Search found 348 matches

by jvini
Fri Mar 01, 2024 6:42 am
Forum: Personal Investments
Topic: SGOV state tax and selling each month before ex-div date?
Replies: 32
Views: 2424

Re: Using up large accumulated capital loss with treasury ETFs - am I overlooking something?

my assumption is that if you trade an ETF with 100% treasuries, any realized cap gains on it will be state free NJ is the only state I know in which this is the case. In NJ, capital gains on bonds which are exempt from NJ taxes, or on "qualified investment funds" which hold them, are exempt from state tax. In a few other states, capital gains on Treasury bonds are exempt, but capital gains on Treasury funds are taxable. In most states, all capital gains are taxable. Hi. Trying to understand. I live in NJ. I hold my annual cash needed in SGOV in my brokerage account. I sell 10k each month and transfer that cash to my checking account. I pay federal taxes on the dividends and am 96.45 exempt for state and local (for 2023), but when...
by jvini
Tue Feb 27, 2024 10:37 am
Forum: Personal Finance (Not Investing)
Topic: SGOV Dividends - qualified or not?
Replies: 16
Views: 3653

Re: SGOV Dividends - qualified or not?

The SGOV dividends, are they exempted from state income taxes? I am thinking they are federal government obligations, so it should be exempt from state income taxes. In 2022 about 92% of the income was from federal government obligations and thus state tax exempt. The 2023 information will be published early next year here: https://www.ishares.com/us/library/tax This is the direct link to the 2023 information. It's "2023 U.S. Government Source Income Information" from the Tax Documents link provided by Eno Deb above. 96.45% for SGOV. https://www.ishares.com/us/literature/tax-information/2023-ishares-us-government-source-income-information-stamped.pdf Thank you so much for this information. My accountant did not realize SGOV divid...
by jvini
Mon Feb 19, 2024 9:46 am
Forum: Personal Investments
Topic: Any reason to hold a bond fund instead of iShares iBonds?
Replies: 39
Views: 5274

Re: Any reason to hold a bond fund instead of iShares iBonds?

Dmevsjd wrote: Mon Feb 19, 2024 9:00 am I own the Treasury ETFs in a ladder. I am willing to pay 7 bps for the simplicity, monthly income and liquidity of the ETF structure (although they will be held to maturity). My TIPS ladder is individual bonds due to these TIPS ibonds being too young and low AUM for my comfort plus they’re 10 bps which is pushing my cheap-o buttons. :)

As a retired guy I’m looking for, and have found, simplicity in Treasury ETFs, VTI and VXUS. Very boring ……. That’s good.
I'm in a similar boat. I think they're a great option. As a recent retiree at 57, I'm all about simplicity in my portfolio. Give me a few equity ETFs, maybe a little stock or two, a fixed asset ladder and I'm good.
by jvini
Mon Feb 19, 2024 8:11 am
Forum: Personal Investments
Topic: Any reason to hold a bond fund instead of iShares iBonds?
Replies: 39
Views: 5274

Re: Any reason to hold a bond fund instead of iShares iBonds?

I don’t really see these discussed often and wanted other opinions. I essentially only own a ladder of iShares iBonds for my bond allocation. An example is linked here: https://www.ishares.com/us/products/310035/ishares-ibonds-dec-2029-term-corporate-etf. The expense fee is about twice that of a vanguard bond ETF but still relatively small (0.10% for iShares iBonds vs 0.04% VCIT). I am happy to pay the price knowing I will eventually get my principal back when the fund matures. Is there any reason you would advice me to switch to a Vanguard bond etf? The fund in your link above (thanks for the link!) is 59% BBB rated. That would scare me off. Switch to a lower expense ratio (ER) Vanguard ETF? Yes for the lower ER. Yes if the rating is AAA ...
by jvini
Sun Feb 18, 2024 8:18 am
Forum: Personal Investments
Topic: Any reason to hold a bond fund instead of iShares iBonds?
Replies: 39
Views: 5274

Re: Any reason to hold a bond fund instead of iShares iBonds?

Picking up this thread. I created a 10 year ladder using brokered CDs and Treasury ishares ibonds etfs. I like the liquidity of the ibond etf (even though I'm planning to hold to maturity) and, based on 2022 returns of bond funds, which I fortunately evaded through a stable value fund, I like a defined maturity. Especially since I just retired at 57. Um averaging 4.5% for my fixed income (55/45 portfolio) which I'm happy with.
by jvini
Fri Feb 02, 2024 8:15 am
Forum: Personal Finance (Not Investing)
Topic: 529 extra cash
Replies: 7
Views: 536

Re: 529 extra cash

You'll simply owe a 10% penalty on the amount that has grown. You'll pay income tax at your current rate for the amount that has grown. You'll also, depending on the State, may have to pay a state penalty/taxes as well, all on the amount that grew in the account. Anything that you contributed was already taxed anyhow. OP is wanting to pull the money out of the 529 without paying the penalty because the amount left in the 529 equals the amount of scholarships received. And 529 rules do allow an amount equal to scholarships to be withdrawn from the 529 without paying the 10% penalty. The question, IMO, is whether the IRS wants the withdrawal done each year when the scholarship is received/applied. See this discussion and particularly SpiritR...
by jvini
Fri Feb 02, 2024 5:56 am
Forum: Personal Finance (Not Investing)
Topic: 529 extra cash
Replies: 7
Views: 536

529 extra cash

Hi all. Our daughter got a scholarship and one graduated early. Yay! We now have an extra 100k in our 529, which equals the scholarship and let's us avoid a 10% penalty upon withdrawal . We are not going to rollover this money into a Roth IRA for them or leave it in for the future. We are going to use it for retirement. Of course there are certain education certificates one can get in other countries that may be a reason to keep it in. The law is very unclear about when this money needs to be withdrawn. Assuming there is no mandate to take it out for non educational purposes, am I correct in thinking that letting it grow tax free and then taking it out, as with an IRA, is meaningless since we'll have to pay taxes on the earnings when we tak...
by jvini
Wed Dec 27, 2023 9:59 am
Forum: Personal Investments
Topic: Greedy/Stupid [Retiree Asset Allocation]
Replies: 46
Views: 8965

Re: Greedy/Stupid [Retiree Asset Allocation]

We have about 45x our current yearly withdrawal of 3% in our portfolio I don't understand this. You either have 33X at 3% withdrawal or 45X at 2.2%. TravelforFun Yes I corrected it. Let's say 33x at 3%. I don't understand either. Are you saying that your portfolio is not $4.5M? You say annual expenses are $100,000 but will probably spend $90,000. Let's go with $100K. If you are at 33x then you portfolio is approximately $3,333,330. $100k expenses X 33x X 3% withdrawal= $100,000. Is the $100,000 the needed income after any pensions and SS ? I was trying to be conservative and make the math easier, but evidently not doing a good job at either. Here are the actual numbers. 4.5 million. 100k a year. 55/45 portfolio. I think that means 45x and ...
by jvini
Wed Dec 27, 2023 8:56 am
Forum: Personal Investments
Topic: Greedy/Stupid [Retiree Asset Allocation]
Replies: 46
Views: 8965

Re: Greedy/Stupid [Retiree Asset Allocation]

Sandtrap wrote: Wed Dec 27, 2023 8:43 am
jvini wrote: Wed Dec 27, 2023 12:25 am
TravelforFun wrote: Tue Dec 26, 2023 9:25 pm
jvini wrote: Mon Dec 25, 2023 1:35 pm We have about 45x our current yearly withdrawal of 3% in our portfolio
I don't understand this. You either have 33X at 3% withdrawal or 45X at 2.2%.

TravelforFun
Yes I corrected it. Let's say 33x at 3%.
To OP:
This might be helpful for you.
Outstanding write up on the 64/40 allocation by Bernstein.
http://web.archive.org/web/20061214061 ... in6040.pdf
R. Ferri on Bernstein's 60/40
http://www.etf.com/sections/index-inve ... nopaging=1

VANGUARD PORTFOLIO ALLOCATION MODELS
https://personal.vanguard.com/us/insig ... locations

j :D
Thank you.
by jvini
Wed Dec 27, 2023 7:30 am
Forum: Personal Investments
Topic: iShares iBonds question
Replies: 23
Views: 1964

Re: iShares iBonds question

Interesting thread. I was looking to learn more about ibonds. If the originators are still viewing the thread I have a question - if I want to invest $100K in a 5 year treasury ladder, is there some table that shows what would be the yield from treasuries vs. ibonds - I wanted to see how much less I would be getting with ibonds? Also someone had posted a link to the case study for different ibonds. In that it states that in the maturity year many investors cash out their investment. Would that decrease the NAV resulting in lower return to me? If you go to the ishares ibonds page, they had a tool that let you create the ladder and show you the yield. Also, people sell a few months early to reinvest because the fund starts to invest in cash ...
by jvini
Wed Dec 27, 2023 12:25 am
Forum: Personal Investments
Topic: Greedy/Stupid [Retiree Asset Allocation]
Replies: 46
Views: 8965

Re: Greedy/Stupid [Retiree Asset Allocation]

TravelforFun wrote: Tue Dec 26, 2023 9:25 pm
jvini wrote: Mon Dec 25, 2023 1:35 pm We have about 45x our current yearly withdrawal of 3% in our portfolio
I don't understand this. You either have 33X at 3% withdrawal or 45X at 2.2%.

TravelforFun
Yes I corrected it. Let's say 33x at 3%.
by jvini
Tue Dec 26, 2023 6:55 pm
Forum: Personal Investments
Topic: Greedy/Stupid [Retiree Asset Allocation]
Replies: 46
Views: 8965

Re: Greedy/Stupid [Retiree Asset Allocation]

45x. We will actually take about 2.5%. Not to be nitpicky, but your "X" number times your percentage withdrawal should equal 100. So your X number and your withdrawal percentage are just different ways of expressing the same thing. For example, if your retirement portfolio is $5,000,000, and you need to withdraw $100k each year to cover expenses, then you have 50x your expenses and your withdrawal percentage is 2%. That's why some people are saying your "X" number and your percentage don't make sense. Either way you are set, but you might want to take a closer look to see why the numbers are off. Maybe your expenses calculation is not including expected taxes? You are right. Sorry, I've been kind of imprecise. Let's jus...
by jvini
Tue Dec 26, 2023 2:21 pm
Forum: Personal Investments
Topic: Greedy/Stupid [Retiree Asset Allocation]
Replies: 46
Views: 8965

Re: Greedy/Stupid [Retiree Asset Allocation]

45x. We will actually take about 2.5%. Not to be nitpicky, but your "X" number times your percentage withdrawal should equal 100. So your X number and your withdrawal percentage are just different ways of expressing the same thing. For example, if your retirement portfolio is $5,000,000, and you need to withdraw $100k each year to cover expenses, then you have 50x your expenses and your withdrawal percentage is 2%. That's why some people are saying your "X" number and your percentage don't make sense. Either way you are set, but you might want to take a closer look to see why the numbers are off. Maybe your expenses calculation is not including expected taxes? You are right. Sorry, I've been kind of imprecise. Let's jus...
by jvini
Mon Dec 25, 2023 9:00 pm
Forum: Personal Investments
Topic: Greedy/Stupid [Retiree Asset Allocation]
Replies: 46
Views: 8965

Re: Greedy/Stupid [Retiree Asset Allocation]

Cash is King wrote: Mon Dec 25, 2023 6:58 pm
jvini wrote: Mon Dec 25, 2023 1:35 pm Hi all. I just retired and was wondering about my allocation. I tend to favor the odds and take out emotion.

We're both 57. No debt. We have about 45x our current yearly withdrawal of 3% in our portfolio, split between tax advantaged and a brokerage account.

We're 55/45. Index funds for the most part.

I'm just wondering if we should be 70/30 or 60/40 or something else in order to maintain our withdrawal and not run out of cash. We'd also like to leave money to our kids.

Thanks.
Are you no longer happy with this allocation? Do you not have enough money to do what you want in retirement and leave money to your kids?
That's why I'm asking. We've always lived below our means and feel fortunate but want to do what's smart.
by jvini
Mon Dec 25, 2023 6:57 pm
Forum: Personal Investments
Topic: Greedy/Stupid [Retiree Asset Allocation]
Replies: 46
Views: 8965

Re: Greedy/Stupid [Retiree Asset Allocation]

45x. We will actually take about 2.5%.
by jvini
Mon Dec 25, 2023 1:35 pm
Forum: Personal Investments
Topic: Greedy/Stupid [Retiree Asset Allocation]
Replies: 46
Views: 8965

Greedy/Stupid [Retiree Asset Allocation]

Hi all. I just retired and was wondering about my allocation. I tend to favor the odds and take out emotion.

We're both 57. No debt. We have about 45x our current yearly withdrawal of 3% in our portfolio, split between tax advantaged and a brokerage account.

We're 55/45. Index funds for the most part.

I'm just wondering if we should be 70/30 or 60/40 or something else in order to maintain our withdrawal and not run out of cash. We'd also like to leave money to our kids.

* Correction. 33x at 3%

Thanks.
by jvini
Sat Dec 23, 2023 1:32 pm
Forum: Personal Investments
Topic: After retirement question
Replies: 32
Views: 4430

Re: After retirement question

I think I'm currently in a similar boat you plan on being in so maybe this will be a little helpful. Wife and I are 57. Just retired. 4.15m portfolio. 5.4m net worth with no debt. An additional net payout of 275k net over 2024. We will hopefully have about 2m in a brokerage account with about 4-5 years worth of that being in bonds and cash by the end of 2024. Overall we are now in a 55/45 portfolio but have been more aggressive prior to our recent rebalance and retirement. We plan on having about a 3% withdrawal rate which includes taxes we will owe. We are going to have cobra for 18 months and then ACA. To keep ACA expenses low, we plan to be in the 22% tax bracket (maybe lower) by spending our brokerage dividends and cash (kept in SGOV-a ...
by jvini
Thu Nov 16, 2023 3:56 am
Forum: Personal Investments
Topic: Are Defined Maturity Bond ETFs (Bulletshares) any good?
Replies: 6
Views: 1765

Re: Are Defined Maturity Bond ETFs (Bulletshares) any good?

I just retired at 57 and built a 10 year brokered CD/Treasury ladder at Fidelity with the 50% fixed asset portion of my portfolio. For year 8 (2031) and 9 2032) I used the ishares ibonds Treasury etfs because cds and treasuries weren't available. Very simple to use and the return is consistent with Treasuries, and they pay out monthly, which I like. Watching what happened to people's bond funds last year (fortunately I was in a stable value fund) I feel better about a ladder that provides a yield close to our yearly budget and has defined maturities so I won't have to sell low from a bond fund if rates go up. If they fall, I'm ok with that too. Bottom line, I like the ease, simplicity, and if you're buying corporates, munis, or high yield, ...
by jvini
Tue Oct 10, 2023 4:21 am
Forum: Personal Investments
Topic: Bond Funds Here on Out
Replies: 286
Views: 22291

Re: Bond Funds Here on Out

Northern Flicker wrote: Sun Oct 08, 2023 8:51 pm
windaar wrote: Many of the best-informed personal investors did not fully understand the full real-world risk of bond funds before the last couple of years.
There have been a lot of threads discussing the inflation risk of bonds long before the present downturn in bonds. Vanguard recommends that people in or near retirement hold an allocation to short TIPS to provide a good source of portfolio liquidity when inflation is accelerating. This also has been discussed on here a number of times in the past.
Allan Roth, advisor and Boglehead has recently written about a 30 year tips ladder and an ishares bonds tips ladder. There are many informed views out there to choose from. It's not easy.
by jvini
Thu Oct 05, 2023 2:25 am
Forum: Personal Investments
Topic: BND exceeding my patience - need something different
Replies: 169
Views: 19681

Re: BND exceeding my patience - need something different

BND is - and always has been - trash. Just get out now. Some people are telling you it's on sale because interest rates have risen sharply. Guess what? Rick Santelli made the case yesterday on CNBC that the 10-year Treasury yield could get to 14% within 7 years. No one really knows, but it is entirely possible that, just as we finished a 40-year run of declining interest rates, we could be in for a multi-decade run of higher interest rates. How do you think BND is going to do in that environment? Your instinct is correct to just hang out on the shorter end of the yield curve. Would a rolling 10 year ladder be effective as well? If you're locking in high rates now (average ~5%/year) and reinvest each year your bond matures into a new 10 yea...
by jvini
Wed Oct 04, 2023 8:13 pm
Forum: Personal Investments
Topic: BND exceeding my patience - need something different
Replies: 169
Views: 19681

Re: BND exceeding my patience - need something different

Hi All, I'd appreciate some opinions/ideas with relation to the fixed income portion my portfolio. I'm thinking about making two changes...I'll get to that shortly. Backstory: I have watched my investment in BND decline steadily for awhile now. I"m holding it in an IRA and what was about $1.15M is now about $1.0M. These numbers aren't exact but it's down significantly from the highs and now dropping below it's value in 2018. I'd say I've been patient - reinvesting dividends along the way, but 5 years of decline are weighing on me. I'm retired now, and would like to ensure my IRA grows some between now and RMDs. I'm evaluating a few possible changes - My plan is to keep the IRA in fixed income. Some possibilities I've been considering:...
by jvini
Wed Oct 04, 2023 6:15 pm
Forum: Personal Investments
Topic: BND exceeding my patience - need something different
Replies: 169
Views: 19681

Re: BND exceeding my patience - need something different

Parkinglotracer wrote: Mon Oct 02, 2023 3:22 pm https://humbledollar.com/2023/09/long-and-short-of-it/

Good article along those lines

I use a vanguard mm fund and 5 year treasury bond ladder. Tsp g fund, CDs, etc. That might work for you.
Interesting article, but why only short bonds and not locking in rates with a ladder?
by jvini
Wed Oct 04, 2023 6:09 pm
Forum: Personal Investments
Topic: BND exceeding my patience - need something different
Replies: 169
Views: 19681

Re: BND exceeding my patience - need something different

Tamalak wrote: Mon Oct 02, 2023 3:05 pm
the_wiki wrote: Mon Oct 02, 2023 3:03 pm In my mind, the only thing selling BND will do is lock in your $150k losses with no hope of recovery.
This.. "don't lock in your losses" type thinking is often irrational for stocks, but it's exactly correct for (non junk) bonds. ANY loss in BND you will make up in 7 years, after which you will get permanent extra profit from increased yield.
I'm sure you're correct, but can you explain how you'll make up the losses if rates rise more? Let's say rates go up another 1%. Won't that reduce returns even more? Does this 7 years assume rates stay steady? Thanks.
by jvini
Sat Sep 30, 2023 3:50 pm
Forum: Investing - Theory, News & General
Topic: Ben Carlson: 24 Things I Believe About Investing
Replies: 17
Views: 4103

Re: Ben Carlson: 24 Things I Believe About Investing

nisiprius wrote: Mon Sep 25, 2023 9:41 am Pretty good. But:
19. I believe long-term returns are the only ones that matter but you have to survive the short-term.
What does that even mean?

If you don't survive the short-term, then the short-term returns did matter.

In his attempt at an aphorism, he got too clever and wrote witty nonsense.
He means don't panic and don't chase in the short term, because both can wind up costing you lots of money. Money that won't be there for the long term. Stay the course, ignore the noise and stick to your long term goals. That's how I read it, anyway.
by jvini
Sat Sep 30, 2023 10:47 am
Forum: Personal Investments
Topic: iShares iBonds question
Replies: 23
Views: 1964

Re: iShares iBonds question

I like the idea of ishares ibonds etfs for building a 10 year Treasury ladder. I've just started researching these. I also noticed they released a defined expiration TIPS etf, which is interesting. I like the iShares iBonds and have used them to build a ten-year bond ladder to age 70 in my rollover IRA, at which point I will apply for Social Security. I used a mix of investment-grade corporate bonds and treasuries. I ignore price fluctuations. I instead focus on 1) the estimated net acquisition yield to maturity (5.25% for the ladder); and 2) the fun of seeing monthly dividends get reinvested (I live a quiet life). Dividends for all my ETFs will hit this Friday. :D So, on or about December 15th, 2024, the December 2024 corporate bond ETF (...
by jvini
Sat Sep 30, 2023 9:31 am
Forum: Personal Investments
Topic: iShares iBonds question
Replies: 23
Views: 1964

Re: iShares iBonds question

[Thread merged into here --admin LadyGeek] I've read their fact sheets and just want to confirm that if I buy the ten year fund, for example, I will getting a defined monthly yield AND if I hold that etf to maturity, I'm guaranteed my principal back, unlike a bond fund that has a fluctuating NAV. I'd appreciate an answer from anyone who is familiar with ishares ibonds etfs. At the time of maturity, the share price / NAV is not guaranteed to be equal or higher than the price when you bought it. But then you'd likely be getting higher distributions to offset the capital loss. You are guaranteed (as long as the underlying bonds don't default, which is safe to assume for treasuries) to have a total yield equal to the stated YTM at the time of ...
by jvini
Sat Sep 30, 2023 8:25 am
Forum: Personal Investments
Topic: iShares iBonds question
Replies: 23
Views: 1964

Re: Ishares ibonds question

Hi all. I'm building a treasury bond ladder with fixed income money I fortunately held in a stable value fund in 2022 and is now in a short term Treasury fund yielding ~5.3% SGOV. I just retired and more specifically, I want to build a 10 year treasury ladder. I know I can do this with treasuries at Fidelity, but I like the ease and flexibility of ishares ibonds. It's just my preference. I've read their fact sheets and just want to confirm that if I buy the ten year fund, for example, I will getting a defined monthly yield AND if I hold that etf to maturity, I'm guaranteed my principal back, unlike a bond fund that has a fluctuating NAV. I'd appreciate an answer from anyone who is familiar with ishares ibonds etfs. What I don't want to hap...
by jvini
Sat Sep 30, 2023 8:22 am
Forum: Personal Investments
Topic: iShares iBonds question
Replies: 23
Views: 1964

Re: iShares iBonds question

LadyGeek wrote: Sat Sep 30, 2023 8:06 am jvin i- In order to provide appropriate advice, it's best to keep all the information in one spot. I split your discussion from another thread into a new one, then merged your update into this thread. If you have any questions, ask them here.

(Thanks to the member who reported the post and provided a link to this thread.)
Thanks! I actually wrote this and wasn't going to repost but then did. Oops. Sorry and thanks for remembering!
by jvini
Sat Sep 30, 2023 7:35 am
Forum: Personal Investments
Topic: iShares iBonds question
Replies: 23
Views: 1964

iShares iBonds question

[Thread merged into here --admin LadyGeek] Hi all. I'm building a treasury bond ladder with fixed income money I fortunately held in a stable value fund in 2022 and is now in a short term Treasury fund yielding ~5.3% SGOV. I just retired and more specifically, I want to build a 10 year treasury ladder. I know I can do this with treasuries at Fidelity, but I like the ease and flexibility of ishares ibonds. It's just my preference. I've read their fact sheets and just want to confirm that if I buy the ten year fund, for example, I will getting a defined monthly yield AND if I hold that etf to maturity, I'm guaranteed my principal back, unlike a bond fund that has a fluctuating NAV. I'd appreciate an answer from anyone who is familiar with is...
by jvini
Tue Sep 26, 2023 5:08 am
Forum: Personal Investments
Topic: Fidelity Cash Mgmt Account
Replies: 29
Views: 5956

Re: Fidelity Cash Mgmt Account

I hold my cash in SGOV in my Fidelity brokerage account. It's a 0-3 month treasury etf. Pays more than Fidelity MM, and is 93% state tax exempt. It has almost no interest rate sensitivity as rates go up, and similar to MM if they fall. I believe in 2024 settlement is only a day. I linked to a simple checking account and transfer to pay bills.
by jvini
Mon Sep 25, 2023 2:51 pm
Forum: Personal Investments
Topic: iShares iBonds question
Replies: 23
Views: 1964

Re: iShares iBonds

On paper, individual longer term bonds all showed losses. WHEN HELD TO MATURITY, which is the plan and benefit of a bond ladder, you will not only get yield, but also get your full principal back. Bond funds like VGIT, a good intermediate treasury fund lost about 12% and keeps losing as rates rise. There is no defined maturity because of the continual planned buying and selling. If you have to sell any of it, you're selling at a big loss. A ladder of individual bonds helps prevent this, and these particular etfs act like individual bonds, not bond funds. Your longer term bonds that you intend to hold to maturity lost value the same as the bond fund. As you just said, "If you have to sell any of it, you're selling at a big loss." ...
by jvini
Mon Sep 25, 2023 1:55 pm
Forum: Personal Investments
Topic: iShares iBonds question
Replies: 23
Views: 1964

Re: iShares iBonds

On paper, individual longer term bonds all showed losses. WHEN HELD TO MATURITY, which is the plan and benefit of a bond ladder, you will not only get yield, but also get your full principal back. Bond funds like VGIT, a good intermediate treasury fund lost about 12% and keeps losing as rates rise. There is no defined maturity because of the continual planned buying and selling. If you have to sell any of it, you're selling at a big loss. A ladder of individual bonds helps prevent this, and these particular etfs act like individual bonds, not bond funds.
by jvini
Mon Sep 25, 2023 1:41 pm
Forum: Personal Investments
Topic: iShares iBonds question
Replies: 23
Views: 1964

Re: iShares iBonds

Also, I can reinvest funds when the ETF expires in the given year. Completely defeats the point of the asset. I do not see any advantage of dealing with all this over just using an intermediate Treasury fund. I now believe the Fed is done or close, and rates will fall. If you really believed this, your plan is even worse than a normal bond fund. Todthebod, you didn't disappoint. You'll have to explain what you hope to gain with holding bonds to maturity intending to reinvest versus just holding longer bonds which, if you believed rates were going to fall, would be the place to put your money. What I believe and what will happen, may be two very different things. I'm investing the fixed asset portion of my portfolio for ballast not for big ...
by jvini
Mon Sep 25, 2023 1:31 pm
Forum: Personal Investments
Topic: iShares iBonds question
Replies: 23
Views: 1964

Re: iShares iBonds

toddthebod wrote: Mon Sep 25, 2023 1:28 pm
jvini wrote: Mon Sep 25, 2023 1:06 pm Also, I can reinvest funds when the ETF expires in the given year.
Completely defeats the point of the asset. I do not see any advantage of dealing with all this over just using an intermediate Treasury fund.
I now believe the Fed is done or close, and rates will fall.
If you really believed this, your plan is even worse than a normal bond fund.
Todthebod, you didn't disappoint. I don't want to discuss or explain the/mystrategy behind bond ladders, nor the benefits of an individual bond equivalent vs a bond fund, nor retirement strategies. I'll leave it there.
by jvini
Mon Sep 25, 2023 1:06 pm
Forum: Personal Investments
Topic: iShares iBonds question
Replies: 23
Views: 1964

iShares iBonds question

[Moved into a new thread from: iShares iBonds --admin LadyGeek] I like the idea of ishares ibonds etfs for building a 10 year Treasury ladder. I've just started researching these. I also noticed they released a defined expiration TIPS etf, which is interesting. If I put 200k in each etf covering the next 10 years, I like that I can reinvest the dividends and then get my principle+ back in the year the ETF terminates, if I'm understanding correctly. I also like the liquidity in case I need cash for something-for rebalancing into equities maybe. I appreciate the ease of selling. Also, I can reinvest funds when the ETF expires in the given year. The notion of an ishares ibonds treasury ladder seems to afford a good amount of flexibility compa...
by jvini
Sun Sep 24, 2023 4:50 pm
Forum: Personal Investments
Topic: Why Not a Bank CD Instead of a Bond Fund?
Replies: 206
Views: 16712

Re: Why Not a Bank CD Instead of a Bond Fund?

Wow. So if I hold my 5 yr. treasury paying 5% a year, to maturity, it somehow loses 10%? That seems weird. I didn't say that. If you hold a fund with a 5 year duration or you buy a 5 year treasury today, and if rate increases by 2% tomorrow, both investments lose about 10% (the treasury loses a bit less because its duration is less than 5 years). That's what I said. And if you hold either one for 5 years and there are no further changes in rate , you are more-or-less made whole after the 5 years. Obviously, the rate will continue to change, which results in a more nuanced comparison. The bold is the key. But if the rate continues to rise, then in 5 years your treasury will not have any loss in capital and you would have earned all your int...
by jvini
Sun Sep 24, 2023 2:18 pm
Forum: Personal Investments
Topic: Why Not a Bank CD Instead of a Bond Fund?
Replies: 206
Views: 16712

Re: Why Not a Bank CD Instead of a Bond Fund?

Okay but I don't see how you can match liabilities with a bond fund since the principal is not predictable. The value of a bond is the net present value of future cash flows discounted to a present value using the prevailing interest rate at their durations as a discount rate. The net present value/cost of your liabilities is you liabilities discounted back to a present value using the prevailing interest at their durations as a discount rate. If the duration of your liabilities matches the duration of the bond fund, then if rates rise, the bond fund loses principal value, but the cost of funding your liabilities drops commensurately. Another way of looking at it is that if rates rise, a bond fund principal goes down, but that lower princi...
by jvini
Sun Sep 24, 2023 2:10 pm
Forum: Personal Investments
Topic: Why Not a Bank CD Instead of a Bond Fund?
Replies: 206
Views: 16712

Re: Why Not a Bank CD Instead of a Bond Fund?

But with bond funds, you do not have that option to manage and control such predictablity/expectation in terms of "holding till maturity to get everything back", so you could run into a situation that you might have to sell the bond funds at a loss. That depends on the bond fund and how it is managed. There are bond funds that liquidate at par on a given date. If an expense is fully predictable, a zero coupon bond that matures on that date is optimal. Bond funds provide daily liquidity at NAV. That is preferred in some situations, while rigid points of liquidity are preferred in other situations. But I think it's safe to say that we are primarily talking about total bond market fund VTBLX and FXNAX as these are the ones that are ...
by jvini
Sun Sep 24, 2023 1:43 pm
Forum: Personal Investments
Topic: Why Not a Bank CD Instead of a Bond Fund?
Replies: 206
Views: 16712

Re: Why Not a Bank CD Instead of a Bond Fund?

Okay but I don't see how you can match liabilities with a bond fund since the principal is not predictable. The value of a bond is the net present value of future cash flows discounted to a present value using the prevailing interest rate at their durations as a discount rate. The net present value/cost of your liabilities is you liabilities discounted back to a present value using the prevailing interest at their durations as a discount rate. If the duration of your liabilities matches the duration of the bond fund, then if rates rise, the bond fund loses principal value, but the cost of funding your liabilities drops commensurately. Another way of looking at it is that if rates rise, a bond fund principal goes down, but that lower princi...
by jvini
Sun Sep 24, 2023 10:03 am
Forum: Personal Investments
Topic: Why Not a Bank CD Instead of a Bond Fund?
Replies: 206
Views: 16712

Re: Why Not a Bank CD Instead of a Bond Fund?

Very interesting thread. I found it because I'm also looking for thoughts on my very fortunate situation. Retiring at 56. Followed a very simple dca, annual rebalanced, 3 fund portfolio strategy, along with investing about 4% how I wanted that turned out extremely beneficial. Now I'm about 55/45. My 55 is staying right where it is. My 45, however, was luckily hiding out in 2022 in a stable value fund in my 401k where I rolled everything from my IRA. (My company allowed this). I have the good issue of deciding what to do with a large portion of money currently in my brokerage account and now back in my IRA all currently in SGOV, which is an amazing fund but not one I believe is beneficial to hold over a time past a year or so. (My current as...
by jvini
Sat Sep 23, 2023 5:44 pm
Forum: Personal Investments
Topic: Why Not a Bank CD Instead of a Bond Fund?
Replies: 206
Views: 16712

Re: Why Not a Bank CD Instead of a Bond Fund?

If you have long-term liabilities funded by short-term bonds or CDs, you are taking reinvestment risk, which is the risk if reinvesting the maturing instruments at a lower yield. This is a hidden risk, so often ignored. If interest rates fall, the present value to fund long-term liabilities rises sharply, but you a maturing short-term instrument will just give you your principal back. Because it will reinvested at the lower rate in the short run, you will have less of your future liability funded than before rates dropped. I like this line of thinking. If I were specifically trying to fill a 10-year rung in a CD or Bond Ladder, or match a liability at that time, I'd like to take reinvestment risk COMPLETELY off the table by buying a single...
by jvini
Sat Sep 23, 2023 3:48 pm
Forum: Personal Investments
Topic: Why Not a Bank CD Instead of a Bond Fund?
Replies: 206
Views: 16712

Re: Why Not a Bank CD Instead of a Bond Fund?

I think of CDs and treasuries as a way to store cash with minimal risk and some ability to offset inflation. Bond funds are for longer-term investing, just like stock funds. I used to think that until 2022. How long will it take until BND, a total bond fund gets back to where it started in 2022. I guess it also matters if you're nearing or in retirement and how much you have to withdraw from bonds for your expenses. I hope 2022 was an anomaly but it does make me think more about individual bonds rather than bond funds. It does indeed matter much of a "cash / CD / treasury" allocation you have to manage against SORR. In my case, my cash/MMF/CD/treasury mix creates a 7 year window for me to make AA adjustments to the stock and bond...
by jvini
Sat Sep 23, 2023 3:21 pm
Forum: Personal Investments
Topic: Why Not a Bank CD Instead of a Bond Fund?
Replies: 206
Views: 16712

Re: Why Not a Bank CD Instead of a Bond Fund?

johnegonpdx wrote: Sat Sep 23, 2023 3:08 pm I think of CDs and treasuries as a way to store cash with minimal risk and some ability to offset inflation.
Bond funds are for longer-term investing, just like stock funds.
I used to think that until 2022. How long will it take until BND, a total bond fund gets back to where it started in 2022. I guess it also matters if you're nearing or in retirement and how much you have to withdraw from bonds for your expenses. I hope 2022 was an anomaly but it does make me think more about individual bonds rather than bond funds.
by jvini
Fri Sep 22, 2023 12:54 pm
Forum: Personal Investments
Topic: Why Not a Bank CD Instead of a Bond Fund?
Replies: 206
Views: 16712

Re: Why Not a Bank CD Instead of a Bond Fund?

The more I see these threads, the more I am inclined to up my future contribution percentage to bonds. In fact, I just made a slight adjustment today for future contributions in my 401K from 89/11 to 86/14. A slight adjustment certainly and probably won't matter much in the grand scheme of things, but I do think that given the fact that bonds funds are at historic lows and interest rate hikes having slowed considerably; there is a lot of upside to bonds. Bonds might offer more upside than a bank CD, but this is a performance issue and not one of mitigating risk which is why most people here say they're buying bonds in their portfolios. And if better returns are the goal, then I would rather up my stock percentage than bonds, especially in ...
by jvini
Tue Sep 19, 2023 9:01 am
Forum: Investing - Theory, News & General
Topic: Rebalancing into stocks when they fall is unrealistic
Replies: 176
Views: 20590

Re: Rebalancing into stocks when they fall is unrealistic

Rebalancing out of stocks when they have outperformed bonds is feasible. There's no law saying you can't reduce risk after your investments have done well. it's the rebalancing into stocks with existing money that I oppose. There are many Bogleheads, mostly in retirement (including myself), who are one-way rebalancers such as you describe. When stocks do well, we rebalance into bonds. When stocks sell off, we sit tight with our large allocation to high-quality bonds and do nothing. However, personally, we are in retirement with a portfolio value that we consider "enough" — so safety of our nest egg is more important to us than achieving the highest returns. For young accumulators, the rebalancing decision is likely to be differen...
by jvini
Mon Sep 18, 2023 6:37 pm
Forum: Personal Investments
Topic: Bonds - what are they good for?
Replies: 112
Views: 9271

Re: Bonds - what are they good for?

I didn't make any changes to our portfolio. It's currently 85/15 (at just about 25x), with about half of that 15% in BND equivalents and another half in I Bonds. It's just that buying I Bonds is no longer enough to keep us on the glide path, and I can't hold my nose long enough to pull the trigger on buying more BND than I currently do. Different situation since I am still in growth / accumulation phase, but I struggle with the same dilemma. I feel so disappointed buying bonds and always want to reach for stocks instead. I can handle 40% drops in the market without losing any sleep, so I decided to use a very small % of bonds primarily for two purposes (1) as my emergency fund (2) as a small backup store of cash to dump into the market whe...
by jvini
Mon Sep 18, 2023 8:01 am
Forum: Personal Investments
Topic: Bonds - what are they good for?
Replies: 112
Views: 9271

Re: Bonds - what are they good for?

When you're freshly retired or retired for a while and your portfolio drops over 50%. That's why for me. If I had enough in equities that it wouldn't matter maybe I wouldn't own bonds, but I would. In fact, I might add even more so I could sleep at night, which I did. 🙂 That said, I now own treasuries and a very very short term Treasury ETF SGOV that's not interest rate sensitive and is high yielding. It will be hard to go to bond funds after watching what people's funds did in 2022.
by jvini
Mon Sep 18, 2023 5:18 am
Forum: Personal Investments
Topic: Help with difference between Tbills, SGOV, USFR, VMFXX
Replies: 13
Views: 2895

Re: Help with difference between Tbills, SGOV, USFR, VMFXX

SGOV. High yield, no real interest rate risk. Goes up when Fed raises. It's like having a great money market and bond allocation rolled into one. Weird times with the yield curve and SGOV let's you take advantage.
by jvini
Mon Sep 18, 2023 5:14 am
Forum: Personal Investments
Topic: Does it make sense to keep bond allocation in SGOV instead BND in deferred accounts?
Replies: 4
Views: 1144

Re: Does it make sense to keep bond allocation in SGOV instead BND in deferred accounts?

Yes, I think it does, especially if you think rates will stay high or rise. I hid in a stable value fund for 2022 and now switched most of my bond allocation into SGOV. It's also where I'm holding cash. When the Fed tells us they're lowering, I'll put some of that SGOV money into VGIT. I'm think about some 1 and 2 year treasuries also for money I won't need for a while.
by jvini
Sat Sep 16, 2023 8:38 am
Forum: Personal Investments
Topic: SGOV: The best way to get exposure to treasury bills?
Replies: 58
Views: 10598

Re: SGOV: The best way to get exposure to treasury bills?

Wiggums wrote: Sat Sep 16, 2023 8:21 am I buy t-bills myself with the duration needed. At some point, when the interest rates fall, the short term investors will wished that they held a longer duration.
True about duration, although I'm glad I missed out on long duration returns in 2022. It saved me 150k+. I'm ok coming a little late to the long duration party.