Topic: Challenge: guess the effect of rebalancing (by interval or bands) in 2008-2009
Replies: 35
Views: 3583

### Re: Challenge: guess the effect of rebalancing (by interval or bands) in 2008-2009

I always like to take another look when dollar differences seem small when looking at relatively small dollar amounts. If you scale it up by 100, so starting with \$1,000,000 instead of \$10,000, the difference between annual rebalancing and monthly rebalancing would have been \$21,900 (in favor of ann...
Sun May 20, 2018 3:54 pm
Forum: Investing - Help with Personal Investments
Topic: Vangaurd Municipal Money Market VMSXX 1.39%
Replies: 76
Views: 7209

### Re: Vangaurd Municipal Money Market VMSXX 1.39%

If you want to take the time, you can actually figure out what your yield was yesterday--not averaged over previous seven days. In doing so, I calculate that the yield of CA muni MM dropped from 1.28% on 5/12 to 1.17% on 5/19 (yesterday). This equates to a drop in TEY for me of 1.97% to 1.80%, and t...
Sun May 20, 2018 2:17 pm
Forum: Investing - Help with Personal Investments
Topic: Vangaurd Municipal Money Market VMSXX 1.39%
Replies: 76
Views: 7209

### Re: Vangaurd Municipal Money Market VMSXX 1.39%

Practically speaking, using the daily SEC yield to calculate the TEY for comparison with other investments might not be the best. As some have experiences (myself included), at peaks it gives a false impression that the muni MM is much much better than other investments. So what is a better way to ...
Sun May 20, 2018 12:28 pm
Forum: Investing - Theory, News & General
Topic: Bond Yields and Federal Funds Rate
Replies: 30
Views: 2410

### Re: Bond Yields and Federal Funds Rate

I always appreciate your insights, lack_ey, but the following statements seem somewhat contradictory: To clarify, I mean that the expectations hypothesis is a very bad model for bond yields and that the shape of the yield curve is not generally indicative of the direction of future short rates (whic...
Sat May 19, 2018 10:19 pm
Forum: Investing - Help with Personal Investments
Topic: Vangaurd Municipal Money Market VMSXX 1.39%
Replies: 76
Views: 7209

### Re: Vangaurd Municipal Money Market VMSXX 1.39%

Here I zoomed in on 1995-2000:

I do see lots of peaks at or near the quarter boundaries.

Kevin
Sat May 19, 2018 10:05 pm
Forum: Investing - Theory, News & General
Topic: Bond Yields and Federal Funds Rate
Replies: 30
Views: 2410

### Re: Bond Yields and Federal Funds Rate

It doesn't do it justice to call the empirical evidence in support of the expectations hypothesis "weak" when IIRC over some period I checked, it actually predicted future rate changes so badly it got the sign wrong on average. For decades nobody has worked from the expectations hypothesis as it's ...
Sat May 19, 2018 8:59 pm
Forum: Investing - Help with Personal Investments
Topic: Vangaurd Municipal Money Market VMSXX 1.39%
Replies: 76
Views: 7209

### Re: Vangaurd Municipal Money Market VMSXX 1.39%

But I wish I could easily plot MM yields for a couple decades of data. I could brute-force it in about 30 minutes I suppose. Not not tonight. :D I pretty quickly found my spreadsheet with the script in it, and ran it for muni MM from 1/4/1993, which is when SEC yields were first published (the fund...
Sat May 19, 2018 8:26 pm
Forum: Investing - Help with Personal Investments
Topic: Vangaurd Municipal Money Market VMSXX 1.39%
Replies: 76
Views: 7209

### Re: Vangaurd Municipal Money Market VMSXX 1.39%

I just plotted the yield of the Muni MM fund from 1994-1996, and to my eye there looks to be monthly peaks, not quarterly. No time to post a chart right now. But I wish I could easily plot MM yields for a couple decades of data. I could brute-force it in about 30 minutes I suppose. Not not tonight....
Sat May 19, 2018 8:00 pm
Forum: Investing - Theory, News & General
Topic: Bond Yields and Federal Funds Rate
Replies: 30
Views: 2410

### Re: Bond Yields and Federal Funds Rate

If you go by the Larry Swedroe guideline of 20 bps/year to extend maturity, you wouldn't extend beyond 2-year maturity. It seems to me that if you were to apply a heuristic like that for curve positioning, the additional yield you should not be a constant but should depend at least in some part on ...
Sat May 19, 2018 6:11 pm
Forum: Investing - Theory, News & General
Topic: 2-year CDs at Vanguard and Fidelity Today
Replies: 203
Views: 27329

### Re: 2-year CDs at Vanguard and Fidelity Today

The agency bonds are rated AA+ because that is the rating of the US Government. So, same rating as Treasuries. It's interesting that Fidelity shows both Moody's AAA and S&P AA+ ratings for most Agency bonds, but only Moody's AAA for Treasuries. A few Agencies only show S&P AA+ and nothing for Moody...
Sat May 19, 2018 5:44 pm
Forum: Investing - Help with Personal Investments
Topic: Vangaurd Municipal Money Market VMSXX 1.39%
Replies: 76
Views: 7209

### Re: Vangaurd Municipal Money Market VMSXX 1.39%

Inspired by neurosphere 's chart, I made an updated chart... Great, thanks! I was in the process of updating the chart and then got distracted and moved on to something else. Thanks for adding the quarter-lines. It emphasises that indeed there is a quarterly spike in muti rates. I also "see" this e...
Sat May 19, 2018 5:31 pm
Forum: Investing - Theory, News & General
Topic: Bond Yields and Federal Funds Rate
Replies: 30
Views: 2410

### Re: Bond Yields and Federal Funds Rate

Interesting analysis, Kevin. Thanks for putting it together. So, actionably: given the data presented, wouldn't short-term CD's, or a CD ladder, be a more stable investment than Total Bond? aloha, j I think a ladder of Treasuries, CDs or munis, depending on whether in tax-advantaged or taxable, out...
Sat May 19, 2018 3:27 pm
Forum: Investing - Theory, News & General
Topic: 2-year CDs at Vanguard and Fidelity Today
Replies: 203
Views: 27329

### Re: 2-year CDs at Vanguard and Fidelity Today

I am new to looking at individual bonds and had a question. Looking at Fidelity's bond screens I see that at the two year maturity mark CD's beat Treasuries but I also noticed Agency bonds yielding very close to CD rates. They are rated AA+, not AAA. Are these Agency bonds really any less safe or l...
Sat May 19, 2018 3:16 pm
Forum: Investing - Theory, News & General
Topic: 5 yr CD up to 3.41% APY, NO EWP for seniors in IRA, but with catch
Replies: 19
Views: 3198

### Re: 5 yr CD up to 3.41% APY, NO EWP for seniors in IRA, but with catch

Would you now recommend brokered CDs over treasuries for the 22% marginal tax bracket, Kevin? Following your posts, the rates seem to be increasing nearly daily. I wonder how much longer this will continue. Not necessarily in a taxable account if you pay state income tax, but it's your marginal sta...
Sat May 19, 2018 2:57 pm
Forum: Investing - Help with Personal Investments
Topic: Vangaurd Municipal Money Market VMSXX 1.39%
Replies: 76
Views: 7209

### Re: Vangaurd Municipal Money Market VMSXX 1.39%

The ends of the last 2 quarters were preceded by hikes in the FFR just a couple weeks before those ends. I would expect the same kind of hike in June before the end of this quarter. That doesn't explain it. If it did, we'd see a similar cycle in Prime MM fund, which we don't. It has just been conti...
Sat May 19, 2018 2:31 pm
Forum: Investing - Help with Personal Investments
Topic: Intermediate Term Treasury vs Tax Exempt Fund
Replies: 27
Views: 2033

### Re: Intermediate Term Treasury vs Tax Exempt Fund

That is great to know. I started reading stuff about primary and secondary market. Need to know more about pros / cons of both. You will get the best pricing at auction--same as institutional investors--but you have more flexibility about when to buy and exactly what maturities to buy on secondary ...
Sat May 19, 2018 1:46 pm
Forum: Investing - Theory, News & General
Topic: Bond Yields and Federal Funds Rate
Replies: 30
Views: 2410

### Re: Bond Yields and Federal Funds Rate

Part of the confusion might have to do with whether you are viewing and analyzing changes over very long time periods, like decades, or shorter periods, like a few years or less. What I showed in the OP was the latter, and it's difficult to understand how someone can't see the disconnect between cha...
Fri May 18, 2018 9:17 pm
Forum: Investing - Help with Personal Investments
Topic: Vangaurd Municipal Money Market VMSXX 1.39%
Replies: 76
Views: 7209

### Re: Vangaurd Municipal Money Market VMSXX 1.39%

The ends of the last 2 quarters were preceded by hikes in the FFR just a couple weeks before those ends. I would expect the same kind of hike in June before the end of this quarter. That doesn't explain it. If it did, we'd see a similar cycle in Prime MM fund, which we don't. It has just been conti...
Fri May 18, 2018 9:10 pm
Forum: Investing - Help with Personal Investments
Topic: Vangaurd Municipal Money Market VMSXX 1.39%
Replies: 76
Views: 7209

### Re: Vangaurd Municipal Money Market VMSXX 1.39%

Beach wrote:
Fri May 18, 2018 1:18 pm
How do you do the math to get the tax equivalent yield? My wife and I combined are in the new 22% tax bracket. Have Ally currently, debating on if making the switch is worthwhile. Thanks!
I recently did a post to explain this: viewtopic.php?f=10&t=248539

Kevin
Fri May 18, 2018 9:08 pm
Forum: Investing - Help with Personal Investments
Topic: Vangaurd Municipal Money Market VMSXX 1.39%
Replies: 76
Views: 7209

### Re: Vangaurd Municipal Money Market VMSXX 1.39%

I just moved \$50k to VMSXX because I thought the yield is going to be consistent at 1.4ish% which will be around 1.8ish taking my Fed bracket of 24% into account. I would be disappointed if this was just some quarter end thing. Does this interest rate swing affect the Prime Market Fund as well? If ...
Fri May 18, 2018 9:05 pm
Forum: Investing - Help with Personal Investments
Topic: Intermediate Term Treasury vs Tax Exempt Fund
Replies: 27
Views: 2033

### Re: Intermediate Term Treasury vs Tax Exempt Fund

If you're game for a little complexity, buy munis directly. As an example, I purchased some 12 month maturity NY GO bonds for 1.9% YTM yesterday. Much better deal to buy munis in the secondary market than any muni funds. I don't think I have time or energy to sift through and balance individual mun...
Fri May 18, 2018 8:45 pm
Forum: Investing - Theory, News & General
Topic: Bank Interest Rates — when will they go up?
Replies: 25
Views: 2761

### Re: Bank Interest Rates — when will they go up?

Couple mentions of Ally in this thread. Do you guys find them good to deal with? Great to deal with, so good hub bank, but rates currently are not generally competitive. Much better CD rates elsewhere, and much better savings account rates elsewhere too, and also money market funds now have better ...
Fri May 18, 2018 7:53 pm
Forum: Investing - Help with Personal Investments
Topic: Bank CDs Vs. Brokerage CDs
Replies: 6
Views: 586

### Re: Bank CDs Vs. Brokerage CDs

My previous reply would be applicable to buying in an IRA, because the state tax exemption for Treasuries is irrelevant. However, if I were buying in a taxable account, Treasuries would provide me with higher taxable-equivalent yields (TEY) at my marginal federal and state tax rates of 27% and 8% re...
Fri May 18, 2018 7:38 pm
Forum: Investing - Help with Personal Investments
Topic: Bank CDs Vs. Brokerage CDs
Replies: 6
Views: 586

### Re: Bank CDs Vs. Brokerage CDs

I was looking today at 1 and 2 treasuries and CDs on Fidelity. The rates were virtually identical. For 1-year, yes, for 2-year, no. Here are the new issue CD yields compared to the large-quantity Treasury quotes Fidelity provides on it's Yields summary page: https://s26.postimg.cc/pztrf7bpl/Cd_New_...
Fri May 18, 2018 7:16 pm
Forum: Investing - Theory, News & General
Topic: Challenge: guess the effect of rebalancing (by interval or bands) in 2008-2009
Replies: 35
Views: 3583

### Re: Challenge: guess the effect of rebalancing (by interval or bands) in 2008-2009

Not going to guess answers to the specific questions, but without peeking or using PV, I'm going to guess that annual rebalancing had the highest return. The reason for this guess is that the market bottom was in early March 2009, so if you rebalanced in early January, you did only one purchase clos...
Fri May 18, 2018 7:06 pm
Forum: Investing - Help with Personal Investments
Topic: Bank CDs Vs. Brokerage CDs
Replies: 6
Views: 586

### Re: Bank CDs Vs. Brokerage CDs

Do you already have a Vanguard or Fidelity brokerage account? Is it an IRA? If so, then I would buy 2-year or maybe 3-year new-issue CDs wherever you have the account. It is very easy to do, and these maturities are where you get the most extra return for extending maturity (most at 2-year, and just...