I have been a Fundrise investor for maybe 3 years and I’m very happy. They charge a small management fee for their funds compared to similar structure and their CEO, Ben Miller, is very transparent in his communication. I love the fact that you can exit the Flagship fund quarterly with no penalties. When the performance was off the charts in 2021 they said very clearly that this was highly unusual and should not be expected going forward, I really appreciated that.
Fwiw, I think their Credit Opportunity Fund is one of the very best solutions to get exposure to private credit.
Search found 814 matches
- Sun Oct 29, 2023 4:41 pm
- Forum: Investing - Theory, News & General
- Topic: Fundrise - Real Estate
- Replies: 161
- Views: 26552
- Sun Oct 29, 2023 5:31 am
- Forum: Personal Investments
- Topic: Small companies offering Corporate Bonds for high % returns vs typcal agency rated bonds?
- Replies: 11
- Views: 1278
Re: Small companies offering Corporate Bonds for high % returns vs typcal agency rated bonds?
Explain to him what credit risk is and the difference between a quoted “target” return and an actual return after defaults.
US Treasuries pay 5% with no credit risk
Investment grade bonds would have a rate of around 6%
Low rates investment grade bonds around 7%
Junk bonds north of 8%
Private lending is around 12-15% (where this group is)
Hard money loans will be north of 20% I assume
The more risk you take, the more defaults you will have and the bigger the difference between a quoted rate and an actual return.
US Treasuries pay 5% with no credit risk
Investment grade bonds would have a rate of around 6%
Low rates investment grade bonds around 7%
Junk bonds north of 8%
Private lending is around 12-15% (where this group is)
Hard money loans will be north of 20% I assume
The more risk you take, the more defaults you will have and the bigger the difference between a quoted rate and an actual return.
- Fri Oct 27, 2023 2:45 pm
- Forum: Personal Investments
- Topic: Are bonds still a good long term investment? [Help with Portfolio]
- Replies: 39
- Views: 7427
Re: Are bonds still a good long term investment? [Help with Portfolio]
I thought it was a terrible article to be honest, a bit surprised the WSJ printed it. It will likely many to have the same reaction you had and they will reduce their allocation to bonds.
Bonds are SO MUCH more attractive now than a few years ago and even stocks are down meaningfully from the highs, especially value stocks, both large cap and small.
I feel better about 60/40 than I have in years.
Bonds are SO MUCH more attractive now than a few years ago and even stocks are down meaningfully from the highs, especially value stocks, both large cap and small.
I feel better about 60/40 than I have in years.
- Thu Oct 26, 2023 7:48 pm
- Forum: Personal Finance (Not Investing)
- Topic: unexpected cash flow deficit - where to draw loan from?
- Replies: 98
- Views: 14751
Re: unexpected cash flow deficit - where to draw loan from?
Not really familiar enough with your life insurance option, but outside of that I would use your HSA. No way I would do a HELOC or 401k loan. If you have taxable investments with limited capital gains, that would be a good option as well.
- Wed Oct 25, 2023 9:50 am
- Forum: Investing - Theory, News & General
- Topic: Time for junk bonds?
- Replies: 207
- Views: 19958
Re: Time for junk bonds?
I don't like junk bonds for several reasons already outlined in this thread - however I agree with the main thesis of the main paper in that I am now able to achieve equity like returns with bonds. I created a bond ladder in our retirement accounts with several investment grade bonds purchased with YTM's in the 6.5% to over 8% range. There is little to no need to take equity risk if I can get those type of returns, especially with the US market trading at a high valuation by historical standards.
- Tue Oct 24, 2023 8:15 pm
- Forum: Investing - Theory, News & General
- Topic: International (Non-US) versus US Equities (The "Arguments")
- Replies: 5351
- Views: 904011
Re: International (Non-US) versus US Equities (The "Arguments")
Craig, Nathan Did you read what I wrote? Let's do this step by step. The 2011 dividend of VTI was $1.23 The 2011 dividend of VEU was $1.37 So VEU's dividend was higher than VTI's dividend in 2011. Fast forward to 2022 (last full year of dividends) The 2022 dividend of VTI $3.18 The 2022 dividend of VEU was $1.56 So not only is VTI's dividend now higher than VEUs, it is 2x as much. I don't know about you, but that tells me something very interesting, namely that the underlying earnings of VTI have grown MUCH faster than VEUs and therefore the dividend has grown much faster. Let's talk about dividend yield that Nathan likes to bring up all the times: I'm eyeballing this but looks like VTI traded around $68 in 2011 and VEU traded around $50 (s...
- Tue Oct 24, 2023 6:36 pm
- Forum: Investing - Theory, News & General
- Topic: International (Non-US) versus US Equities (The "Arguments")
- Replies: 5351
- Views: 904011
Re: International (Non-US) versus US Equities (The "Arguments")
I love it.Nathan Drake wrote: ↑Tue Oct 24, 2023 5:33 pmNo, it’s not. You keep repeating false information
The dividend yield on international is much higher than US dividend yield
...
Nathan, your inability to have an actual discussion about facts rather than just repeating the same mantra over and over again is staggering.
- Tue Oct 24, 2023 5:22 pm
- Forum: Investing - Theory, News & General
- Topic: International (Non-US) versus US Equities (The "Arguments")
- Replies: 5351
- Views: 904011
Re: International (Non-US) versus US Equities (The "Arguments")
Interesting that you posted this link because for some reason I decided to take a look at Cambria's fund GVAL this morning. For those who don't know, it's a global value fund that's approaching 10 years since inception, and it's cumulative returns (before fees) are... drum roll... -23%. I never invested in the fund even though I've been aware of this fund since I first discovered Meb's podcast, but as far as I can remember it's always been "cheap". I mention this mostly because it feels like this could just keep happening with international stocks, and people will be making the same arguments in 2033. I'll probably stick to my 60/40 US/International ratio for the foreseeable future, but I'd be lying if I said I'm not a little fru...
- Tue Oct 24, 2023 6:39 am
- Forum: Personal Consumer Issues
- Topic: Streaming: YoutubeTV vs Philo
- Replies: 40
- Views: 3604
Re: Streaming: YoutubeTV vs Philo
Hello all, We have had YT TV for several years and have enjoyed it. The price is now up to 72.99 a month. We have multiple streaming services and I’m trying to trim down the cost. We have: 1. Prime video as part of Amazon Prime membership (~ $140/year) 2. Paramount plus included as part of our Walmart plus service, which we use a lot (~ $140/year) 3. HBO Max (pay it yearly - I think it’s about $180/year) 4. Hulu, which our daughter shares with us as part of her Spotify student account, so no cost to us (she pays for it) 5. Disney, (pay it yearly - $140/year). The kids are huge Disney and Marvel fans 6. Netflix (not the top plan, but the next one down) $16.25/month 7. YT TV $72.99/month We have more than we can possibly watch, so I think th...
- Tue Oct 24, 2023 5:18 am
- Forum: Personal Investments
- Topic: Taking money out of ETF's etc and putting it into CDs
- Replies: 21
- Views: 2811
Re: Taking money out of ETF's etc and putting it into CDs
Or you leave the money in the Vanguard Money Market Fund, which right now pays 5.29%? The yield would decline if/when the Fed decreases rates, on the other hand you are totally flexible when to use the money.
- Tue Oct 24, 2023 3:05 am
- Forum: Personal Finance (Not Investing)
- Topic: What's Your Credit Card Rewards Strategy?
- Replies: 7203
- Views: 1421607
Re: What's Your Credit Card Rewards Strategy?
My Amex Platinum more than pays for itself. Uber credit of $20 per month. I travel a lot and the card gets me free access to lounges and I save at least $50 per month in breakfast / dinners / beverages.
And most importantly: My daughter thinks it’s cool how heavy the card is
And most importantly: My daughter thinks it’s cool how heavy the card is
- Tue Oct 24, 2023 2:58 am
- Forum: Personal Investments
- Topic: Structured Notes
- Replies: 13
- Views: 1711
Re: Structured Notes
Larry Swedroe has written just recently that Structured notes are financial fairy tales. He is pretty blunt: ...the empirical research demonstrates that these are products meant to be sold (the issuer benefits from a lower cost of capital), never bought (investors earn large negative risk-adjusted returns). Why, then, are they popular? For the same reasons many financial products are popular—they either carry large commissions for the sellers or so greatly favor the issuers that they push the products on unsophisticated investors who cannot fathom the complexity (but are assured by the salespeople and the advertising that these are good and often safe products). This. FWIW, I have family members who bought “completely safe” structured note...
- Mon Oct 23, 2023 7:46 am
- Forum: Personal Investments
- Topic: Purchasing 10yr treasury notes in the secondary market
- Replies: 9
- Views: 1975
Re: Purchasing 10yr treasury notes in the secondary market
If taxable I would buy one with a low coupon rate as a good portion of your return would come from capital gains. This is a common misconception that pops up persistently on these forums. It is an understandable misconception, but a misconception none the less. The market discount (that results from buying a treasury note with a coupon far below current rates) will reach a final resting place reported as interest on Form 1040 Schedule B, taxed at ordinary income tax rates (not capital gains tax rates). See the first post of the Taxation of Treasury bills, notes and bonds megathread: Treasury notes and bonds are more complicated because they pay interest semi-annually (coupon payments), and there also can be a market discount or premium whe...
- Mon Oct 23, 2023 7:40 am
- Forum: Investing - Theory, News & General
- Topic: BND - Sure Thing Short
- Replies: 93
- Views: 18829
Re: BND - Sure Thing Short
I hope the poster with a decent position in long term treasuries (SCHQ) is no longer holding those, down a cool 25% since the time of the post, ouch…
- Mon Oct 23, 2023 3:15 am
- Forum: Personal Investments
- Topic: Purchasing 10yr treasury notes in the secondary market
- Replies: 9
- Views: 1975
Re: Purchasing 10yr treasury notes in the secondary market
Are you holding them in taxable or non-taxable account? If taxable I would buy one with a low coupon rate as a good portion of your return would come from capital gains.
- Sat Oct 21, 2023 7:51 pm
- Forum: Personal Investments
- Topic: Should I add more bonds
- Replies: 19
- Views: 2799
Re: Should I add more bonds
You should think about what target returns you need to achieve your goal (which is something I don’t see mention here often). For example, we have a low need to take risk and don’t need more than 5-6% nominal returns per year. Bonds are now yielding over 5% (Treasuries) or 6% (Investment Grade Corporates) - so we significantly increased our allocation to bonds. Having said that, the expected long term returns from equities is still higher (8-10%), so if you need those type of returns, there is no reason to decrease your allocation to equities as long as you can handle the higher volatility. I think the difficult part is that saying "we don't need more than 5-6& nominal returns per year" is fairly difficult over a longer time ...
- Sat Oct 21, 2023 7:42 pm
- Forum: Investing - Theory, News & General
- Topic: Investing 100% into TQQQ
- Replies: 231
- Views: 36966
Re: Investing 100% into TQQQ
One of the worst things you could possibly do.
- Sat Oct 21, 2023 3:33 pm
- Forum: Personal Investments
- Topic: Should I add more bonds
- Replies: 19
- Views: 2799
Re: Should I add more bonds
You should think about what target returns you need to achieve your goal (which is something I don’t see mention here often). For example, we have a low need to take risk and don’t need more than 5-6% nominal returns per year. Bonds are now yielding over 5% (Treasuries) or 6% (Investment Grade Corporates) - so we significantly increased our allocation to bonds.
Having said that, the expected long term returns from equities is still higher (8-10%), so if you need those type of returns, there is no reason to decrease your allocation to equities as long as you can handle the higher volatility.
Having said that, the expected long term returns from equities is still higher (8-10%), so if you need those type of returns, there is no reason to decrease your allocation to equities as long as you can handle the higher volatility.
- Sat Oct 21, 2023 8:41 am
- Forum: Personal Investments
- Topic: Averaged Forward versus Trailing P/E Ratios for Index Funds
- Replies: 8
- Views: 844
Re: Forward versus Trailing P/E Ratios for Index Funds
... Obviously the forward estimates. A extreme but hopefully illuminating example. It is second quarter of 2000. You finial have 1999s audited data, all nice and hard and factual. The dot.com bust is starting. All sorts of warnings lights are going off. The made up earnings without the bad stuff is pointing to some very bad stuff happening? Should you incorporate this new news into your planning? I mean, 1999’s earnings will be restated 20% downwards, but you are going to need to wait until 2003 to get that specific hard data. Hey, would you rather be precisely wrong or generally right? When I worked in accounting and we had to get big huge things precisely correct down to the penny we knew which one we were choosing. Looks like you worked...
- Sat Oct 21, 2023 8:33 am
- Forum: Personal Investments
- Topic: Time to buy Bond Funds?
- Replies: 14
- Views: 2787
Re: Time to buy Bond Funds?
It's absolutely time to buy Bond Funds. I never owned bonds in a meaningful way in my investing lifetime (20 years), they now make up 47% of my portfolio. I have a low need to take risk so the fact that I can buy an investment grade bond fund with a YTM clearly over 6% is excellent news. I also buy invidiual bonds of issuers I know well, you can get lower grade investment grade bonds with yields over 7%.
- Thu Oct 19, 2023 7:37 pm
- Forum: Personal Investments
- Topic: Averaged Forward versus Trailing P/E Ratios for Index Funds
- Replies: 8
- Views: 844
Re: Forward versus Trailing P/E Ratios for Index Funds
Which would you rather have:alex_686 wrote: ↑Thu Oct 19, 2023 7:29 pm Which would you rather have?
Drive a car via the rear view mirror, perfectly clear but data is lagging 9 months behind?
Or look through your front windscreen, into a foggy night colored by a analysis opinions?
Forward looking has more statistical power than backwards looking. You should be able to find both fairly easily. There are some deeply wonky issues with actual P/E ratios so be cautious when using them.
No idea on large/mid/small but I suspect the differences would be small.
Actual, factual earnings in accordance with accepted accounting standards.
Or made up, forward looking, earning estimates without all the bad stuff?
- Wed Oct 18, 2023 9:02 pm
- Forum: Personal Investments
- Topic: Tired of working. Are we ready to retire?
- Replies: 65
- Views: 13177
Re: Tired of working. Are we ready to retire?
I used to dream about retiring early, but for me the mindset changed into the other direction when I turned 50. It was more „I actually won‘t be able to work that much longer in an interesting & challenging job“ vs „how much longer do I need to do this“. Our kids are in still in school, so that plays a big role as well in the sense that we couldn‘t do extensive travel anyway until they go to College. So from my perspective: Yes, financially you could probably do it even though it seems tight, but 49 is awfully early. Also, to keep it real, yes your daughter will enjoy having you around more now, but that will change a lot once she enters Middle School and spending lots of time with her dad will be the last thing on her mind. Also think ...
- Sun Oct 15, 2023 2:45 pm
- Forum: Personal Investments
- Topic: High Yield Opportunities
- Replies: 7
- Views: 1743
Re: High Yield Opportunities
If you are able to be a lender in this environment, you can easily earn 8, 9, 10 or even 11% very safely. I see this at my company where lending facilities from banks now command 8% upwards with a lot of protections / low risk for the lender.
The question is how you can get exposure to this in the most efficient way as a private investor. Personally, I really like Fundrise’ Opportunity Credit Fund which has a yield right now or around 11% (maybe even 12).
The question is how you can get exposure to this in the most efficient way as a private investor. Personally, I really like Fundrise’ Opportunity Credit Fund which has a yield right now or around 11% (maybe even 12).
- Thu Oct 12, 2023 4:32 am
- Forum: Personal Investments
- Topic: Bonds Again!
- Replies: 19
- Views: 2253
Re: Bonds Again!
I have to admit I‘m genuinely puzzled why anyone would sell a Total Bond Fund now - when yields are at the highest level in at least 15 years and going forward (which is the only thing that matters) the return expectations are so much better than a few years ago. Just a total classic case of selling low. When buying/selling the Total Bond Market fund now you should think about: - Is the current yield to maturity of 4.9% attractive? (My personal answer is a resounding yes) - With an effective duration of over 6 years, are you emotionally able to deal with price changes of over 6% for every 1% change in interest rates? (But remember, price changes don‘t impact your yield to maturity, so a price decline now just means that returns in future ye...
- Thu Oct 12, 2023 4:12 am
- Forum: Investing - Theory, News & General
- Topic: High Yield Term Bond Ladder Crazy or Genius ?
- Replies: 52
- Views: 5703
Re: High Yield Term Bond Ladder Crazy or Genius ?
As others pointed out, I don‘t think High Yield Bonds are worth the risk, especially when there is a decent chance that the economic environment is weakening. You can buy investment grade corporate bonds right now with YTM of around 6%, I like (and hold) the ETF LQD for example. There is still a default risk but it‘s much lower than High Yield.
- Wed Oct 11, 2023 4:30 pm
- Forum: Personal Investments
- Topic: Have you increased bond allocation lately?
- Replies: 64
- Views: 7118
Re: Have you increased bond allocation lately?
Yes. I had 0 bonds at the end of 2021, I now hold 43% of my portfolio in bonds.
Early 50s, low need to take risk.
Early 50s, low need to take risk.
- Tue Oct 10, 2023 3:23 am
- Forum: Personal Investments
- Topic: Bond Funds Here on Out
- Replies: 286
- Views: 22632
Re: Bond Funds Here on Out
Every time I think I understand bonds, I read something that lets me know I don't. If I buy a 5-year treasury, I know I will get my principal back at the end of 5 years. If I buy a bond fund with a 5-year duration (or seven), I'm not guaranteed to get my purchase price back at the end of 7 years, am I? This is the part I don't understand about bond funds. I read I should match my duration to my need but what is the guarantee that I will get my principal back?? If you total the amounts received in dividends over time plus current NAV where do you stand when compared to the original investment? That‘s correct and the reason is the fact that a bond fund typically maintains a constant duration, i.e. the bond fund constantly replaces maturing b...
- Mon Oct 09, 2023 8:27 pm
- Forum: Investing - Theory, News & General
- Topic: Total Return Investing VS Income Focused Investing (again)
- Replies: 26
- Views: 3209
Re: Total Return Investing VS Income Focused Investing (again)
Not sure I understand your question, but we are clearly no longer in a „low-yield“ environment, so if there is such a thing as an „income investor“ as the Vanguard article implies, that investor would now invest in bonds again for income and would have no need to a) reach for yield in high yield bond funds or high yielding equities or b) pursue a total return approach.
- Sun Oct 08, 2023 2:14 pm
- Forum: Personal Investments
- Topic: Where is the excitement about higher bond yields?
- Replies: 84
- Views: 11441
Re: Where is the excitement about higher bond yields?
It feels like for the first time in my investing life bonds are offering attractive returns . Looking at the Vanguard Total Bond Market Fund (VBTLX), annual returns since inception in 2001 are 3.0% - whereas the YTM today is 4.9% and the distribution yield is 3.3% and rising quickly . It seems to me this is a generational opportunity to lock-in higher returns for 5-10 years, but most of the posts here seem to be complaining about the fall in bond prices. My question is, anyone else i ncreasing their allocation to bond and if so, what are you buying? In my early 50s and I hold both Total Bond Market (BND) and the iShares ETF LQD (Investment grade Corporate Bonds). I also hold individual bonds in my 401k. I don't like high yield bond funds, ...
- Sat Oct 07, 2023 6:08 pm
- Forum: Investing - Theory, News & General
- Topic: At what point does BND become attractive?
- Replies: 141
- Views: 24172
Re: At what point does BND become attractive?
Not sure why so many people seem to be confused about the difference in distribution yield and SEC yield / yield to maturity. Let‘s say you own a single bond with a coupon of 3% and you bought the bond at par, maturing in 1 year. The next day there is a dramatic increase in interest rates and the price of your bond drops to 98. Your coupon hasn‘t changed, you are still earning $3, with a price of 98 your distribution yield is now 3.06%. What matters however is that your yield to maturity is now 5% (or close to it, too lazy to do the exact math) as you are still earning the 3% coupon and another $2 in capital gain when the bond matures in 1 year. Thank you, this is the answer. I figured it out after looking at the Morningstar data. Your pos...
- Sat Oct 07, 2023 6:00 pm
- Forum: Personal Investments
- Topic: Where is the excitement about higher bond yields?
- Replies: 84
- Views: 11441
Re: Where is the excitement about higher bond yields?
It’s the opposite. If a safer investment option pays you a higher yield, investors will demand higher returns from a riskier option which means prices need to fall. You can also think of it that future returns from equities are now discounted with a higher number, which means the current value of those future earnings is worth less.aristotelian wrote: ↑Sat Oct 07, 2023 5:06 pm Shouldn't higher bond yields imply higher expected returns for stocks?
- Sat Oct 07, 2023 4:00 pm
- Forum: Investing - Theory, News & General
- Topic: At what point does BND become attractive?
- Replies: 141
- Views: 24172
Re: At what point does BND become attractive?
Not sure why so many people seem to be confused about the difference in distribution yield and SEC yield / yield to maturity. Let‘s say you own a single bond with a coupon of 3% and you bought the bond at par, maturing in 1 year. The next day there is a dramatic increase in interest rates and the price of your bond drops to 98. Your coupon hasn‘t changed, you are still earning $3, with a price of 98 your distribution yield is now 3.06%.
What matters however is that your yield to maturity is now 5% (or close to it, too lazy to do the exact math) as you are still earning the 3% coupon and another $2 in capital gain when the bond matures in 1 year.
What matters however is that your yield to maturity is now 5% (or close to it, too lazy to do the exact math) as you are still earning the 3% coupon and another $2 in capital gain when the bond matures in 1 year.
- Thu Oct 05, 2023 4:08 pm
- Forum: Personal Investments
- Topic: Where is the excitement about higher bond yields?
- Replies: 84
- Views: 11441
Re: Where is the excitement about higher bond yields?
Interesting responses. And I do agree, there have been a lot of posts on TIPs, I guess the negative ones were mostly from people holding a total bond market fund. I think one reason I can't get very excited about TIPs is the fact that I know my personal inflation rate is totally different than what is generally quoted. One reason is housing, we own our house with no mortgage and in addition the government's measurement has such a lag that it is hardly relevant. If I'm not mistaken shelter inflation was 7.3% for the 12 months ending in August - however in reality rents have probably peaked about 1 year ago and have since dipped and are now rising very slowly again. I am a bit surprised how many posters say that the only purpose of bonds is t...
- Thu Oct 05, 2023 9:16 am
- Forum: Personal Investments
- Topic: Where is the excitement about higher bond yields?
- Replies: 84
- Views: 11441
Re: Where is the excitement about higher bond yields?
Sure, people are always behind the curve by a year or two. There may be dreams of getting rich on 5%-6% cash accounts. It might be the most interesting upgrade is in the opportunity to buy a TIPS ladder at +2.5% real yield rather than -2% real yield. If you look at the payout on a hypothetical 30 year ladder relative to dollars invested today that increases from 2.4% annually at the latter to 4.7% at the former. When the real yield is 0%, then by obvious math the payout for 30 years is at 3.33% real per year. I'm not saying to run out and buy a ladder of TIPS, but if you want numbers to look at those might be interesting. Note that a set up TIPS ladder is locked in for good whatever interest rates do after that. That is because the income ...
- Thu Oct 05, 2023 7:42 am
- Forum: Personal Investments
- Topic: Where is the excitement about higher bond yields?
- Replies: 84
- Views: 11441
Where is the excitement about higher bond yields?
It feels like for the first time in my investing life bonds are offering attractive returns. Looking at the Vanguard Total Bond Market Fund (VBTLX), annual returns since inception in 2001 are 3.0% - whereas the YTM today is 4.9% and the distribution yield is 3.3% and rising quickly. It seems to me this is a generational opportunity to lock-in higher returns for 5-10 years, but most of the posts here seem to be complaining about the fall in bond prices. My question is, anyone else increasing their allocation to bond and if so, what are you buying? In my early 50s and I hold both Total Bond Market (BND) and the iShares ETF LQD (Investment grade Corporate Bonds). I also hold individual bonds in my 401k. I don't like high yield bond funds, I do...
- Tue Oct 03, 2023 5:05 pm
- Forum: Investing - Theory, News & General
- Topic: we may be close to a bottom
- Replies: 36
- Views: 4187
Re: we may be close to a bottom
At the bottom of the GFC the S&P traded at less than 10x peak earnings (12 months trailing reported earnings) and in 2003 it was 15x, so with peak earnings at 198 for the S&P that puts a theoretical low if we get an ugly bear market somewhere in the 2000-3000 range.
Now bonds, that's another story.
Now bonds, that's another story.
- Mon Oct 02, 2023 4:37 pm
- Forum: Personal Investments
- Topic: BND exceeding my patience - need something different
- Replies: 169
- Views: 19907
Re: BND exceeding my patience - need something different
Op, I feel your pain, the decline in BND has been painful. A few thoughts: - As others pointed out, from my perspective now is exactly the wrong time to sell with the YTM 4.9% and an effective duration of 6.4 years. Think of it this way: If someone offered you to park your cash for 6 years and pay you 4.9% per year every year, would you take it? - On the other hand, it is entirely possible that BND could drop another 5-10% (even if unlikely given the fact that rates are already elevated), so you need to ask yourself if you could handle that. With BND you are holding a bond fund that changes over 6% in value for every 1% change in interest rates, there is no way around that. - I would ignore the distribution yield. The fund still holds a lo...
- Mon Oct 02, 2023 3:22 pm
- Forum: Personal Investments
- Topic: BND exceeding my patience - need something different
- Replies: 169
- Views: 19907
Re: BND exceeding my patience - need something different
Op, I feel your pain, the decline in BND has been painful. A few thoughts: - As others pointed out, from my perspective now is exactly the wrong time to sell with the YTM 4.9% and an effective duration of 6.4 years. Think of it this way: If someone offered you to park your cash for 6 years and pay you 4.9% per year every year, would you take it? - On the other hand, it is entirely possible that BND could drop another 5-10% (even if unlikely given the fact that rates are already elevated), so you need to ask yourself if you could handle that. With BND you are holding a bond fund that changes over 6% in value for every 1% change in interest rates, there is no way around that. - I would ignore the distribution yield. The fund still holds a lot...
- Sun Oct 01, 2023 3:38 pm
- Forum: Investing - Theory, News & General
- Topic: What’s So Bad About Cash (v. Buying a Bond Fund)?
- Replies: 122
- Views: 9984
Re: What’s So Bad About Cash (v. Buying a Bond Fund)?
This is such a classic case of „buy high / selling low“ it should be part of the Wiki. I remember when the Total Bond ETF BND was trading at 86 or 87 a couple of years ago (maybe 3 years ago) and a lot of people on this forum were loving it, even though the yield to maturity was maybe around 2%. Today, you can buy BND with a yield-to-maturity of 4.9% with a duration of 6.4 years, which is exponentially more attractive that the valuation a few years ago. Before you sell your total bond market position you should consider this: Do you rather earn 4.9% annually over the next 6-7 years (knowing that may earn less should you hold the fund less than 6-7 years) or do you prefer staying in cash, which earns 5.5% now - but may earn 2% or 3% or 1% a ...
- Fri Sep 29, 2023 3:11 pm
- Forum: Investing - Theory, News & General
- Topic: What (real) rate of return do you expect from stocks/bonds?
- Replies: 19
- Views: 1527
Re: What (real) rate of return do you expect from stocks/bonds?
3.5% for our (conservative) portfolio.
- Thu Sep 28, 2023 9:08 pm
- Forum: Personal Investments
- Topic: Are Short Term Bonds preferable to Total Bond Market Index Funds?
- Replies: 60
- Views: 7279
Re: Are Short Term Bonds preferable to Total Bond Market Index Funds?
And to add: The referenced article is just terrible. Bonds are mostly straightforward math, so if anyone was surprised in 2022 that bonds funds can lose double digits when rates increase from historic lows - well they shouldn‘t be. And of course short term bonds will outperform in such a scenario. That‘s by design but the author makes it sounds like it‘s an unexpected outcome.
- Thu Sep 28, 2023 8:59 pm
- Forum: Personal Investments
- Topic: Are Short Term Bonds preferable to Total Bond Market Index Funds?
- Replies: 60
- Views: 7279
Re: Are Short Term Bonds preferable to Total Bond Market Index Funds?
These bond threads are fascinating to me. I remember when BND was trading at 86 or 87, probably with a 2% yield, and I thought this makes absolutely no sense taking on all that duration risk with no interest but people were loving it. And now, that mid/long term bonds are finally paying decent forward looking returns again, people freak out about the fact that bond prices are down.
I couldn‘t care less if BND goes down a few % more in the short term but I LOVE the fact that I‘ll earn at least 4.9% annually over the next 6 years. But of course, if your investment horizon is less than the duration, why would you want to hold them.
As always, Nisi gave very thoughtful responses & great visuals
I couldn‘t care less if BND goes down a few % more in the short term but I LOVE the fact that I‘ll earn at least 4.9% annually over the next 6 years. But of course, if your investment horizon is less than the duration, why would you want to hold them.
As always, Nisi gave very thoughtful responses & great visuals
- Thu Sep 21, 2023 8:06 pm
- Forum: Personal Consumer Issues
- Topic: First Time Snowboarding..Should I?
- Replies: 41
- Views: 4887
Re: First Time Snowboarding..Should I?
Love the fact that you are thinking about it.
But… You don‘t want to try snowboarding for the first time on a hardpacked, icy trail (and for me that‘s what East Coast skiing typically looks like). It‘s awful. You will fall ALL the time, even as good skier, the movement is totally different. And you fall very differently compared to skiing. If possible you will have your first 1-2 days on powder conditions or at at least lots of soft snow.
And regardless what the snow conditions are, you MUST have gloves with wrist protection and if icy/hard packed you will want knee protection and ideally tail bone protection as well.
Again, love the idea though, have fun!
But… You don‘t want to try snowboarding for the first time on a hardpacked, icy trail (and for me that‘s what East Coast skiing typically looks like). It‘s awful. You will fall ALL the time, even as good skier, the movement is totally different. And you fall very differently compared to skiing. If possible you will have your first 1-2 days on powder conditions or at at least lots of soft snow.
And regardless what the snow conditions are, you MUST have gloves with wrist protection and if icy/hard packed you will want knee protection and ideally tail bone protection as well.
Again, love the idea though, have fun!
- Thu Sep 21, 2023 7:26 pm
- Forum: Personal Finance (Not Investing)
- Topic: Share your net worth progression
- Replies: 4288
- Views: 1081833
Re: Share your net worth progression
Early 50s, married, 1 child. Double income until 2017, DW did some consulting afterwards, she has been happily retired now for 2 years. 2007: crossed 1.0m 2010: >2.0m 2016: >3.0m 2017: 3.76m 2018: 3.96m 2019: 4.6m 2020: 5.4m 2021: 6.6m 2022: 6.8m currently 6.9m Congrats those are some big numbers. Are you going to retire early? What is the end goal? Thanks. I‘m in a well paying C-Suite role right now, which is honestly not very stressful and I actually enjoy what I‘m doing, so I keep going for a while. I work remote every other week, play tennis 1 morning during the week and mountain bike during the day at least one more day, so a pretty ideal set up. Our daughter is only in Middle School so until she goes to College we can’t really travel...
- Thu Sep 21, 2023 7:19 pm
- Forum: Personal Investments
- Topic: Who has the LOWEST Stock Allocation??
- Replies: 85
- Views: 10196
Re: Who has the LOWEST Stock Allocation??
Early 50s, 7m net worth so low need to take risk, currently approx 20% in stocks. May increase that to 40% or maybe even 50% if valuations were very attractive, but no need with cash yielding 5% and corporate bonds yielding more than 6%.
- Sun Sep 17, 2023 9:54 am
- Forum: Investing - Theory, News & General
- Topic: International (Non-US) versus US Equities (The "Arguments")
- Replies: 5351
- Views: 904011
Re: International (Non-US) versus US Equities (The "Arguments")
Choice-supportive bias and/or post-putchase rationalization In this case, those who do not subscribe to ex-US have not displayed choice-supportive bias and/or post-purchase rationalization. Instead they have been merely pointing out various things about ex-US that are supposed to pan out but have not panned out for a very long time (in the past decades,). Is "past decades" long enough? Some believe that it is too short based on some technical/theoretical/mathematical/etc standard. Some believe that it is indeed a reasonably long enough duration considering the practical factors like typical lifespan, whether or not US will suddenly become Japan overnight and etc. I also have not seen anyone that doesn't subscribe to ex-US: - maki...
- Sat Sep 16, 2023 6:51 pm
- Forum: Investing - Theory, News & General
- Topic: International (Non-US) versus US Equities (The "Arguments")
- Replies: 5351
- Views: 904011
Re: International (Non-US) versus US Equities (The "Arguments")
I very much like your takeaway summary, as I think it's quite honest and right in line with what I've seen you post on this thread while also displaying that you have actually taken other viewpoints and information under consideration. You think what you think, but you're not a brick wall. I just want to address this bit if you don't mind: - The fact that the earnings dynamics (and btw also profitability) has been so much better in the US doens‘t seem to bother the pro ex-US crowd - which I find curious as that is something I would want to understand better before committing large %‘s to ex-US I will admit that I was a bit surprised when I did my whole "well, what about PEG, then?" thing earlier. I wasn't expecting it to come up ...
- Sat Sep 16, 2023 6:16 pm
- Forum: Investing - Theory, News & General
- Topic: International (Non-US) versus US Equities (The "Arguments")
- Replies: 5351
- Views: 904011
Re: International (Non-US) versus US Equities (The "Arguments")
- The fact that the earnings dynamics (and btw also profitability) has been so much better in the US doens‘t seem to bother the pro ex-US crowd - which I find curious as that is something I would want to understand better before committing large %‘s to ex-US I don't feel the need to form an opinion or make a judgement call about things like "earnings dynamics". I'm sure professional forecasters have a lot to say on this, but if they're never right I don't think I'm going to do much better. Ex US companies have profits, I assume their managers are incentivized to grow profits, the market puts a price on these profits, that's good enough for me So the fact that ex-US profits grew much more slowly over the last 15 years doesn‘t inte...
- Sat Sep 16, 2023 6:10 pm
- Forum: Investing - Theory, News & General
- Topic: International (Non-US) versus US Equities (The "Arguments")
- Replies: 5351
- Views: 904011
Re: International (Non-US) versus US Equities (The "Arguments")
I don‘t even know what this means - did I say the market cares what we think?Northern Flicker wrote: ↑Sat Sep 16, 2023 5:23 pmThe market doesn't care what we think. The market has and will continue to take its best shot at pricing in the likelihood of mean reversion or persistence of currency, valuations, earnings growth, and profitability.ge1 wrote: The significant underperformance of ex-US vs US over the last 10-15 years have various reasons, some of which I would agree are likely to revert back (currency impact, valuation change), others are fundamental in nature (stronger earnings growth, higher profitability) and unlikely to change soon.
- Sat Sep 16, 2023 3:42 pm
- Forum: Investing - Theory, News & General
- Topic: International (Non-US) versus US Equities (The "Arguments")
- Replies: 5351
- Views: 904011
Re: International (Non-US) versus US Equities (The "Arguments")
My takeaway from this whole discussion is the following: - The significant underperformance of ex-US vs US over the last 10-15 years have various reasons, some of which I would agree are likely to revert back (currency impact, valuation change), others are fundamental in nature (stronger earnings growth, higher profitability) and unlikely to change soon - The OP and others Iike Nathan think the difference in fundamentals has not been significant, I disagree with that. I won‘t bother to link the different papers as people clearly have made up their mind - but anyone with an open mind should consider the fact that ex-US dividends have barely grown which is a very strong indication that earnings have barely grown (a simple google search will b...