Search found 349 matches

by Zosima
Mon Jan 22, 2024 7:18 pm
Forum: Personal Investments
Topic: iShares iBonds ETFs by BlackRock - thoughts?
Replies: 12
Views: 1769

Re: iShares iBonds ETFs by BlackRock - thoughts?

Hebell wrote: Mon Jan 22, 2024 11:34 am
fuddbogle wrote: Mon Jan 22, 2024 11:16 am Just curious - What's the advantage of the IShares/iBonds ladder vs. a CD ladder?
You can sell when you want, in full or part. With a CD you can't.
In addition to the greater liquidity that HeBell mentioned, iShares also offer the potential for higher yields (with corresponding credit risk) and longer maturity options.
by Zosima
Mon Jan 22, 2024 7:42 am
Forum: Personal Investments
Topic: iShares iBonds ETFs by BlackRock - thoughts?
Replies: 12
Views: 1769

Re: iShares iBonds ETFs by BlackRock - thoughts?

CookiemonsterCA wrote: Sun Jan 21, 2024 10:33 pm I like the idea of BlackRock’s iBonds ETFs (especially for corporate bonds, as I don’t have the energy to buy these individually). In particular, I like: 1) the diversification, and 2) the fact that they mature, like a bond. It seems like an easy way to create a diversified ladder of corporate bonds.

Thoughts on this new type of ETF?

Thank you!
Agree on another poster on searching for prior threads for a good discussion on defined maturity ETFs from BlackRock and Invesco. I use iShares iBonds corporate ETFs to build out a corporate ladder for the reasons you mentioned and they have performed as expected.
by Zosima
Mon Nov 06, 2023 8:02 am
Forum: Personal Consumer Issues
Topic: Small to Medium sized cities for FIRE
Replies: 103
Views: 10231

Re: Small to Medium sized cities for FIRE

Focusing in on the Midwest (as I am most familar with that area), here are places I would consider retiring to:

-- Iowa City, IA (your initial suggestion is a fabulous place)
-- Madison, WI
-- Des Moines, IA
-- Omaha, NE
-- Lincoln, NE
-- Indianapolis, IN
-- Kansas City, MO (and Kansas suburbs)
-- Columbus, OH
-- PIttsburgh, PA
-- Sioux Falls, SD
by Zosima
Tue May 16, 2023 8:28 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Cash Plus Account Pilot
Replies: 462
Views: 100281

Re: The new Vanguard Cash Account

You can still write checks on some Vanguard funds, such as the Federal MM fund and the Treasury MM fund in the mutual fund platform and the settlement fund in the brokerage platform. Does this still work now? I thought this was discontinued. Can you write checks with a regular brokerage account holding VMFXX? Then it's close to having a HYSA at 5.02% APY (VMFXX's current rate). Sounds too good to be true. :shock: The short answer is yes. https://personal.vanguard.com/us/whatweoffer/accountservices/checkwriting?lang=en . But I am not sure I understand why it is too good to be true. VMFXX is the settlement fund, and you can ACH to your checking account to pay bills, so it functions like an HYSA already without check writing. The transfer tim...
by Zosima
Mon Apr 17, 2023 8:46 pm
Forum: Personal Investments
Topic: 1-Month Treasury Yield Drop in April?
Replies: 20
Views: 3443

Re: 1-Month Treasury Yield Drop in April?

Kevin M wrote: Mon Apr 17, 2023 8:14 pm
Here is the 3m minus 1m spread since for the maximum period:

Image

So yeah, it's historically high now, but we see that it's been volatile before, and typically comes down quickly after it spikes, so I would expect that will happen again soon.
Thanks for the chart Kevin! The current 112 bp spread is by far the largest spread in at least the last 20 years. It does seem to be a supply/demand issue with strong demand for <= 1 month T-bills. It just seems strange as I do not understand what is driving it.
by Zosima
Mon Apr 17, 2023 7:09 pm
Forum: Personal Investments
Topic: 1-Month Treasury Yield Drop in April?
Replies: 20
Views: 3443

Re: 1-Month Treasury Yield Drop in April?

The strangeness of the 1-month T-bill rate continues. On April 3, there was a 20 bp spread between the 1-month and 3-month T-bill rate (4.70% vs. 4.90%). As of April 17, the spread is 112 bp (4.09% vs. 5.21%). The auction result on April 17 for the 13-week T-bill was 5.232%. For those (like me) who have rolling short-term T-bill ladders as a complement to (or in lieu of) money market funds, a 3-month ladder is a much better alternative than a 4-week ladder in the current environment.

https://home.treasury.gov/resource-cent ... nth=202304
by Zosima
Mon Apr 17, 2023 7:52 am
Forum: Personal Investments
Topic: VUSXX taxable for state and local now
Replies: 353
Views: 60130

Re: VUSXX taxable for state and local now

grok87 wrote: Mon Apr 17, 2023 6:04 am
OSUperu wrote: Sun Apr 16, 2023 11:14 pm A bit of thread-jacking, but a few mentioned turning rolling through tbill/notes vs using this money market fund...

Is there a yield (and/or other) benefit for purchasing T bills/notes at auction vs the seemingly easier secondary market?
i'm not sure but the tbill auctions are very frequent. so you don't have to wait long to buy at auction
cheers
grok
In addition to the nominal savings on bid/ask spreads, one other advantage of purchasing at auction is the ability to autoroll which, when it is set up, will save time until one needs to withdraw the funds.
by Zosima
Fri Apr 14, 2023 4:27 pm
Forum: Personal Finance (Not Investing)
Topic: Finding a Financial Planner for Budgeting/Cash Flow
Replies: 14
Views: 1654

Re: Finding a Financial Planner for Budgeting/Cash Flow

Your situation sounds like ours a decade and a half ago. I echo the advice of the posters above. It is probably no more work for you to do it yourself than to hire someone to do it as you will need to organize and provide them with relevant information. For us, we had two main starting points: first, track all expenses. Second, manage cash flows for the mismatch between cash in and cash out. For tracking expenses, we used Mint. We looked at other programs, but Mint was the easiest to use and is generally fairly good (although the ads are annoying which is the "cost" of a free program. It took us a year of diligently tracking our expenses but it was empowering to get a better handle on our cash flows. I recognize that most people h...
by Zosima
Wed Apr 12, 2023 6:37 am
Forum: Personal Investments
Topic: 1-Month Treasury Yield Drop in April?
Replies: 20
Views: 3443

Re: 1-Month Treasury Yield Drop in April?

As for whether this should affect a "strategy", the question to ask is "does owning 4 week Treasuries make sense to me?" If the answer is yes, then you take what the market is offering. You're seeing one of the downsides of staying short-term if you don't actually need short-term money. This is not necessary accurate. These are short-term funds so the comparison is between rolling 4-week Treasury ladder (one rung each week) vs. a money market fund. The genesis for the former strategy is that Vanguard's Treasury Money Market fund (VUSXX) has changed its holdings from 100% Treasuries (whose income is exempt from state income taxes) through 2022 to 42% Repos (which are subject to state income tax) as of March 31. The 4-wee...
by Zosima
Tue Apr 11, 2023 4:20 pm
Forum: Personal Investments
Topic: 1-Month Treasury Yield Drop in April?
Replies: 20
Views: 3443

1-Month Treasury Yield Drop in April?

The one-month Treasury yield dropped significantly on April 11th from 4.53% to 4.27% and down from 4.70% on April 3rd. The remainder of the Treasury yield curve was essentially flat to slightly up for the month of April. It is noteworthy to me because I was looking to set up a rolling 4-week T-bill ladder and it will also impact rates on money market funds. Can someone explain the rationale for the rate cut? It does not appear related to the upcoming May meeting as two month to two year rates are flat to slightly up to 15bp.

Any insights are appreciated on whether this is a short-term supply/demand blip that should not affect a rolling 4-week T-bill strategy or something else.

Thank you.
by Zosima
Fri Feb 17, 2023 8:18 pm
Forum: Investing - Theory, News & General
Topic: The True Value of One More Year (OMY)
Replies: 55
Views: 7953

Re: The True Value of One More Year (OMY)

Rocket354, thank you for doing this analysis and sharing your insights. It definitely highlights the financial benefits of OMY or TMY when considering retirement into a potential negative sequence of returns scenario (which we will only know after the fact). Big ERN did an analysis on OMY and came to similar conclusions as your analysis. https://earlyretirementnow.com/2021/01/13/one-more-year-swr-series-part-42/ On a personal level, I did OMY in 2022, after I had it my "number" and am working part-time in 2023 to reduce my withdrawal rate. I was aware of the financial benefits in negative scenarios (which 2022 and beyond may turn out to be) but the psychological benefits of working last year to cushion the impact of market returns...
by Zosima
Fri Feb 03, 2023 12:42 pm
Forum: Investing - Theory, News & General
Topic: Would these ETFs be a good way to create a Treasury ladder?
Replies: 12
Views: 1608

Re: Would these ETFs be a good way to create a Treasury ladder?

BondBloxx ETFs would absolutely be a substitute for a rolling bond ladder. I am well into constructing a rolling 12-month Treasury bill ladder and have been following the BondBloxx ETFs (specifically XHLF) as a potential substitute. My only concerns would be liquidity as the BondBloxx have fairly low volume but their bid/ask spreads are fairly narrow.
by Zosima
Fri Jan 20, 2023 8:19 pm
Forum: Personal Investments
Topic: how much should a retiree keep in TIPS?
Replies: 82
Views: 7831

Re: how much should a retiree keep in TIPS?

Here is another good discussion on this topic.

viewtopic.php?t=376740
by Zosima
Fri Jan 20, 2023 8:42 am
Forum: Personal Investments
Topic: Why not more interest in FISVX for small value?
Replies: 18
Views: 1925

Re: Why not more interest in FISVX for small value?

Others can weigh in but my biggest concern about FISVX (and related value tilts for Fidelity's index funds) is that they follow the Russell indicies which are less than optimal for investing due to turnover and front-running. For comparison, Vanguard offers small cap value ETFs based on S&P and CRSP, both of which outperformed FISVX (based on Russell 2000) by over 100bp since the latter's inception. https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=2&startYear=1985&firstMonth=1&endYear=2023&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=100000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalance...
by Zosima
Fri Jan 20, 2023 7:55 am
Forum: Personal Investments
Topic: Does Fidelity's auto-liquidation of non-core money market funds ever fail?
Replies: 30
Views: 6645

Re: Does Fidelity's auto-liquidation of non-core money market funds ever fail?

The only auto transfer I had fail, involved an ACH debit of a CMA that should have overdrafted pull from my brokerage margin, and that was just one too many steps, the ACH was kicked back as NSF. Fidelity couldn't tell me why. I've had the same setup work in the past. I've never had a liquidation of FZDXX or SPRXX fail. +1. I also have a CMA with overdraft pull from brokerage and I once had a quarterly tax payment where Fidelity failed to pull the funds from the brokerage account. Fidelity apologized but failed to provide an explanation of why that happened. Now, I keep FZDXX in both my CMA and brokerage account and always ensure that there is sufficient funds in my CMA (via FZDXX) to cover upcoming bills and payments. Fidelity has never f...
by Zosima
Sat Jan 14, 2023 2:41 pm
Forum: Personal Investments
Topic: Sensible Money or Not? or is there better way?
Replies: 4
Views: 802

Re: Sensible Money or Not? or is there better way?

A friend of mine was in a similar situation to yours and interviewed a handful of advisors, including Sensible Money. She ultimately went with Mayport Wealth Advisors and seems satisfied so far. I do not have personal experience with them but they adhere to low-cost index funds and charge a fixed fee for their services (not AUM) so depending on your investible assets may or may not be cost effective.

https://www.mayport.com/

Other more closer to do-it-yourself options are Vanguard Personal Advisor (or similar at Fidelity or Schwab). In any event, you will need an attorney to set up the Trust.

Good luck with your decision and please let us know what you decide and how it turns out.
by Zosima
Mon Jan 09, 2023 7:43 am
Forum: Personal Finance (Not Investing)
Topic: Big Law Retirement Plans
Replies: 40
Views: 7430

Re: Big Law Retirement Plans

DSBH wrote: Mon Jan 09, 2023 7:31 am Not Big Law but my former Megacorp allowed deferred compensation for HCE as part of benefits. Might be worth checking with his Big Law.
Many law firms offer cash balance plans (which is effectively a form of deferred compensation) but it is generally only available for partners, not associates.
by Zosima
Thu Dec 29, 2022 8:06 pm
Forum: Personal Investments
Topic: Buying T-Bills on Vanguard and Fidelity
Replies: 11
Views: 2526

Re: Buying T-Bills on Vanguard and Fidelity

I was a fan of Fidelity offering the Auto Roll for its T-Bills, but the only way to stop the Auto Roll is to call and talk to a human at Fidelity. That process took me almost 20 minutes today, and they could not explain why it I couldn't just stop it with a click of my mouse. But when they asked why I was turning it off and what my financial plan was, their motive became more clear. Is your claim that this page is false? https://www.fidelity.com/fixed-income-bonds/fixed-income-tools-services/auto-roll-program You have the ability to withdraw from the service at any time with no penalties, giving you complete control. This Auto Roll feature will continue to purchase a replacement position upon the maturity of your existing position unless: ...
by Zosima
Wed Dec 28, 2022 7:18 pm
Forum: Investing - Theory, News & General
Topic: Vanguard Cash Plus Account Pilot
Replies: 462
Views: 100281

Re: Vanguard Cash Plus Account Pilot

anon_investor wrote: Sat Dec 17, 2022 11:06 am I wonder why Vanguard cannot do something similar instead of having to create a new account type.
Vanguard had an Advantage Account that did exactly that (it operated similar to Fidelity's CMA account) until Vanguard discontinued it in 2019. The Cash Plus Account pilot seems to be its (inferior) replacement. I am not sure what Vanguard's strategy is.
by Zosima
Tue Dec 20, 2022 7:04 pm
Forum: Personal Finance (Not Investing)
Topic: Fidelity Money Market (SPAXX) vs Marcus Savings Account for house down payment.
Replies: 22
Views: 7042

Re: Fidelity Money Market (SPAXX) vs Marcus Savings Account for house down payment.

I would also look at Fidelity's Federal Tax Exempt Money Market Fund (FZEXX). Its current 1-day yield is 3.38%, which at a 35% federal tax bracket is a 5.2% equivalent yield.
by Zosima
Sat Dec 17, 2022 10:03 am
Forum: Investing - Theory, News & General
Topic: FZDXX money market fund hitting 4.10% yield
Replies: 139
Views: 23980

Re: FZDXX money market fund hitting 4.10% yield

nileshilpa wrote: Sat Dec 17, 2022 9:34 am
anon_investor wrote: Fri Dec 16, 2022 1:01 pm I use SPRXX in my Fido CMA, which serves as my checking account. 3.98% is amazing.
In my CMA account it shows FZSXX as Money Market account. How do you switch to SPRXX?
FZDXX and SPRXX are not available as "Core" accounts but if you invest in either FZDXX/SPRXX, the Core account will automatically pull from FZDXX/SPRXX by liquidating the latter funds. For both my brokerage account and CMA my Core account is usually at $0 with the remaining funds held in FZDXX.

As others have said, prime funds such as FZDXX/SPRXX are slightly riskier than government MM funds and are subject to liquidity gates and redemption fees.
by Zosima
Wed Nov 30, 2022 7:22 pm
Forum: Personal Investments
Topic: Am I OK to retire?
Replies: 58
Views: 10621

Re: Am I OK to retire?

Question for others - Is there a role for OP to fund a Donor Advised Fund with a chunk of money up front to take the tax deduction - then watch that grow and donate money through that? I’ve read on BH about DAF’s and was wondering if in this scenario that would be a benefit. (Either while working or when retired to offset Roth conversions) This is a great suggestion. In the three years prior to "retirement" (which for me means working 20%), we funded approximately 10-15 years of anticipated charitable contributions in a Donor Advised Fund. We used appreciated mutual funds for the contributions so we were able to obtain the charitable deduction at a higher tax bracket than we will have in "retirement" and avoid capital g...
by Zosima
Wed Nov 30, 2022 5:30 pm
Forum: Personal Investments
Topic: Am I OK to retire?
Replies: 58
Views: 10621

Re: Am I OK to retire?

In all seriousness congrats on your success! I'd be more interested in hearing how you did it! Thanks. My story is not that interesting, though. Worked throughout college to get through with no debt. State schools were not expensive at the time. Worked at a number of employers and consulting firms early in career. Worked hard, became an expert in my field, and most recently lead a large technical team critical to my employer’s success. Saved aggressively from the beginning, allowed lifestyle to inflate modestly compared to income, and benefited from equity grants that paid off. Pretty burnt out now. Will walk away from significant equity to leave but might be worth it at this point. Congratulations on your financial and professional succes...
by Zosima
Fri Nov 11, 2022 7:27 am
Forum: Investing - Theory, News & General
Topic: Vanguard Cash Plus Account Pilot
Replies: 462
Views: 100281

Re: Vanguard is offering a 3.5% APY FDIC Insured Cash Plus Account

Good to see this coming. At the Bogleheads conference, Joel Dickson mentioned that they would have a replacement for Vanguard Advantage. Since this doesn't have Checks, ATM, and Fidelity's CMA does have those things (and also earns 3.6%+ on SPRXX), right now Fidelity's option is more attractive IMO. I can see how a "savings" account at VG would tempt some people, but my liquid funds have been out of VG for over 2 years, and this isn't going to bring them back. I don't really care if my $1300 checking account is FDIC insured I do not understand why Vanguard would terminate Vanguard Advantage and then bring a similar offering several years later. I used to have most of my money at Vanguard but when Vanguard Advantage was terminated...
by Zosima
Tue Nov 01, 2022 10:19 am
Forum: Investing - Theory, News & General
Topic: Positive Impact of Rising Rates on Those Nearing Retirement
Replies: 3
Views: 600

Positive Impact of Rising Rates on Those Nearing Retirement

I am 54 years old and am looking to transition to a quasi-early retirement in 2023 (will do some part time work but need to dip into savings). Over the last several years I have been recording our net worth each month to ensure we are on track. Beginning this Spring I also started keeping track of a modified funded ratio based using SPIA quotes from Blueprint Income as a proxy. Specifically, each month, I would take our net worth and obtain quotes from Blueprint Income to see what SPIAs from a A++ rated insurer we could purchase with our net worth. Obviously, we would never put 100% of our net worth in a SPIA and we have no current plans to use any SPIA or DIA until at least age 70 (and perhaps not even then). However, I have found this to ...
by Zosima
Tue Oct 25, 2022 1:29 pm
Forum: Personal Investments
Topic: treasury funds with a .5-1year duration?
Replies: 16
Views: 2518

Re: treasury funds with a .5-1year duration?

Are there any (low-cost) treasury funds with a .5-1 year duration? These funds all have short durations (between 0.12 and 2.0 years) and low expense ratios (less than 0.05% or less). iShares 0-3 Month Treasury Bond ETF (SGOV) BondBloxx Bloomberg Six Month Target Duration US Treasury ETF (XHLF) BondBloxx Bloomberg One Year Target Duration US Treasury ETF (XONE) Schwab Short-Term U.S. Treasury ETF (SCHO) Vanguard Short-Term Treasury Index ETF (VGSH) BondBloxx Bloomberg Two Year Target Duration US Treasury ETF (XTWO) Thanks for the list! I was not aware of the BondBloxx ETFs, which appear to be very new (within the last two months). https://www.prnewswire.com/news-releases/bondbloxx-launches-first-suite-of-target-duration-etfs-to-help-investo...
by Zosima
Sun Oct 16, 2022 6:13 pm
Forum: Investing - Theory, News & General
Topic: Short-term TIPS at negative yields vs. rolling 4-week Tbills
Replies: 21
Views: 3139

Re: Short-term TIPS at negative yields vs. rolling 4-week Tbills

Kevin and Cruncher, thanks for the information. Very informative in highlighting that short-term TIPS are much more correlated with inflation than longer-term TIPS. This concept was also studied by Vanguard in a paper from a few years ago and they came to the same conclusions you did, although surprisingly, they did not compare the inflation correlation of short-term nominal treasuries, although they studied other asset classes. https://www.vanguard.ca/documents/tips.pdf I had very preliminary attempted to see if there was any ability to take advantage of this by pairing short-term TIPS with longer-term nominal Treasuries for a given duration was not able to find any obvious way to do so. For example, I attempted to replicate the duration o...
by Zosima
Wed Oct 12, 2022 11:24 am
Forum: Personal Investments
Topic: Changing Fidelity CMA core position
Replies: 44
Views: 12017

Re: Changing Fidelity CMA core position

justsomeguy2018 wrote: Wed Oct 12, 2022 11:13 am
So the Fidelity rep's info was wrong? Is there something in settings that I need to do to make that happen, or will it happen automatically?
I believe it happens automatically for any money market funds (it has to be money market funds, not other investments) in the CMA. For the overdraft protection with the brokerage account, you would need to set that up under "Account Services -- Cash Manager Tool" from your CMA.

https://www.fidelity.com/cash-managemen ... nt-account
by Zosima
Wed Oct 12, 2022 11:08 am
Forum: Personal Investments
Topic: Changing Fidelity CMA core position
Replies: 44
Views: 12017

Re: Changing Fidelity CMA core position

Question - when I spoke to Fidelity rep about this, they told me that the money had to be in the Core account to satisfy any debits, except in certain circumstances like BillPay that had been set up by me. I can't seem to get a good answer and don't want to risk my CC bills not getting paid on their due date! Speaking from experience, my "Core" CMA account is often at $0 as I frequently move any excess to FDZXX. When checks/disbursements come in, Fidelity will pull the funds from FDZXX (or another money market account) to pay the creditors. I also have a backup with my Fidelity brokerage account where it can pull any overdrafts from my money market accounts (or if I really mess up a margin account) but I generally try to keep 1-2...
by Zosima
Wed Oct 12, 2022 8:44 am
Forum: Personal Investments
Topic: Changing Fidelity CMA core position
Replies: 44
Views: 12017

Re: Changing Fidelity CMA core position

FZDXX is the core in my fidelity HSA. I think you may mean FDRXX (Fidelity Government Cash Reserves) rather than FZDXX (Fidelity Money Market Fund Premium). I hold FDRXX as my core in my Fidelity HSA also. FDRXX is virtually identical to SPAXX (Fidelity Government Money Market Fund), which is my Core account in my Fidelity brokerage, but FDRXX has a slightly lower ER (0.33% vs. 0.42%) and thus has a correspondingly higher 7-day SEC yield (1.90% vs. 1.85%). I have no idea why Fidelity has two virtually identical funds but one a core for a brokerage account and one for a core for the HSA. I would prefer to have FDRXX has the core for my brokerage account also but that is not available online. I guess if I cared enough I could call Fidelity t...
by Zosima
Mon Oct 10, 2022 10:44 am
Forum: Personal Investments
Topic: Pros and Cons/Risks of Fidelity Money Market Fund Options?
Replies: 22
Views: 10572

Re: Pros and Cons/Risks of Fidelity Money Market Fund Options?

To the posters talking about the risk of SPRXX. Is there really a “3% risk of a 5% loss of capital”, which is what the OP stated as his risk tolerance? I think there he should definitely be ok to be in SPRXX with that tolerance, do you agree? The other funds have essentially a 0% risk and SPRXX is a token amount higher. I use SPRXX for my EF. Trying to numerically quantify "risk" is very problematic, and doesn't provide any context to what the consequences individually may be. 100% of the money you put in a risky investment is at risk, even if the odds of the risky event are 1 in 1000, if the event happens it impacts all of it. If your money market is frozen and can't be accessed for a period of time, maybe years, and that coinci...
by Zosima
Sat Oct 08, 2022 1:24 pm
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2953
Views: 623518

Re: If long TIPS hit a real yield above 2.0% I will…

I recall that TIPS are the most appropriate for tax sheltered accounts. What will be a rational to keep them in taxable unless there are no other options available TIPS (and other Treasury securities) are tax free at a state level, which makes them valuable in taxable account if one lives in a high tax bracket. The only drawback on TIPS is the "phantom" income on the inflation adjustments which results in taxable income without corresponding cash to pay taxes. However, that is no different than nominal treasuries in which a portino of the interest payments are reinvested. I have all of my TIPS in a taxable account as I currently live in a moderately high tax state/bracket (7.65%). Thanks, that’s a good point. Will it make a diffe...
by Zosima
Sat Oct 08, 2022 7:43 am
Forum: Personal Investments
Topic: Any experience with Toyota Income Driver Notes?
Replies: 316
Views: 56957

Re: Any experience with Toyota Income Driver Notes?

mykesc2022 wrote: Sat Oct 08, 2022 1:08 am
Not sure, but that is a different question than the one that was posed...which was "why bother". For me, I watch the company fairly close but as soon as I see an FDIC insured investment that is liquid--and a significantly higher rate, I will move in a heartbeat. That doesnt exist right now.
Fitness Bank offers FDIC insured 3.50% APY on its high yield savings account (3.60% if one has an associated checking account). The only catches are one needs to average 12,500 daily steps over a month.

https://www.fitnessbank.fit/
by Zosima
Fri Oct 07, 2022 8:10 pm
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2953
Views: 623518

Re: If long TIPS hit a real yield above 2.0% I will…

SteadyOne wrote: Fri Oct 07, 2022 3:54 pm I recall that TIPS are the most appropriate for tax sheltered accounts. What will be a rational to keep them in taxable unless there are no other options available
TIPS (and other Treasury securities) are tax free at a state level, which makes them valuable in taxable account if one lives in a high tax bracket. The only drawback on TIPS is the "phantom" income on the inflation adjustments which results in taxable income without corresponding cash to pay taxes. However, that is no different than nominal treasuries in which a portino of the interest payments are reinvested.

I have all of my TIPS in a taxable account as I currently live in a moderately high tax state/bracket (7.65%).
by Zosima
Thu Sep 29, 2022 7:52 am
Forum: Investing - Theory, News & General
Topic: Purchasing MYGAs (multi year guaranteed annuities) - mega thread
Replies: 2255
Views: 293042

Re: MYGAs Mark to Market value for net worth calculationnuities) - mega thread

I like to keep track of my net worth, recalculating periodically like quarterly. MYGAs present a bit of a dilemma for that calculation. Unlike stocks, bonds, options, real estate, etc. there is not a simple way to know a MYGAs "mark-to-market" value today. Pricing of stocks and bonds are updated daily as are options, and even real estate (using zillow or equivalent). With MYGAs, the company only tells you the current value with interest (at least mine does), even though if you tried to redeem it before maturation, you would receive dramatically less because of surrender value and market value adjustment. I completely understood that when I purchased my MYGA, but I still wish the companies would honestly tell you, "this is th...
by Zosima
Wed Sep 28, 2022 7:39 am
Forum: Investing - Theory, News & General
Topic: Purchasing MYGAs (multi year guaranteed annuities) - mega thread
Replies: 2255
Views: 293042

Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

Canvas is now offering 5.25% 3-year MYGA and 5.15% 5 and 7-year MYGA. I anticipate other MYGA providers will also increase rates but I still like the current yields on Treasuries and defined maturity bond ETFs better than MYGA rates due to better liquidity (albeit without the tax deferral of MYGAs in taxable accounts).

https://canvasannuity.com/
by Zosima
Fri Sep 23, 2022 2:01 pm
Forum: Personal Investments
Topic: Invesco bullet ETF shares
Replies: 42
Views: 6075

Re: Invesco bullet ETF shares

I think we're talking past each other a bit here. I agree with you that the total returns will be fair for the asset class, so if investors are using target maturity ETFs as a general way to achieve a total return with a specific maturity, they're fairly priced and constructed. Yet often investors are interested in target maturity bonds specifically to construct ladders where for each year, bonds maturing that year plus distributions from all future maturity years are used to fund a specific portion of living expenses. If the composition of cashflows between distributions and maturity is volatile, this will not work. So, they shouldn't use these products, or they need some type of additional buffer. I think we are aligned. Defined maturity...
by Zosima
Fri Sep 23, 2022 1:39 pm
Forum: Personal Investments
Topic: Invesco bullet ETF shares
Replies: 42
Views: 6075

Re: Invesco bullet ETF shares

The new yield to maturity from market value of $23.56 is still 3.5%, the same it was before the new bond was added. Yes, a new investor buying in now can see the new cash flows. But the old investor's expected cash flows have materially shifted with respect to the composition between distributions and the amount to be received at maturity: the maturity amount is much higher, but the distributions will be materially lower (almost 20% lower). I want to be clear, nobody is being robbed--the yield to maturity (3.5%) is still fair. But it's the composition of the cash flows that I'm saying is volatile and which makes these products undesirable for many use cases like bond ladders or as CD substitutes with psychological confidence in the maturit...
by Zosima
Fri Sep 23, 2022 12:04 pm
Forum: Personal Investments
Topic: Invesco bullet ETF shares
Replies: 42
Views: 6075

Re: Invesco bullet ETF shares

Okay, I'm going to put together a numerical example to illustrate what I'm talking about since something isn't clicking. For simplicity, I will be using time value of money formulas in Excel rather than precise bond formulas. The example is going focus on a target maturity ETF issued in 2017 and maturing in 2027. At inception, it contained a single 30-year bond originally issued in 1997. When the bond was issued by MegaCorp A, the bond had an 7.5% coupon, but by 2017 the market rate had dropped to 3% ( FRED data here ; check April 1997 and April 2017), so the bond was trading at a premium around $38.39. That's =PV(0.03,10,-7.5,-100)-100. Thus, if the initial ETF share is $25, the investor would expect to receive distributions of 5.42% or $...
by Zosima
Fri Sep 23, 2022 6:22 am
Forum: Personal Investments
Topic: Invesco bullet ETF shares
Replies: 42
Views: 6075

Re: Invesco bullet ETF shares

Normally "principal" is more akin to "market value" than to "par value" or "maturity value", so I'd say that your principal WOULD change if yields change. But if you continue to hold the bonds (or the target maturity ETF) until redemption, you'll get exactly the cash flows you signed up for. But you won't get exactly the cash flows you signed up for--the composition of cash flows between distributions and maturity will fluctuate based on the underlying bond index. An investor in defined maturity ETFs through Invesco or iShares (or future offerings) at a particular point in time can determine the bonds in the ETF, the interest payments from those bonds and the par value of those bonds at maturity. The...
by Zosima
Wed Sep 21, 2022 4:07 pm
Forum: Investing - Theory, News & General
Topic: Purchasing MYGAs (multi year guaranteed annuities) - mega thread
Replies: 2255
Views: 293042

Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

HueyLD wrote: Wed Sep 21, 2022 4:03 pm
Zosima wrote: Wed Sep 21, 2022 3:48 pm
PatrickA5 wrote: Wed Sep 21, 2022 2:40 pm I purchased a couple of MYGAs from Fidelity (Mass Mutual) a couple of years ago and have been happy. Does anyone know if Fidelity offers SPIA's (like Immediate Annuities or Stan)? I know I can convert my MYGA at Mass Mutual if I want to a SPIA, but just wondering if I could go through Fidelity and see more options. I don't see the option on their website and the first line Fidelity "chat" guy didn't know.
It looks like Fidelity offers SPIAs but you need to work through an agent and are not able to obtain online quotes.

https://www.fidelity.com/annuities/imme ... es/compare
On the linked page, you can obtain online quotes by clicking on “Guaranteed Income Estimator.”
Thanks! I missed that.
by Zosima
Wed Sep 21, 2022 3:48 pm
Forum: Investing - Theory, News & General
Topic: Purchasing MYGAs (multi year guaranteed annuities) - mega thread
Replies: 2255
Views: 293042

Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

EDIT to fix comment about not obtaining online quotes.
PatrickA5 wrote: Wed Sep 21, 2022 2:40 pm I purchased a couple of MYGAs from Fidelity (Mass Mutual) a couple of years ago and have been happy. Does anyone know if Fidelity offers SPIA's (like Immediate Annuities or Stan)? I know I can convert my MYGA at Mass Mutual if I want to a SPIA, but just wondering if I could go through Fidelity and see more options. I don't see the option on their website and the first line Fidelity "chat" guy didn't know.
It looks like Fidelity offers SPIAs.

https://www.fidelity.com/annuities/imme ... es/compare
by Zosima
Mon Sep 19, 2022 10:40 am
Forum: Investing - Theory, News & General
Topic: Now that long TIPS yields are 60 bp off their highs I will…
Replies: 2953
Views: 623518

Re: If long TIPS hit a real yield above 2.0% I will…

6. Already converted all my bonds to the 20-year TIPS as soon as it yielded 1.0% real…just some weeks ago. Positive real returns, government guaranteed, are … positive real returns. I actually did just this, but not for all my bonds, just enough to cover most inflation-affected expenses. If the TIPS real rates keep rising I'll consider locking in the rest. I have to say, it makes no sense to me why TIPS real rates are so high. You'd think people would pay a premium to be insured against inflation? The market based explanation would be that deflation is expected. Not really, perhaps a few months of expected decline in the non-seasonally adjusted CPI to explain the high yields on very short term TIPS like Jan and April 2023, but the 10 year ...
by Zosima
Fri Sep 16, 2022 8:11 am
Forum: Investing - Theory, News & General
Topic: Purchasing MYGAs (multi year guaranteed annuities) - mega thread
Replies: 2255
Views: 293042

Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

I have been building a fixed income bridge between my semi-retirement and beginning to collect SS at Age 70. Two years ago, MYGAs were far better than other alternatives such as nominal Treasuries, TIPS, CDs and defined maturity bond ETFs. Today, MYGAs are simply not competitive given their illiquidity, higher administrative costs (e.g. cannot immediately buy online through a broker) and nominal credit risk. Recently, my fixed income purchases have been a combination of defined maturity bond ETFs (4.9% adjusted YTM at 6-7 years, with likely a 20-30bp future haircut for credit downgrades) and TIPS at 1%. I am hopeful that MYGA rates will increase in the near future but 5 and 7 year rates need to be above 5% for me to consider them in the cur...
by Zosima
Sun Sep 11, 2022 8:26 am
Forum: Personal Investments
Topic: Changing Fidelity CMA core position
Replies: 44
Views: 12017

Re: Changing Fidelity CMA core position

FZDXX is the core in my fidelity HSA. I think you may mean FDRXX (Fidelity Government Cash Reserves) rather than FZDXX (Fidelity Money Market Fund Premium). I hold FDRXX as my core in my Fidelity HSA also. FDRXX is virtually identical to SPAXX (Fidelity Government Money Market Fund), which is my Core account in my Fidelity brokerage, but FDRXX has a slightly lower ER (0.33% vs. 0.42%) and thus has a correspondingly higher 7-day SEC yield (1.90% vs. 1.85%). I have no idea why Fidelity has two virtually identical funds but one a core for a brokerage account and one for a core for the HSA. I would prefer to have FDRXX has the core for my brokerage account also but that is not available online. I guess if I cared enough I could call Fidelity t...
by Zosima
Sat Sep 10, 2022 7:34 am
Forum: Personal Investments
Topic: Changing Fidelity CMA core position
Replies: 44
Views: 12017

Re: Changing Fidelity CMA core position

Not really question about cma but more of a question about sprxx. With all the commercial paper in that fund is it something to worry about when you compare vs their government funds like spaxx or fzfxx I own FZDXX and am comfortable with it. I do monitor its holdings and liquidity fairly frequently. As of August 31, it held approximately 40% in US Treasury and government agency repurchase obligations and had daily liquidty of approximately 58% which gives me comfort. I also place a lot of stock in Fidelity's reputation and an assumption that if there is a liquidity crisis Fidelity will step in to avoid breaking the buck to avoid a reputational disaster. I can also see why others would prefer to avoid prime money market funds and stick wit...
by Zosima
Sat Sep 10, 2022 7:09 am
Forum: Investing - Theory, News & General
Topic: Trading Treasuries (nominal and TIPS)
Replies: 4191
Views: 466801

Re: Trading Treasuries (nominal and TIPS)

Great thread! Thanks everyone for their contributions. I have a fairly basic question on Fidelity's "Expected Yield" for upcoming auctions. I am specifically looking at the 13-week auction on Monday, September 12. This appears to be a reopening of a 26-week bill issued on June 16 (Cusip 912796X79). Fidelity lists the expected yield at 2.944% on the Treasury auction page. However, when I look at secondary Treasuries, this bill has an Ask Yield to Maturity of 3.034% for 100 bonds (but there is no "depth of book" option for smaller amounts like other bills). There is a very similar T-bill that matures on December 13 that has an Ask Yield to Maturity of 3.04%. I am assuming that if I invest in the Treasury auction the actual...
by Zosima
Mon Aug 15, 2022 8:56 am
Forum: Personal Investments
Topic: Would you trust a B++ MYGA?
Replies: 31
Views: 3554

Re: Would you trust a B++ MYGA?

Stinky wrote: Mon Aug 15, 2022 7:37 am With insurer default, there is likely less than 100% loss of funds, while with your death, there is 100% mortality. :D
LOL! :)
by Zosima
Mon Aug 15, 2022 6:27 am
Forum: Personal Investments
Topic: Would you trust a B++ MYGA?
Replies: 31
Views: 3554

Re: Would you trust a B++ MYGA?

According to AM Best, a B++ financial strength rating results in a 1.45% default rate over a 3-year period and a 4.29% default rate over a 10-year period (no 5 or 7 year period were available but an extrapolation could be a rough approximation) (see link below, free registration may be required). https://ratings.ambest.com/DisclosurePDF.aspx?PCA=0&AMBNum=7358 How this data affects the decision to invest in a B++ MYGA will vary by indvidual but I am personally comfortable investing in a 5-year MYGA with a B++ company (within the limits of the state guaranty association). Part of my analysis is that my personal mortality rate (mid 50s) over that five year period is higher than the chances of default (which I recognize is not necessarily a...
by Zosima
Sun Jul 31, 2022 7:29 pm
Forum: Investing - Theory, News & General
Topic: Purchasing MYGAs (multi year guaranteed annuities) - mega thread
Replies: 2255
Views: 293042

Re: Purchasing MYGAs (multi year guaranteed annuities) - mega thread

bog007 wrote: Sun Jul 31, 2022 12:11 pm canvas still at 4.6

https://canvasannuity.com/
Aspida, a relatively newer entrant to the MYGA space with an A- rating, offers 5-year MYGAs at 4.65% (albeit with no withdrawal option) and 4.55% with a drawal option. They also offer 7-year rates up to 4.8%.