Are Bonds a Good Investment Now?

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jafcorrea
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Are Bonds a Good Investment Now?

Post by jafcorrea »

Additional Fed Rate Hikes Expected ... Buy or Sell Bonds in 2017?
Thanks JC
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ruralavalon
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Re: Are Bonds a Good Investment Now?

Post by ruralavalon »

jafcorrea wrote:Additional Fed Rate Hikes Expected ... Buy or Sell Bonds in 2017?
For the long-term investor a rate hike is probably good news.

Over the long haul the benefit of higher interest paid on the bonds will probably outweigh the likely small and short-term decline in bond values.
Last edited by ruralavalon on Wed Dec 07, 2016 11:58 am, edited 1 time in total.
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orca91
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Re: Are Bonds a Good Investment Now?

Post by orca91 »

Both, if needed to rebalance. :happy

What is your AA, and what does your IPS say? Stay the course.
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ruralavalon
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Re: Are Bonds a Good Investment Now?

Post by ruralavalon »

What percentage of your portfolio is currently in bonds or bond funds?

What is your target bond allocation?
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bob the baker
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Re: Are Bonds a Good Investment Now?

Post by bob the baker »

Following...while admitting it seems we are essentially talking about timing.

But I happen to have a couple 100K that has sat in cash for the last few months, but is slated to go back into bond funds to fit the AA on my IPS. To help me avoid trying to divine the bottom of the recent slide in prices, I will probably get set up to DCA into bond funds moving forward.
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David Jay
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Re: Are Bonds a Good Investment Now?

Post by David Jay »

bob the baker wrote:Following...while admitting it seems we are essentially talking about timing.

But I happen to have a couple 100K that has sat in cash for the last few months, but is slated to go back into bond funds to fit the AA on my IPS. To help me avoid trying to divine the bottom of the recent slide in prices, I will probably get set up to DCA into bond funds moving forward.
If it makes you feel better, put 1/12 of the funds into bonds on the 15th of every month for the next 12 months, starting next Thursday.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
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Re: Are Bonds a Good Investment Now?

Post by goblue100 »

jafcorrea wrote:Additional Fed Rate Hikes Expected ... Buy or Sell Bonds in 2017?
With a little looking, you could find very similar threads for every year since 2011. Most years the expected hike hasn't come.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns
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ruralavalon
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Re: Are Bonds a Good Investment Now?

Post by ruralavalon »

goblue100 wrote:
jafcorrea wrote:Additional Fed Rate Hikes Expected ... Buy or Sell Bonds in 2017?
With a little looking, you could find very similar threads for every year since 2011. Most years the expected hike hasn't come.
Some people have been expecting rate hikes since 2009.
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jafcorrea
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Re: Are Bonds a Good Investment Now?

Post by jafcorrea »

thanks all for the advises, but the question remains

do i continuum sending contributions to my bond fund in 2017 :D

portfolio 80/20 TSM/TBM/ITSM/ITBM
0 debits, 52y, more than enoth on emergency saving
CA 28% fed 8.75%? state
Thanks JC
Quark
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Re: Are Bonds a Good Investment Now?

Post by Quark »

ruralavalon wrote:
goblue100 wrote:
jafcorrea wrote:Additional Fed Rate Hikes Expected ... Buy or Sell Bonds in 2017?
With a little looking, you could find very similar threads for every year since 2011. Most years the expected hike hasn't come.
Some people have been expecting rate hikes since 2009.
Odds are very high for a December hike. It would be very unusual for the market to give 95% odds a rate hike (http://www.cmegroup.com/trading/interes ... -fomc.html), Fed officials to talk up a rate hike and the Fed not to raise. That hasn't been happening "since 2009".

In any event, bond prices already include the market's perception of the chances of a rate hike, so it doesn't really make sense to buy or sell based on your guess of what the Fed will do, unless you have unique insight or information. I''ll go out on a limb and say that no one posting in this thread has those things.
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Re: Are Bonds a Good Investment Now?

Post by Quark »

jafcorrea wrote:thanks all for the advises, but the question remains

do i continuum sending contributions to my bond fund in 2017 :D
If that's your investment plan, stick to it. Don't alter it based on your perception of, or news stories about, the economy, the Fed, politics or other macro factors.
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Re: Are Bonds a Good Investment Now?

Post by nisiprius »

1) If the Fed hikes the overnight rate, that may or may not have much effect on the longer rates, like the 10-year rate. In 2004-2007 the overnight rate rose from 1% to 5%, but there was little effect on the longer rates (which are set by the market, not the Fed) and little effect on bond funds.

2) If the 10-year rate rate rises a lot and suddenly, then bond funds like the Vanguard Total Bond Market Index Fund will take a short-term knock whose size is predictable from the fund's "duration." For example, an instantaneous rise of 1%--not in the Fed rate, but in the rates for the bonds in the fund--will cause it to decline by 5.8 x 1% = -5.8%.

3) If rates rise, new bonds pay more interest, and the fund will gradually pay out more and more in fund dividends as low-interest bonds in the fund are replaced by new, higher-interest bonds. Higher interest rates are generally good for bondholders, as intuition tells us. There is also a counterintuitive effect that higher interest rates are initially bad for existing bondholders who wish to sell on the market before maturity. They are competing with higher-interest new bonds and given a choice, buyers will only buy your old bonds if you offer a discount.

4) The balancing act when interest rates rise--short-term bad, long-term good--plays out over a time period roughly equal to the duration, 5.8 years for Total Bond. This matches up perfectly with what Vanguard says:
Conservative to moderate funds—Risk level 2

Vanguard funds classified as conservative to moderate are subject to low-to-moderate fluctuations in share prices. In general, such funds may be appropriate for investors with medium-term investment horizons (four to ten years).
If your investment horizon is less than four years, then you probably shouldn't have been in the fund in the first place.

5) Again, what matters is not the Fed's raising their rate, but market forces raising the 5, 7, 10-year rates. If you knew in advance just when this would happen, then you could time the market and beat me, buying and holding Total Bond, by selling your bond fund just before the rate rise, waiting for the dust to settle, and then buying back several years later. I'd take the knock, you could skip over it. I repeat: if you knew the timing, then you could do it.

6) In this forum, people have been waiting for that rate since 2009. This post, Interest rates can only go up, why go intermediate in bonds? asked the question: "So isn't it wise to go short in this environment where rates can only go up?"

This is the difference between the Vanguard Total Bond Market Index fund and the Vanguard Short-Term Bond Index Fund in the time since that post was made. The blue line shows the results of investing $10,000 in the intermediate-term Total Bond fund (blue) has made a total of $3,195, while the orange line shows the results of going short-term in the Vanguard Short-Term Bond Index (orange) made $1,585 or less than half as much. So far, sticking to short-term bonds in order to avoid being hit by the expected rate increase would so far have cost you more than half of the gains made in the Total Bond fund.

Source
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patrick013
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Re: Are Bonds a Good Investment Now?

Post by patrick013 »

nisiprius wrote:1) If the Fed hikes the overnight rate, that may or may not have much effect on the longer rates, like the 10-year rate. In 2004-2007 the overnight rate rose from 1% to 5%, but there was little effect on the longer rates (which are set by the market, not the Fed) and little effect on bond funds.
I think that was an isolated incident not likely to repeat. If the Fed wanted the
long rates to increase and they didn't increase they certainly would have taken
other actions to do so. So they do control the long rates thru those other actions.
The appropriate thing to do in 2008 would be rebalance to a 100% LT bond fund to
realize cap gains from lower rates and imminent rate reductions.

I'm not much of a fan of TBM as what to do with ST and LT bonds is rather instinctual
to me. What you see in 2004-2007 is what I call the "value of perfect information"
or in other words reliable information. :)
age in bonds, buy-and-hold, 10 year business cycle
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Re: Are Bonds a Good Investment Now?

Post by orca91 »

jafcorrea wrote:thanks all for the advises, but the question remains

do i continuum sending contributions to my bond fund in 2017 :D

portfolio 80/20 TSM/TBM/ITSM/ITBM
Yes. Enough to keep you 80/20 AA at least.
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ruralavalon
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Re: Are Bonds a Good Investment Now?

Post by ruralavalon »

jafcorrea wrote:thanks all for the advises, but the question remains

do i continuum sending contributions to my bond fund in 2017 :D

portfolio 80/20 TSM/TBM/ITSM/ITBM
0 debits, 52y, more than enoth on emergency saving
CA 28% fed 8.75%? state
What percentage of your portfolio is currently in bonds or bond funds?

What is your target bond allocation?
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Re: Are Bonds a Good Investment Now?

Post by jebmke »

jafcorrea wrote:Additional Fed Rate Hikes Expected ... Buy or Sell Bonds in 2017?
I may do neither - just hold what I have. I still haven't hit a re-balance point yet.
When you discover that you are riding a dead horse, the best strategy is to dismount.
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Rob5TCP
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Re: Are Bonds a Good Investment Now?

Post by Rob5TCP »

One other options some Bogleheads have been using. Higher, long term CD (7 years).
The current best one is from Andrews Fed C.U.; 3% yield for 7 years. The EWP is only 6 months
so if rates do soar, your downside is limited.

KevinM has several posts on this, as well as a few other members. He does a nice risk/reward
analysis on his website.
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jafcorrea
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Re: Are Bonds a Good Investment Now?

Post by jafcorrea »

ruralavalon wrote:
jafcorrea wrote:thanks all for the advises, but the question remains

do i continuum sending contributions to my bond fund in 2017 :D

portfolio 80/20 TSM/TBM/ITSM/ITBM
0 debits, 52y, more than enoth on emergency saving
CA 28% fed 8.75%? state
What percentage of your portfolio is currently in bonds or bond funds? 20% TBM/ITBM

What is your target bond allocation?30% or 40%bonds before 55y ..I think, or maybe re balance/sell ITBM and add on TBM
Thanks JC
KlangFool
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Re: Are Bonds a Good Investment Now?

Post by KlangFool »

OP,

What makes you think that you know XYZ (whatever) is a good investment at any moment? Please note that if you know the answer to the above question, you will be extremely rich. You should be running a hedge fund.

I know that I do not know. So, I follow my IPS and invest according to my AA. Now, my stock is up and bond is down. So, I am buying the bond at this moment.

Unless and until you know that you do not know, you will not follow an IPS. But, why do you think that you know anything? Why you are not rich trading XYZ if you really know?

KlangFool
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Re: Are Bonds a Good Investment Now?

Post by seed4great »

I am not sure why there are talk to put money into very long term CD, while interest rate is so low nowdays? Andrews CU is an exception, and I did hear it is not a place where you want to keep your money: please check ratings. Typical rates for 5yr CD at descent financial institutions is around 2%. This is at historic low, and they must go up no matter what. Of course, it may happen very slowly. But it will happen.
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Re: Are Bonds a Good Investment Now?

Post by Angst »

My thinking generally falls along the lines of "The heck with 'expectations'."

That which brings the underperforming assets of your asset allocation as defined in your IPS back into balance, is a good investment now.
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Re: Are Bonds a Good Investment Now?

Post by ruralavalon »

jafcorrea wrote:
ruralavalon wrote:
jafcorrea wrote:thanks all for the advises, but the question remains

do i continuum sending contributions to my bond fund in 2017 :D

portfolio 80/20 TSM/TBM/ITSM/ITBM
0 debits, 52y, more than enoth on emergency saving
CA 28% fed 8.75%? state
What percentage of your portfolio is currently in bonds or bond funds? 20% TBM/ITBM

What is your target bond allocation?30% or 40%bonds before 55y ..I think, or maybe re balance/sell ITBM and add on TBM
Yes, in my opinion it's probably better to continue your contributions to Vanguard Total Bond Market Index Fund in 2017, in fact increase your contributions to Vanguard Total Bond Market Index Fund and exchange some from the international bond fund to Vanguard Total Bond Market Index Fund.

You are currently 52, in my opinion an asset allocation of 80% stocks and 20% bonds is probably too risky for your age, so it's good that you intend to increase your bond allocation before you reach 55.

In my opinion an asset allocation of 60% stocks and 40% bonds is within the range of what is reasonable at age 55, so that's a good idea for your new asset allocation.

I think it's good to decrease your international bonds, and increase your holding of Vanguard Total Bond Market Index Fund. In my opinion international bonds just add more expense and unnecessary complexity to a portfolio, with no readily apparent benefit.
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Rob5TCP
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Re: Are Bonds a Good Investment Now?

Post by Rob5TCP »

seed4great wrote:I am not sure why there are talk to put money into very long term CD, while interest rate is so low nowdays? Andrews CU is an exception, and I did hear it is not a place where you want to keep your money: please check ratings. Typical rates for 5yr CD at descent financial institutions is around 2%. This is at historic low, and they must go up no matter what. Of course, it may happen very slowly. But it will happen.
The reason for the CD from Andrews is the relatively modest EWP. So, I have no problem putting most of my bonds into their CD's.
Andrews CU has a strong A or A+ rating. The C.U. with the very poor rating was Valor C.U. They had the 3% offering earlier.
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Re: Are Bonds a Good Investment Now?

Post by abuss368 »

Bonds should always be included in a well diversified and low cost investment portfolio. Market timing and security selection does not work.
John C. Bogle: “Simplicity is the master key to financial success."
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jafcorrea
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Re: Are Bonds a Good Investment Now?

Post by jafcorrea »

ruralavalon wrote:
jafcorrea wrote:
ruralavalon wrote:
jafcorrea wrote:thanks all for the advises, but the question remains

do i continuum sending contributions to my bond fund in 2017 :D

portfolio 80/20 TSM/TBM/ITSM/ITBM
0 debits, 52y, more than enoth on emergency saving
CA 28% fed 8.75%? state
What percentage of your portfolio is currently in bonds or bond funds? 20% TBM/ITBM

What is your target bond allocation?30% or 40%bonds before 55y ..I think, or maybe re balance/sell ITBM and add on TBM
Yes, in my opinion it's probably better to continue your contributions to Vanguard Total Bond Market Index Fund in 2017, in fact increase your contributions to Vanguard Total Bond Market Index Fund and exchange some from the international bond fund to Vanguard Total Bond Market Index Fund.

You are currently 52, in my opinion an asset allocation of 80% stocks and 20% bonds is probably too risky for your age, so it's good that you intend to increase your bond allocation before you reach 55.

In my opinion an asset allocation of 60% stocks and 40% bonds is within the range of what is reasonable at age 55, so that's a good idea for your new asset allocation.

I think it's good to decrease your international bonds, and increase your holding of Vanguard Total Bond Market Index Fund. In my opinion international bonds just add more expense and unnecessary complexity to a portfolio, with no readily apparent benefit.

what do you think at 55y change the portfolio to: (and have, let say 5 to 10 more years to go)
80% Wellington
10% TISM
10% TIBM or maybe 20% TISM

I haven't seen anyone talking about this kind of portfolio :greedy
Thanks JC
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Re: Are Bonds a Good Investment Now?

Post by Jack FFR1846 »

You have to choose an AA that you can live with and sleep with. As a comparison, I'm 59 and plan to retire within 3 years. I'm 50/50 with the bonds in fido total US bond. I rebalance on my birthday and invest taxable in SCHB (US broad market). But I rebalance inside my IRA with Fido total US market.

$100k on the sidelines? I would not let that happen in my own portfolio.
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ruralavalon
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Re: Are Bonds a Good Investment Now?

Post by ruralavalon »

First of all, it's very important to look at the overall situation and consider all investments and accounts together as a single unified whole. Please post all your details in this format: "Asking Portfolio Questions". You have been politely asked to do this many times by many different people who are trying to help you. Is there some reason you refuse to provide this information?
jafcorrea wrote:
ruralavalon wrote:
jafcorrea wrote:
ruralavalon wrote:
jafcorrea wrote:thanks all for the advises, but the question remains

do i continuum sending contributions to my bond fund in 2017 :D

portfolio 80/20 TSM/TBM/ITSM/ITBM
0 debits, 52y, more than enoth on emergency saving
CA 28% fed 8.75%? state
What percentage of your portfolio is currently in bonds or bond funds? 20% TBM/ITBM

What is your target bond allocation?30% or 40%bonds before 55y ..I think, or maybe re balance/sell ITBM and add on TBM
Yes, in my opinion it's probably better to continue your contributions to Vanguard Total Bond Market Index Fund in 2017, in fact increase your contributions to Vanguard Total Bond Market Index Fund and exchange some from the international bond fund to Vanguard Total Bond Market Index Fund.

You are currently 52, in my opinion an asset allocation of 80% stocks and 20% bonds is probably too risky for your age, so it's good that you intend to increase your bond allocation before you reach 55.

In my opinion an asset allocation of 60% stocks and 40% bonds is within the range of what is reasonable at age 55, so that's a good idea for your new asset allocation.

I think it's good to decrease your international bonds, and increase your holding of Vanguard Total Bond Market Index Fund. In my opinion international bonds just add more expense and unnecessary complexity to a portfolio, with no readily apparent benefit.

what do you think at 55y change the portfolio to: (and have, let say 5 to 10 more years to go)
80% Wellington
10% TISM
10% TIBM or maybe 20% TISM

I haven't seen anyone talking about this kind of portfolio :greedy
That totals 120%.

I think you should increase the bond allocation now, and not wait until age 60 or 65. Your very low 20% bond allocation is too risky for your current age of 52 in my opinion.

Vanguard Wellington Fund Admiral Shares (VWENX) Is an excellent actively managed moderate allocation fund with 65% stocks and 35% bonds, meant to be used by itself as a simple one fund portfolio. It would be fine if you wanted to use it by itself in your IRAs. Mixing it with other funds is an unnecessary complication.

How about using only:
Vanguard Wellington Fund Admiral Shares (VWENX) ER 0.18% by itself.

OR

Instead:
45%, Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.05%
15%, Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.12%
40%, Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) ER 0.06%

Finally it's very important to look at the overall situation and consider all investments and accounts together as a single unified whole. Please post all your details in this format: "Asking Portfolio Questions". You have been politely asked to do this many times by many different people who are trying to help you. Is there some reason you refuse to provide this information?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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jafcorrea
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Re: Are Bonds a Good Investment Now?

Post by jafcorrea »

ruralavalon wrote:First of all, it's very important to look at the overall situation and consider all investments and accounts together as a single unified whole. Please post all your details in this format: "Asking Portfolio Questions". You have been politely asked to do this many times by many different people who are trying to help you. Is there some reason you refuse to provide this information?
jafcorrea wrote:
ruralavalon wrote:
jafcorrea wrote:
ruralavalon wrote: What percentage of your portfolio is currently in bonds or bond funds? 20% TBM/ITBM

What is your target bond allocation?30% or 40%bonds before 55y ..I think, or maybe re balance/sell ITBM and add on TBM
Yes, in my opinion it's probably better to continue your contributions to Vanguard Total Bond Market Index Fund in 2017, in fact increase your contributions to Vanguard Total Bond Market Index Fund and exchange some from the international bond fund to Vanguard Total Bond Market Index Fund.

You are currently 52, in my opinion an asset allocation of 80% stocks and 20% bonds is probably too risky for your age, so it's good that you intend to increase your bond allocation before you reach 55.

In my opinion an asset allocation of 60% stocks and 40% bonds is within the range of what is reasonable at age 55, so that's a good idea for your new asset allocation.

I think it's good to decrease your international bonds, and increase your holding of Vanguard Total Bond Market Index Fund. In my opinion international bonds just add more expense and unnecessary complexity to a portfolio, with no readily apparent benefit.

what do you think at 55y change the portfolio to: (and have, let say 5 to 10 more years to go)
80% Wellington
10% TISM
10% TIBM or maybe 20% TISM

I haven't seen anyone talking about this kind of portfolio :greedy
That totals 120%.

I think you should increase the bond allocation now, and not wait until age 60 or 65. Your very low 20% bond allocation is too risky for your current age of 52 in my opinion.

Vanguard Wellington Fund Admiral Shares (VWENX) Is an excellent actively managed moderate allocation fund with 65% stocks and 35% bonds, meant to be used by itself as a simple one fund portfolio. It would be fine if you wanted to use it by itself in your IRAs. Mixing it with other funds is an unnecessary complication.

How about using only:
Vanguard Wellington Fund Admiral Shares (VWENX) ER 0.18% by itself.

OR

Instead:
45%, Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.05%
15%, Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.12%
40%, Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) ER 0.06%

Finally it's very important to look at the overall situation and consider all investments and accounts together as a single unified whole. Please post all your details in this format: "Asking Portfolio Questions". You have been politely asked to do this many times by many different people who are trying to help you. Is there some reason you refuse to provide this information?


My Portfolio:
52y
CA - San Francisco FED tax 28% / STATE ?
Salary 120k
0 Debits
Emergency funds: 500k use to flip houses in a Bay Area
Brokerage Account: rental property money VFIAX contributing yearly $60k
Roth IRA: 40 %VTSAX / 20% VTIAX / 20% VTBLX / 20% REIT contributing yearly $6500
Simple IRA transferring to Traditional IRA ever 3 to 4 months, (so I can take advantage to a admiral shares) 70 %VTSAX / 10% VTIAX / 10% VTBLX / 10% VTABX contributing yearly $15500 no matching contributions :annoyed

NO ... 80% Wellington/10% TISM/10% TIBM = 100%
or
80% Wellington/maybe 20% TISM = 100% ... how about use wellington and add ITSM?

doing the best I can to bring up 60/40, Because of the ER I do not changed yet,

now is okay? :sharebeer
Last edited by jafcorrea on Thu Dec 08, 2016 7:17 pm, edited 2 times in total.
Thanks JC
KlangFool
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Re: Are Bonds a Good Investment Now?

Post by KlangFool »

OP,

You have a problem. You are unwilling and unable to rebalance your portfolio. So, a simple and effective solution for you is

100% Wellington fund

You never have to rebalance your portfolio and ask whether it is a good time to buy/sell the bond.

KlangFool
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jafcorrea
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Re: Are Bonds a Good Investment Now?

Post by jafcorrea »

KlangFool wrote:OP,

You have a problem. You are unwilling and unable to rebalance your portfolio. So, a simple and effective solution for you is

100% Wellington fund

You never have to rebalance your portfolio and ask whether it is a good time to buy/sell the bond.

KlangFool

I have no problem in re balancing my portfolio, just asking if make sense having a 80% Wellington fund and 20% TISM
also my first question was ... buy more bonds or exchange my TIBM to TBM
Thanks JC
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ruralavalon
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Re: Are Bonds a Good Investment Now?

Post by ruralavalon »

jacorrea wrote:My Portfolio:
52y
CA - San Francisco FED tax 28% / STATE ?
Salary 120k
0 Debits
Emergency funds: 500k use to flip houses in a Bay Area

Brokerage Account:

rental property money VFIAX contributing yearly $60k

Roth IRA:
40 %VTSAX /
20% VTIAX /
20% VTBLX /
20% REIT
contributing yearly $6500

Simple IRA transferring to Traditional IRA ever 3 to 4 months, (so I can take advantage to a admiral shares)
70 %VTSAX /
10% VTIAX /
10% VTBLX /
10% VTABX
contributing yearly $15500 no matching contributions :annoyed



NO ... 80% Wellington/10% TISM/10% TIBM = 100%
or
80% Wellington/maybe 20% TISM = 100% ... how about use wellington and add ITSM?


doing the best I can to bring up 60/40, Because of the ER I do not changed yet,

now is okay? :sharebeer
That's getting much better :) , but you omitted some information that we need to have :( .

You have an excellent savings/contribution rate :D . That's very important. And it's good to see that you are debt free.

I think that your choice of Vanguard 500 Index Fund Admiral Shares (VFIAX) ER 0.05% is a good tax-efficient fund choice for your taxable account.

. . . . .

To suggest some tax-efficient ideas to cover all accounts we need to know --

1) the current relative sizes of all accounts, like this:
taxable brokerage account -- ww%, $aa
Roth IRA -- xx%, $bb
SIMPLE IRA -- yy%, $cc
traditional IRA -- zz#, $dd
(Please make sure that you include all of your long-term/retirement accounts.)
total = 100%
total dollars = $?????

2) Your tax filing status
(if married filing jointly, that opens some additional account possibilities for you.)

. . . . .

In the taxable account I suggest using very tax-efficient stock index funds. Wiki article "Tax-efficient fund placement". Those funds are also suitable for any type of account.

That means for tax-efficiency you prefer bond funds and balanced funds (such as Wellington, if it works for your desired asset allocation) in tax protected accounts like your IRAs.
Last edited by ruralavalon on Fri Dec 09, 2016 7:46 am, edited 6 times in total.
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TomCat96
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Re: Are Bonds a Good Investment Now?

Post by TomCat96 »

jafcorrea wrote:Additional Fed Rate Hikes Expected ... Buy or Sell Bonds in 2017?
My solution to this question was stop worrying and go 100% equities :D
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ruralavalon
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Re: Are Bonds a Good Investment Now?

Post by ruralavalon »

TomCat96 wrote:
jafcorrea wrote:Additional Fed Rate Hikes Expected ... Buy or Sell Bonds in 2017?
My solution to this question was stop worrying and go 100% equities :D
I don't think that 100% stocks makes any sense at all for jafcorrea who is 52 years old.

There is far more risk in stocks than in bonds. Most here expect that any effect from interest rate increases will likely be small and temporary, basically without much meaning for a long-term investor.
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EyeYield
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Re: Are Bonds a Good Investment Now?

Post by EyeYield »

Re: Are Bonds a Good Investment Now?

For me, something like the Total Bond Fund is the BEST investment NOW and I'm buying.

Set aside for a moment that December is my annual TLH month and that my portfolio has an increased equity position due to the recent run up in stocks, putting my AA out of balance, forcing me to buy bonds, and think of the one asset class that might seem to be selling at a discount. It's bonds.

In anticipation of next weeks rate hike by the Fed of .25%, the Total Bond Fund, in my case AGG, has dropped over 4.50% in just the past month.
That's a big drop for a possible .25% rate hike - depending on what the Fed actually says.

The market times me every December and for once I'm happy about it.
"The stock market is a giant distraction from the business of investing." - Jack Bogle
TomCat96
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Re: Are Bonds a Good Investment Now?

Post by TomCat96 »

ruralavalon wrote:
TomCat96 wrote:
jafcorrea wrote:Additional Fed Rate Hikes Expected ... Buy or Sell Bonds in 2017?
My solution to this question was stop worrying and go 100% equities :D
I don't think that 100% stocks makes any sense at all for jafcorrea who is 52 years old.

There is far more risk in stocks than in bonds. Most here expect that any effect from interest rate increases will likely be small and temporary, basically without much meaning for a long-term investor.

Ah yes. Acknowledged. But it just goes to highlight that OP's question is completely risk-tolerance dependent.
Being 35, bonds are unpalatable enough as it is, even without the likely near term drops.
jfave33
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Re: Are Bonds a Good Investment Now?

Post by jfave33 »

Those who worry about these things should just buy cds.
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