Bogleheads.org

On a side note: How did you get TradingView to display the Yield on the main chart? I've been searching forever on how to do this and can only get the yield in a separate pane under the main chart like the volume. Right click on the yield curve and move to... existing pane above Note that I am using TTM Yield for this. You will notice that depending on the time interval you display, the curves will cross at different points in time. 3-5 years is a good time interval for this. Also make sure the vertical scales are set so that the min and max of the yield and price curves are at the same levels vertically. The red line is TTM dividend per share, which you can calculate with the below Pine script (for quarterly dividends): indicator("Di...

Sorry, but I have to correct you on this. The safety profile of an MMF with commercial paper is not the same as treasury bills' risk profile. The Reserve Fund broke the buck because of commercial paper issued by Lehman. "The fund had a $785 million allocation to short-term loans issued by Lehman Brothers." The majority of MMFs hold 'commercial paper', not treasuries. This particular Invesco fund has 25% in commercial paper issued by various banks around the world. If one wants higher safety they need to find a 'USD treasuries only' MMF. Not sure there are any available to EU residents. Hence the suggestion for those ETFs or individual TBILLs. By "risk" I didn't mean only the risk of default. One should also include dura...

Also treasury bills are not completely risk-free (and neither are MMF: I should know as I was holding some cash in The Reserve Fund in 2008): Sorry, but I have to correct you on this. The safety profile of an MMF with commercial paper is not the same as treasury bills' risk profile. The Reserve Fund broke the buck because of commercial paper issued by Lehman. "The fund had a $785 million allocation to short-term loans issued by Lehman Brothers." The majority of MMFs hold 'commercial paper', not treasuries. This particular Invesco fund has 25% in commercial paper issued by various banks around the world. If one wants higher safety they need to find a 'USD treasuries only' MMF. Not sure there are any available to EU residents. Henc...

Hi, putting MMFs to one side I use VDST, IB01 and ERNE for shorter term cash like equivalents. DJN Personally I prefer T-bills at IBKR. No management fee, liquid, cheap to buy, predictable. 0.002%/$5 min. per trade. Safety wise the ETFs are better because they hold just treasuries. I guess there's some liquidity risk if there's some LSE issues/closure. I don't like the bank commercial paper holdings of the Invesco: https://markets.ft.com/data/funds/tearsheet/holdings?s=IE0008005567:USD MMF recommended holding period is still 1 year. And duration on the ETFs is 0.5 year so not much interest rate risk there unless Central Banks go crazy with hikes. If investing >$10,000, these start to get more expensive than the MMF but I guess that's the p...

This is a great find, thank you. I wasn't aware mutual funds & money market funds were available via IBKR in Europe. Yes it took me a while to find out also. There are very few Irish-based money market ETFs and even less USD ones. Maybe MMFs are not very well suited for ETFs given they are so slow and steady. Also in this case the $5.95 per order via IBKR for a mutual fund is a lot more cost effective than the 0.05% they charge for ETF purchases. FWIW the Invesco liquidity funds have existed since 1995 and went through 2008 and 2020 unscathed, so that's hopefully an indication that they are solid (even though past performance is not a guarantee of future results etc...) I placed the order on Friday Mar 10 and got it at the Mar 10 end-o...

0.1% would be better, of course, especially if the liquidity is also good. The senior person who asked this question has 6 digits in their numbers for this purpose, should be enough to buy, I guess. Is there a link to see the possible options, maybe? Like etfdb? Log in to your IBKR account, go to Research -> Mutual Funds Scanner -> pick your country / region -> fund type "money market" and you will get a list of all the ones available on IBKR along with the fund domicile (stick to Ireland) and the management fee %. Cost me $5.95 transaction fee to purchase >150k worth of the Invesco one. Initially I looked at the Blackrock ones because that is what my company retirement plan is using, but either the min purchase was too much or t...

I would try working backwards by figuring out what your brokers offer and then seeing if those are attractive enough to buy. My experience trying to put 6-7 figures at work with corporate bonds is that private banks and investment banks have a list of bonds they want to get rid of so careful with that. Secondary market for bond trading is a bit of a 'black box'. IBKR has a good platform but the spreads are nasty (not IB's fault). Be aware most if not all corporate bonds are callable so if interest rates drop, newer issues that were sold at higher rates might be called back. You're probably 'better off' in a corporate bond fund, short term if you are worried about interest rates continuing to rise. It's certainly not the same thing as bonds ...

I don't like the spreads and carry costs of those short term bond ETFs. It's a bit tricky to buy Treasuries at IB but it's possible.

Here's a bit of a calc I did a few weeks ago (incl 15% tax):

galeno wrote: ↑Mon Mar 13, 2023 3:11 pm VWRD = 15.5

A 6.45% bond whos coupons grow

Thanks for the article, but it's a paywall for me.
People actually pay money to subscribe to their fear news?

MF you gotta compare with cash as they hold 90% of their collateral in T-Bills.
They had a good year last year.. skill, luck? both? who knows...
Maybe this year they will do good as well with 5% on their collateral.

I fell for this managed futures bait in 2009 after 'great performance' in 2008.
To get any significant benefits you need to allocate at least 20%.
I wouldn't bother with any asset less than 10%.
What came after? 10+ years of nothing much and lots of fees.
No thanks.

Some examples of stellar performance:
https://stockcharts.com/freecharts/perf ... 2&O=011000

BND has a duration of 6.6 years.
Price high low of 2016 $84.70 07/08/2016 $80.02 12/15/2016
Distributions in 2016 were $1.99 so 2.35%-2.49%, roughly.
Using the regular 'hold till duration' rule, you'd expect the return to be $10,000 plus the interest over 7 years, so around $11,645 - $11,741

How did BND perform?
$10,000 $10,635 0.86%

We had hikes from 2016-2020.. and now again. Hence why maybe the 2x duration - 1 rules makes more sense... Scary.

All these 1980-today bond performance graphs might be useless in the future and should come with a warning.
It could be that the great bond bull market is done.
In that case, it pays benefits to look at how intermediate bonds performed in a period of rising rates... (50s, 60s, 70s) in real terms of course.
Hint: not very well.

PS. The duration = time to break even only works if rates stay in a tight range. In rising rates, the formula might end up being something like 2 x duration -1.

To play devil's advocate here, and illustrate the feebleness of these sorts of anecdotes, Coke stock was about $10 in 1994. Now it's about $60. Over 29 years, that's about a 6.5% annual return. Coke's divided yield has averaged around 2% during that 29 years, so call it an 8.5% annual return. But what if he'd invested in 1998 instead? Coke was about $40 in 1998. Its annual return since then has been only about 1.5%. And adding dividends, a bit under 4%. So a guaranteed 6.15% yield would have smoked his investment if he'd not been so fortunate with his timing. What's the timing like for OP right now? I'll let you know in 29 years. As an aside, the math in that anecdote doesn't seem to work out. Coke's ~8.5% yield, as I reckon it, over 29 ye...

Isn't Bridgewater and Dalio the same ones that were pushing "risk parity" and leveraged long bonds for portfolio allocations?
How did that turn out?

If your signature is up to date, I'd be more worried about your large 21.5% of assets bet on a single stock (MSFT & VWRA has already 3% MSFT) rather than the -15% drawdown on a bond fund. Thanks for your interest and comment, this level of allocation to a single stock is the result of large capital gain over the past decade from an employee share option plan. I got lucky with the timing when accumulating and then the price escalation. The lesson I learnt here (too late) was that I should have sold on receipt each year and moved to a tax-free account (ISA or SIPP). However, I did not do this and they remain in taxable. I am in the process of selling down the holding gradually moving proceeds into VWRL, every year using capital gains all...

If your signature is up to date, I'd be more worried about your large 21.5% of assets bet on a single stock (MSFT & VWRA has already 3% MSFT) rather than the -15% drawdown on a bond fund.

To play devil's advocate here, and illustrate the feebleness of these sorts of anecdotes, Coke stock was about $10 in 1994. Now it's about $60. Over 29 years, that's about a 6.5% annual return. Coke's divided yield has averaged around 2% during that 29 years, so call it an 8.5% annual return. But what if he'd invested in 1998 instead? Coke was about $40 in 1998. Its annual return since then has been only about 1.5%. And adding dividends, a bit under 4%. So a guaranteed 6.15% yield would have smoked his investment if he'd not been so fortunate with his timing. What's the timing like for OP right now? I'll let you know in 29 years. As an aside, the math in that anecdote doesn't seem to work out. Coke's ~8.5% yield, as I reckon it, over 29 ye...

CPA_RIA wrote: ↑Tue Feb 28, 2023 8:40 am waiting for a VERY LONG time.

I recall reading that the 'worst' case if rates keep rising it would take holding (2x duration - 1) in years to break even in nominal terms.

Anyone who has locked into a long term T bond of 5-6% may be able to enjoy long periods of high returns at close to zero risk and no state interest tax (nice for those living in CA) Of course, there is always the risk that inflation and interest rates could soar in the future and that your 6% bond may be worth less; however, that is less likely than the alternative path. Just ask Buffett. The cash dividend we received from Coke in 1994 was $75 million. By 2022, the dividend had increased to $704 million. Growth occurred every year, just as certain as birthdays. All Charlie and I were required to do was cash Coke’s quarterly dividend checks. We expect that those checks are highly likely to grow. Assume, for a moment, I had made a similarly-...

https://www.fidelity.com/learning-center/investment-products/fixed-income-bonds/duration Bond funds with constant durations behave slightly different than holding a 7y bond whos duration gets reduced with every year that passes. "if interest rates were to fall by 1%, the 10-year bond with a duration of just under 9 years would rise in value by approximately 9%. If rates were to fall 2%, the bond’s value would also rise by approximately twice as much (18%)." The bogle way would be to just stand there and do nothing as we can't predict accurately what will happen in the future. If you want to take a stance on the direction of interest rates then you can either move into short term bonds and have reinvestment risk in a few years when...

Corporates are the "talk of the town". See my previous thread asking why..

How are you planning on investing in them?
Individual direct bonds? Callable ones?
Will your private bank be selling them or recommending them to you or will you research via a platform?
Which rating do you plan on targeting for 7-8% in USD?

Thanks a lot for some guidance. But if this is somewhat of an ordinary market development, why would people hold bond ETFs in their portfolio if they have negative returns over several years? Would not cash then be a safer option? Also, does the -4% of the specific etf i mentioned imply, that on average these bonds were charging the buyers 4% interest for borrowing money from them?! Because they were told "60/40" and they just bought long duration bond funds at 2% yields. Yes, it's "normal" for this to happen when rates go up. Your bond fund will go down in % the 'average duration' of the bonds for every % in interest rate increase. The negative return is due to the market price of the bonds. When interest rates go up, ...

I posted this in another thread so many someone can help clear this up as it's part of the discussion on buying T-Bills with IBKR

Anyone successfully buy Treasuries at IBKR?
I saw some 4.9% annualized on the 6 month the other day.
Do they have 6-7 figure minimum trading sizes because I even tried to hit the ask on a few with $10k and I never got fills.
At Schwab Int'l it's super easy and get instant fills even at the bid or mid price.

BTW, there's no withholding on treasuries as they don't pay a coupon (you pay a lower price and get the 100 par at maturity.

Investable corporates Baa are a good 'volatility' dampener within an AA. Returns should be something in between equity and gov bonds over the long term. Yields are quite attractive these days at 5-5.5% however the spread over treasuries is low and "more than 8%" you are talking about junk bonds are Baas that were or are about to be downgraded.

Man y'all are a pessimistic bunch. Global equities past 100 years returned something like 5% real after inflation despite wars, famines, earthquakes, dictators and nuclear bombs. Before making a decision read: Triumph of the Optimists Credit Suisse Global Investment Returns Yearbook Psychology of Money by Morgan Housel Stocks for the Long Run by Jeremy Siegel Little Book of Common Sense Investing Sixth Edition by John Bogle Random Walk Down Wall Street 50th Edition by Burton Malkiel Research perpetual withdrawal rates -- ignore the 4% rule as it doesn't apply to your horizon. Play with online calculators like cfiresim, ficalc, portfoliovisualizer Maybe even pay a one-time fee to talk to a financial advisor -- do not hire them if they charge...

Anyone successfully buy Treasuries at IBKR?
I saw some 4.9% annualized on the 6 month the other day.
Do they have 6-7 figure minimum trading sizes because I even tried to hit the ask on a few with $10k and I never got fills.
At Schwab Int'l it's super easy and get instant fills even at the bid or mid price.

In your situation, at 50x expenses saved, I would close the business if I couldn't find a buyer and rent out or sell the building.
Enjoy life with your family, destress, take some vacations and look for the next step either doing a new business you love and is less stressful or just focus on your hobbies and family.

Diversify your portfolio well beyond Finland and Scandinavian equities. Keep it passive and low cost. You can pretty much live off the dividends from a diversified portfolio of distributing funds or use accumulating funds if tax efficient in your country and sell off 2% a year to spend. Keep a couple of years of expenses liquid.

Out of the 10 worst real draw downs for a 50/50 portfolio, how many of those had a negative return for the bond portion? The above was actually for a 60/40 portfolio, here are the numbers for a 50/50 portfolio, with the real total changes in both stocks and bonds: Dec 1915 -> Jun 1920 (-43.63%, stocks: -44.15%, bonds: -44.10%) Sep 1929 -> Jun 1932 (-40.59%, stocks: -76.80%, bonds: 38.15%) Oct 1939 -> May 1942 (-24.65%, stocks: -37.27%, bonds: -10.79%) Apr 1946 -> Feb 1948 (-27.68%, stocks: -35.38%, bonds: -19.91%) Jan 1973 -> Sep 1974 (-33.65%, stocks: -48.64%, bonds: -15.29%) Dec 1976 -> Sep 1981 (-26.38%, stocks: -10.77%, bonds: -40.66%) Dec 2021 -> Oct 2022 (-23.76%, stocks: -24.47%, bonds: -23.30%) 50/50 stock/bond: 7 drops of at least...

https://www.sifma.org/resources/researc ... -equities/

The U.S. equity markets are the largest in the world and continue to be among the deepest, most liquid and most efficient, representing 46.2% of the $111 trillion global equity market cap, or $51 trillion. This is 4.3x the next largest market, China. U.S. market share has averaged 37.4% over the last 10 years, troughing at 32.9% in 2012 and peaking at 46.2% as of 3Q22.

However this is by market cap, not the size of the respective economies.

How did you come to the conclusion that your bank is outperforming the LifeStrategy?
https://www.vanguardinvestor.co.uk/inve ... erformance
https://www.vanguardinvestor.co.uk/inve ... erformance

SPY 2007/2008 -50.80%
There were larger drawdowns than that.. just an FYI.
And yes, you might get margin call before -100% of your capital.
What are you actually trying to achieve?

PS. I was leveraged in 2008 and lost my a**. Still regret it to this day. If I would have asked on here, I probably would have been cautioned and wouldn't have listened. Luckily I learnt my lesson and calmed down. Sometimes it takes a 7 figure slap across the face to realize you are playing with fire.

UpperNwGuy wrote: ↑Tue Jan 24, 2023 4:09 pm I retired in 2013. I did not have financial fears. I'm old enough to have lived through the stagflation of the 1970s, the 1987 Black Monday crash, the 2000 dot com crash, the 2008 global financial crisis, and numerous Federal government shutdowns. I assumed that these were typical worst case scenarios, and I was ready for them, so I didn't fear them.

Were you invested in those times? Did you keep a journal about your emotions around those times?

Pitfall: 2x leverage = lose 100% of your money.

If you adjust the split too much you end up becoming an active investor surely... Yes - but the kind of people who spend their free time on Bogleheads forums often have a desire to fiddle/tweak/tilt. If you just take the "true" Bogleheads advice and do 100% VWRP for 40 years, there isn't a lot to talk about! So you do have lots of discussions amongst Bogleheads about some kind of partial divergence from a pure market cap approach. Excluding stuff they don't like (there's an ongoing thread about not wanting to invest in China, for example), adding more of stuff they do like (small cap value, home country bias), "play money" invested in individual stocks up to X% limit, and so on. Where's the line that makes these investo...

You're probably better off with distributing in all 3 cases but you should ask an accountant in each country.

Netherlands has horrible tax treatment for investments.They tax investment income is via the 'box 3' system.
https://www.belastingdienst.nl/wps/wcm/ ... e-in-box-3
This is essentially a wealth tax on your stock investments of 1.7%. They assume you get like 0.0% on savings, 5.7% on stocks/other, 2.5% on bonds and tax you 31% on the 'assumed' income. If you have a -20% portfolio drop like in 2022, tough luck.

https://am.jpmorgan.com/de/en/asset-man ... e-markets/
Page 68

Vanguard EUR Corporate Bond UCITS ETF Accumulating/Distributing
ISIN IE00BGYWT403
4.28% YTW
4.6Y Duration
0.09% TER
Somewhat low assets in the accumulating class, so check the bid/ask spread when you trade this.

BTW Inflation in Europe is 10% so these are almost 'guaranteed' to lose money in real terms unless the ECB starts cutting rates and inflation somehow disappears.

Check out justETF for other European UCITS bond funds.

Jimsad wrote: ↑Mon Jan 16, 2023 5:30 am I keep hearing that investment grade corporate bonds are best place to invest now as they are expected to give best returns seen in a life time

I also keep hearing the same drum beat about corporate bonds in 2023.
Is it just because those funds took a beating in 2022 and people think they 'look like they are on sale'? As I understand it, the drop was just because of the interest rate hikes and long duration in most of those funds.
5% nominal yields with inflation greater than the yield.
Limited upside due to inflation slowing down and Fed backtracking the rate hikes (1970s mistake?) but in such case, stocks would get a boost too.
Could someone more versed in investment grade corporates explain?

galeno wrote: ↑Sun Jan 22, 2023 8:17 am Why?

VWRD PE = 14.3
WSML PE = 11.8
VDEM PE = 11.2

We only hold VWRD. But very tempted to sell 20% and put the half the proceeds into developed world SCs and the other half into EM.

tradez wrote: ↑Sun Jan 22, 2023 7:16 am I don't buy the argument of "What do you know that the market doesn't know about China? It's already priced in". I could argue the same with people that choose to add an EM ETF to their VWRP or IWDA market portfolio. What do they know about the market that means they want to add even more weight to emerging markets, or small caps etc.

I recently did just that considering the under-performance of EM, Small Caps and xUS for the last 10 years. I could be wrong.

BoomBustInvest wrote: ↑Sat Jan 21, 2023 6:25 am

DoctorE wrote: ↑Fri Jan 20, 2023 7:03 pm 5%pa nominal on USD investable grade now so what would the upside come from? drop in interest rates?

... yes... along with a broad-based re-allocation from equities into now discounted bond prices

Expecting bond prices move on more buying demand not just on interest rate & credit risk?
Surely rational investors would not bid up prices of investment grade bonds (decreasing yields) if they can get more from treasuries who's prices are determined by the Fed Fund rate and inflation expectations.

IWDA + EIMI: In case someone wants to play with %s to get a higher or lower 'tilt' to Emerging Markets than the World Index.
Emerging markets have been underperforming developed markets for about 10 years now.. will it remain like this in the future or will they outperform? Nobody knows...

5%pa nominal on USD investable grade now so what would the upside come from? drop in interest rates?

Here's what a simple two fund portfolio would have done in USD after fees: USD 60/40 - VT/BND - 1.51% 3Y, 3.32% 5Y, 5.43% 10Y You raise an interesting point, but there are still choices to be made as to whether you choose a US-heavy Large Cap, All-World, Emerging Markets etc. All have performed differently, and an adviser would argue they can use tactical allocation to move things around if there is a macro need too. My bank has suggested 1% uplift for TAA. As it so happens, this thread has no doubt convinced me that I should go down the bogle route (should I expect anything less from this forum!) and my mind is moving towards IWDA + EIMI. Unless I am analysing it incorrectly, it seems like the iShares MSCI World Index has performed better...

The 100% Stock Pick portfolio at 7.8% annual return is easy to compare with VT, Vanguard's globally diversified index fund. From Europe, you would invest through the Ireland-based ETF version VWRA -- same return, but it's not been around for 10 years, so let's look at VT's historic return. In the past 10 years, it had a return of 8.14% per year. So even before the 1 percentage point fee, a globally diversified index fund outperforms the banks' stock picks. If you invested $10m in 2012, you would have about $22m with the index fund and $19m with their actively managed fund (after the 1 percentage point fee). Not a strong selling point for the bank, given that the turbulence of the last years might have been especially favorable for a skille...

If anyone has any input on this I would be much grateful. Thanks Leverage has destroyed more investors than just about anything else. It effectively means you are short volatility (because of the risk of margin calls). You want to think carefully about who is the long on that trade, and their relative position re information, dealing costs, tax etc. I am sure the more sophisticated here will tell me why I am wrong. One thing that I learned after a few years of doing this is that part of the risk is that you may not be able to implement your desired trading strategy, even if you want to. For example: . You may not be able to log in to your account (presumably because everyone else is trying to). This situation can persist for hours, and the...

Wow, some extremely valuable responses. Thank you. I think it would be unfair for me to name the specific private bank I am with, but it is one of the major European players. i.e. UBS, Pictet, HSBC Private, Credit Suisse, BNP Paribas etc. It is not the retail arm, and the investments are not being picked by one of many financial advisors. They have large global teams dedicated to it. They have a handful of discretionary portfolios based on equity/bond AA. I actually have about 80% of my holdings there, and the remaining in more aggressive themes, e.g. Asia, Hedge Funds, Private Credit etc. I can confirm the fee is 1% and I pay this independently, it does not come out of the portfolio. It is extremely transparent and there are no hidden fee...

This could be fraud...
Do all the trades add up?
Did the BIL maybe syphon some money out?
Are the statements a spreadsheet or are they from the brokerage?

I spoke with Schwab on the phone recently and they do allow phone based UCTIS trades as well as transfers for EU residents.
"European-domiciled UCITS ETFs are available for residents of the European Economic Area (EEA)."
https://international.schwab.com/invest ... tf-trading

Europeans love their bonds! 50% in bonds when ECB has been keeping interest rate -8% below 'transitory' inflation is not a good way to protect your portfolio from inflation over 70 years! Have you seen what happens to a 50/50 portfolio during high inflationary times? Ouch, I was just considering a 60/40 portfolio! What happens to a 50/50 portfolio during high inflationary times, and what should we be doing about it if there's something to be done? My apologies if my previous post sounded rough I didn't actually read your post thoroughly. I only saw the "My Portfolio" and missed the "planning" line. So you are *planning* to invest in this way but haven't done so yet? In such case what is your allocation right now, just c...

Europeans love their bonds!
50% in bonds when ECB has been keeping interest rate -8% below 'transitory' inflation is not a good way to protect your portfolio from inflation over 70 years! Have you seen what happens to a 50/50 portfolio during high inflationary times?