Suggestions for Reasonably Safe Funds

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LXEX55
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Suggestions for Reasonably Safe Funds

Post by LXEX55 » Wed Feb 14, 2018 6:34 pm

I have very little stomach for risk. I currently have about 50% of my company 401k funds in stable value which only pays about 1.5% per year. When I retire at the end of this year, I want to move my money to Vanguard. Can anyone recommend a reasonably safe mutual fund that pays slightly higher return than the stable value funds I am presently in? I know the higher the risk, the greater the potential reward, but I am only looking for something like a 3% return rate. Any suggestions?

retiredjg
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Re: Suggestions for Reasonably Safe Funds

Post by retiredjg » Wed Feb 14, 2018 6:42 pm

What is the other half of your 401k invested in?

If stocks, consider something like the LifeStrategy Conservative Growth fund which is 40% stocks and 60% bonds.

LXEX55
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Re: Suggestions for Reasonably Safe Funds

Post by LXEX55 » Wed Feb 14, 2018 6:56 pm

retiredjg wrote:
Wed Feb 14, 2018 6:42 pm
What is the other half of your 401k invested in?

If stocks, consider something like the LifeStrategy Conservative Growth fund which is 40% stocks and 60% bonds.
It is invested in a mix of stock and bond funds, but, when I move my 401k over to Vanguard, I switch all that too. Just not sure to what, that is what I looking for advice on.

mega317
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Re: Suggestions for Reasonably Safe Funds

Post by mega317 » Wed Feb 14, 2018 7:11 pm

Well the prime money market funds yields close to 1.5%.

Iliketoridemybike
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Re: Suggestions for Reasonably Safe Funds

Post by Iliketoridemybike » Wed Feb 14, 2018 7:13 pm

You can buy a highly rated bond at about 3% and see no price fluctuation if held to maturity and if you go shorter duration, your purchasing power won’t be eaten up as quickly.
Some bonds in that range include a 10 year treasury, a 5 year corporate at Aa/AA or a 3 year corporate at an A rating.

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sdsailing
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Re: Suggestions for Reasonably Safe Funds

Post by sdsailing » Wed Feb 14, 2018 7:16 pm

It's a mix of stocks and bonds but only paying 1.5% per year?

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SquawkIdent
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Re: Suggestions for Reasonably Safe Funds

Post by SquawkIdent » Wed Feb 14, 2018 7:17 pm

You may want to consider a nice 40s/60b balanced fund. VG has several to choose from. Could you handle 40% stocks or is that too much? If you can't, consider Target Retirement Income fund or even something less risky. IMHO, you are just the person who could benefit from a balanced fund, as the "turmoil" within the fund is somewhat hidden as you only see one NAV. Enjoy your retirement!! :sharebeer

mega317
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Re: Suggestions for Reasonably Safe Funds

Post by mega317 » Wed Feb 14, 2018 7:19 pm

Iliketoridemybike wrote:
Wed Feb 14, 2018 7:13 pm
You can buy a highly rated bond at about 3% and see no price fluctuation if held to maturity and if you go shorter duration, your purchasing power won’t be eaten up as quickly.
Some bonds in that range include a 10 year treasury, a 5 year corporate at Aa/AA or a 3 year corporate at an A rating.
I don't know if I'd recommend individual bonds for someone so risk averse, or really most people. And just because you might not see price fluctuations it doesn't mean the value of a bond doesn't change.

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BL
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Re: Suggestions for Reasonably Safe Funds

Post by BL » Wed Feb 14, 2018 7:24 pm

I suggest a single balanced fund such as:
Life Strategy Conservative (60% bonds) or
Target Retirement Income (70% bonds) or even
Life Strategy Income (80% bonds).

It is good to have at least 30% equities to keep up with inflation.

I guess you could find an online bank offering decent CDs for conservative guaranteed income in an IRA, which probably can't keep up with inflation.

123
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Re: Suggestions for Reasonably Safe Funds

Post by 123 » Wed Feb 14, 2018 7:25 pm

If you're so adverse to risk perhaps just a ladder of CDs would work. There is not much return but there is not much risk. There is no free lunch.
The closest helping hand is at the end of your own arm.

retiredjg
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Re: Suggestions for Reasonably Safe Funds

Post by retiredjg » Wed Feb 14, 2018 7:26 pm

LXEX55 wrote:
Wed Feb 14, 2018 6:56 pm
It is invested in a mix of stock and bond funds, but, when I move my 401k over to Vanguard, I switch all that too. Just not sure to what, that is what I looking for advice on.
What is your stock to bond ratio if you include the stable value fund on the bond side?

Are you comfortable with what you have now?

Iliketoridemybike
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Re: Suggestions for Reasonably Safe Funds

Post by Iliketoridemybike » Wed Feb 14, 2018 7:28 pm

mega317 wrote:
Wed Feb 14, 2018 7:19 pm
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:13 pm
You can buy a highly rated bond at about 3% and see no price fluctuation if held to maturity and if you go shorter duration, your purchasing power won’t be eaten up as quickly.
Some bonds in that range include a 10 year treasury, a 5 year corporate at Aa/AA or a 3 year corporate at an A rating.
I don't know if I'd recommend individual bonds for someone so risk averse, or really most people. And just because you might not see price fluctuations it doesn't mean the value of a bond doesn't change.
Hmmmm
If held to maturity, the value does not change. A $1000 bond pays $1000 at maturity, plus the interest paid at the coupon dates. Highly rated bonds are in many cases better options than a fund of bonds, which right now are dropping like a rock.

delamer
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Re: Suggestions for Reasonably Safe Funds

Post by delamer » Wed Feb 14, 2018 7:32 pm

It is a difficult question to answer.

The perception of “reasonably safe” varies a lot from person to person.

Take a look at these charts, and pay particular attention to the worst year and years with a loss. They may help you decide what you can live with: https://personal.vanguard.com/us/insigh ... llocations

One of the Vanguard LifeStrategy funds probably would meet your needs, unless you decide on no stocks.

https://investor.vanguard.com/mutual-fu ... estrategy/#/

mouses
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Re: Suggestions for Reasonably Safe Funds

Post by mouses » Wed Feb 14, 2018 7:44 pm

123 wrote:
Wed Feb 14, 2018 7:25 pm
If you're so adverse to risk perhaps just a ladder of CDs would work. There is not much return but there is not much risk. There is no free lunch.
In my area you can get five year CDs at 2.3%.

PFInterest
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Re: Suggestions for Reasonably Safe Funds

Post by PFInterest » Wed Feb 14, 2018 7:52 pm

Iliketoridemybike wrote:
Wed Feb 14, 2018 7:28 pm
mega317 wrote:
Wed Feb 14, 2018 7:19 pm
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:13 pm
You can buy a highly rated bond at about 3% and see no price fluctuation if held to maturity and if you go shorter duration, your purchasing power won’t be eaten up as quickly.
Some bonds in that range include a 10 year treasury, a 5 year corporate at Aa/AA or a 3 year corporate at an A rating.
I don't know if I'd recommend individual bonds for someone so risk averse, or really most people. And just because you might not see price fluctuations it doesn't mean the value of a bond doesn't change.
Hmmmm
If held to maturity, the value does not change. A $1000 bond pays $1000 at maturity, plus the interest paid at the coupon dates. Highly rated bonds are in many cases better options than a fund of bonds, which right now are dropping like a rock.
Those bonds are losing value.... You just don't see it.

Iliketoridemybike
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Re: Suggestions for Reasonably Safe Funds

Post by Iliketoridemybike » Wed Feb 14, 2018 7:57 pm

PFInterest wrote:
Wed Feb 14, 2018 7:52 pm
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:28 pm
mega317 wrote:
Wed Feb 14, 2018 7:19 pm
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:13 pm
You can buy a highly rated bond at about 3% and see no price fluctuation if held to maturity and if you go shorter duration, your purchasing power won’t be eaten up as quickly.
Some bonds in that range include a 10 year treasury, a 5 year corporate at Aa/AA or a 3 year corporate at an A rating.
I don't know if I'd recommend individual bonds for someone so risk averse, or really most people. And just because you might not see price fluctuations it doesn't mean the value of a bond doesn't change.
Hmmmm
If held to maturity, the value does not change. A $1000 bond pays $1000 at maturity, plus the interest paid at the coupon dates. Highly rated bonds are in many cases better options than a fund of bonds, which right now are dropping like a rock.
Those bonds are losing value.... You just don't see it.
You don’t understand bonds.

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Nestegg_User
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Re: Suggestions for Reasonably Safe Funds

Post by Nestegg_User » Thu Feb 15, 2018 4:41 am

mouses wrote:
Wed Feb 14, 2018 7:44 pm
123 wrote:
Wed Feb 14, 2018 7:25 pm
If you're so adverse to risk perhaps just a ladder of CDs would work. There is not much return but there is not much risk. There is no free lunch.
In my area you can get five year CDs at 2.3%.
I just picked up two year CD’s at 2%; going out farther in duration at only nominal increases didn’t make sense

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Tamarind
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Re: Suggestions for Reasonably Safe Funds

Post by Tamarind » Thu Feb 15, 2018 7:10 am

OP, what % drop in this money would scare you? Let's say over a month. 1%? 5%? 10%?

magicrat
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Re: Suggestions for Reasonably Safe Funds

Post by magicrat » Thu Feb 15, 2018 8:26 am

Iliketoridemybike wrote:
Wed Feb 14, 2018 7:57 pm
PFInterest wrote:
Wed Feb 14, 2018 7:52 pm
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:28 pm
mega317 wrote:
Wed Feb 14, 2018 7:19 pm
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:13 pm
You can buy a highly rated bond at about 3% and see no price fluctuation if held to maturity and if you go shorter duration, your purchasing power won’t be eaten up as quickly.
Some bonds in that range include a 10 year treasury, a 5 year corporate at Aa/AA or a 3 year corporate at an A rating.
I don't know if I'd recommend individual bonds for someone so risk averse, or really most people. And just because you might not see price fluctuations it doesn't mean the value of a bond doesn't change.
Hmmmm
If held to maturity, the value does not change. A $1000 bond pays $1000 at maturity, plus the interest paid at the coupon dates. Highly rated bonds are in many cases better options than a fund of bonds, which right now are dropping like a rock.
Those bonds are losing value.... You just don't see it.
You don’t understand bonds.
If you buy an individual bond for $1000, then interest rates rise, the value of that bond falls to below $1000. Just because you don't mark it to market does not mean it's not happening. The value of the bond will then rise at it gets towards maturity, and you will in fact get $1000 for it when it matures. But that is exactly what happens to the bonds in bond funds, there no difference in how the bonds are priced. The only difference is that the bond fund is buying new bonds as old ones mature (which, of course, you would also need to do as an individual bond holder if you seek to maintain your level of bond holdings).

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Toons
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Re: Suggestions for Reasonably Safe Funds

Post by Toons » Thu Feb 15, 2018 8:28 am

retiredjg wrote:
Wed Feb 14, 2018 6:42 pm
What is the other half of your 401k invested in?

If stocks, consider something like the LifeStrategy Conservative Growth fund which is 40% stocks and 60% bonds.
+1 :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

LXEX55
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Re: Suggestions for Reasonably Safe Funds

Post by LXEX55 » Thu Feb 15, 2018 4:16 pm

Nearing_Destination wrote:
Thu Feb 15, 2018 4:41 am
mouses wrote:
Wed Feb 14, 2018 7:44 pm
123 wrote:
Wed Feb 14, 2018 7:25 pm
If you're so adverse to risk perhaps just a ladder of CDs would work. There is not much return but there is not much risk. There is no free lunch.
In my area you can get five year CDs at 2.3%.
I just picked up two year CD’s at 2%; going out farther in duration at only nominal increases didn’t make sense
I know I sound really stupid here, but, if my money is in a 401k how can I shop around for the best CD rate? Am I not locked into whatever Vanguard or my current holder Wells Fargo offers?

Iliketoridemybike
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Re: Suggestions for Reasonably Safe Funds

Post by Iliketoridemybike » Thu Feb 15, 2018 6:55 pm

magicrat wrote:
Thu Feb 15, 2018 8:26 am
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:57 pm
PFInterest wrote:
Wed Feb 14, 2018 7:52 pm
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:28 pm
mega317 wrote:
Wed Feb 14, 2018 7:19 pm

I don't know if I'd recommend individual bonds for someone so risk averse, or really most people. And just because you might not see price fluctuations it doesn't mean the value of a bond doesn't change.
Hmmmm
If held to maturity, the value does not change. A $1000 bond pays $1000 at maturity, plus the interest paid at the coupon dates. Highly rated bonds are in many cases better options than a fund of bonds, which right now are dropping like a rock.
Those bonds are losing value.... You just don't see it.
You don’t understand bonds.
If you buy an individual bond for $1000, then interest rates rise, the value of that bond falls to below $1000. Just because you don't mark it to market does not mean it's not happening. The value of the bond will then rise at it gets towards maturity, and you will in fact get $1000 for it when it matures. But that is exactly what happens to the bonds in bond funds, there no difference in how the bonds are priced. The only difference is that the bond fund is buying new bonds as old ones mature (which, of course, you would also need to do as an individual bond holder if you seek to maintain your level of bond holdings).
So as you explain folks shouldn’t say bonds go down in value, when in fact they don’t if held to maturity.

ThrustVectoring
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Re: Suggestions for Reasonably Safe Funds

Post by ThrustVectoring » Thu Feb 15, 2018 7:21 pm

Iliketoridemybike wrote:
Thu Feb 15, 2018 6:55 pm
magicrat wrote:
Thu Feb 15, 2018 8:26 am
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:57 pm
PFInterest wrote:
Wed Feb 14, 2018 7:52 pm
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:28 pm

Hmmmm
If held to maturity, the value does not change. A $1000 bond pays $1000 at maturity, plus the interest paid at the coupon dates. Highly rated bonds are in many cases better options than a fund of bonds, which right now are dropping like a rock.
Those bonds are losing value.... You just don't see it.
You don’t understand bonds.
If you buy an individual bond for $1000, then interest rates rise, the value of that bond falls to below $1000. Just because you don't mark it to market does not mean it's not happening. The value of the bond will then rise at it gets towards maturity, and you will in fact get $1000 for it when it matures. But that is exactly what happens to the bonds in bond funds, there no difference in how the bonds are priced. The only difference is that the bond fund is buying new bonds as old ones mature (which, of course, you would also need to do as an individual bond holder if you seek to maintain your level of bond holdings).
So as you explain folks shouldn’t say bonds go down in value, when in fact they don’t if held to maturity.
If you buy a plane ticket for flying home for Thanksgiving at $250, and tomorrow you could buy an equivalent ticket for $249, is there not some sense in which your plane ticket has lost a dollar? Similarly, if you can buy a bond that pays you $1000 in a year for $980, and tomorrow you can buy an equivalent bond for $979, have you not lost a dollar?
Current portfolio: 60% VTI / 40% VXUS

jjface
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Re: Suggestions for Reasonably Safe Funds

Post by jjface » Thu Feb 15, 2018 8:47 pm

ThrustVectoring wrote:
Thu Feb 15, 2018 7:21 pm
Iliketoridemybike wrote:
Thu Feb 15, 2018 6:55 pm
magicrat wrote:
Thu Feb 15, 2018 8:26 am
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:57 pm
PFInterest wrote:
Wed Feb 14, 2018 7:52 pm


Those bonds are losing value.... You just don't see it.
You don’t understand bonds.
If you buy an individual bond for $1000, then interest rates rise, the value of that bond falls to below $1000. Just because you don't mark it to market does not mean it's not happening. The value of the bond will then rise at it gets towards maturity, and you will in fact get $1000 for it when it matures. But that is exactly what happens to the bonds in bond funds, there no difference in how the bonds are priced. The only difference is that the bond fund is buying new bonds as old ones mature (which, of course, you would also need to do as an individual bond holder if you seek to maintain your level of bond holdings).
So as you explain folks shouldn’t say bonds go down in value, when in fact they don’t if held to maturity.
If you buy a plane ticket for flying home for Thanksgiving at $250, and tomorrow you could buy an equivalent ticket for $249, is there not some sense in which your plane ticket has lost a dollar? Similarly, if you can buy a bond that pays you $1000 in a year for $980, and tomorrow you can buy an equivalent bond for $979, have you not lost a dollar?
I think you are both right depending on how you look at it. One is saying I still fly home regardless of what the price does and the other is saying but you can get it cheaper now so you lost money by buying at the more expensive price. Though you can only say that in hindsight.

Basically you don't lose out based on what you had before but don't benefit from the rate rise that new bonds have since your bond value drops to compensate.

Duffydog1
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Re: Suggestions for Reasonably Safe Funds

Post by Duffydog1 » Fri Feb 16, 2018 8:40 am

I am in the same situation.I have chosen VG Life Strategy Income Fund. 30% equity and 70% fixed.
It took me a long time to settle on this fund but it meets my AA and uses all index funds. It won't lose much during bad times, but it won't gain much during better times.

retiredjg
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Re: Suggestions for Reasonably Safe Funds

Post by retiredjg » Fri Feb 16, 2018 8:45 am

Isn't LifeStrategy Income at 20% stock and 80% bonds?

I think it is the Target Income fund that is at 30% stock.

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Nestegg_User
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Re: Suggestions for Reasonably Safe Funds

Post by Nestegg_User » Sat Feb 17, 2018 7:43 am

there’s a few different LifeStrategy funds:

VASGX - “LifeStrategy Growth “ - 80% equities

VSMGX - “LifeStrategy Moderate Growth “ is 60% equities

VSCGX - “LifeStrategy Conservative Growth “ is 40% equities

VASIX - “ LifeStrategy Income” is 20% equities

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dwickenh
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Re: Suggestions for Reasonably Safe Funds

Post by dwickenh » Sat Feb 17, 2018 8:01 am

Iliketoridemybike wrote:
Wed Feb 14, 2018 7:28 pm
mega317 wrote:
Wed Feb 14, 2018 7:19 pm
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:13 pm
You can buy a highly rated bond at about 3% and see no price fluctuation if held to maturity and if you go shorter duration, your purchasing power won’t be eaten up as quickly.
Some bonds in that range include a 10 year treasury, a 5 year corporate at Aa/AA or a 3 year corporate at an A rating.
I don't know if I'd recommend individual bonds for someone so risk averse, or really most people. And just because you might not see price fluctuations it doesn't mean the value of a bond doesn't change.
Hmmmm
If held to maturity, the value does not change. A $1000 bond pays $1000 at maturity, plus the interest paid at the coupon dates. Highly rated bonds are in many cases better options than a fund of bonds, which right now are dropping like a rock.
Sell your bond on the open market right now and I bet it takes a hit also. That is why you match a funds duration to your need for the funds much like a single bond maturing. Bonds and bond funds are not different if you sell them on a whim(immediate need for cash).
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

Iliketoridemybike
Posts: 572
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Re: Suggestions for Reasonably Safe Funds

Post by Iliketoridemybike » Sat Feb 24, 2018 7:30 pm

dwickenh wrote:
Sat Feb 17, 2018 8:01 am
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:28 pm
mega317 wrote:
Wed Feb 14, 2018 7:19 pm
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:13 pm
You can buy a highly rated bond at about 3% and see no price fluctuation if held to maturity and if you go shorter duration, your purchasing power won’t be eaten up as quickly.
Some bonds in that range include a 10 year treasury, a 5 year corporate at Aa/AA or a 3 year corporate at an A rating.
I don't know if I'd recommend individual bonds for someone so risk averse, or really most people. And just because you might not see price fluctuations it doesn't mean the value of a bond doesn't change.
Hmmmm
If held to maturity, the value does not change. A $1000 bond pays $1000 at maturity, plus the interest paid at the coupon dates. Highly rated bonds are in many cases better options than a fund of bonds, which right now are dropping like a rock.
Sell your bond on the open market right now and I bet it takes a hit also. That is why you match a funds duration to your need for the funds much like a single bond maturing. Bonds and bond funds are not different if you sell them on a whim(immediate need for cash).
You buy a bond to hold to maturity. If you need the funds soon, you buy shorter durations.

Iliketoridemybike
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Re: Suggestions for Reasonably Safe Funds

Post by Iliketoridemybike » Sat Feb 24, 2018 7:32 pm

ThrustVectoring wrote:
Thu Feb 15, 2018 7:21 pm
Iliketoridemybike wrote:
Thu Feb 15, 2018 6:55 pm
magicrat wrote:
Thu Feb 15, 2018 8:26 am
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:57 pm
PFInterest wrote:
Wed Feb 14, 2018 7:52 pm


Those bonds are losing value.... You just don't see it.
You don’t understand bonds.
If you buy an individual bond for $1000, then interest rates rise, the value of that bond falls to below $1000. Just because you don't mark it to market does not mean it's not happening. The value of the bond will then rise at it gets towards maturity, and you will in fact get $1000 for it when it matures. But that is exactly what happens to the bonds in bond funds, there no difference in how the bonds are priced. The only difference is that the bond fund is buying new bonds as old ones mature (which, of course, you would also need to do as an individual bond holder if you seek to maintain your level of bond holdings).
So as you explain folks shouldn’t say bonds go down in value, when in fact they don’t if held to maturity.
If you buy a plane ticket for flying home for Thanksgiving at $250, and tomorrow you could buy an equivalent ticket for $249, is there not some sense in which your plane ticket has lost a dollar? Similarly, if you can buy a bond that pays you $1000 in a year for $980, and tomorrow you can buy an equivalent bond for $979, have you not lost a dollar?
Nope. I still get the value of the plane ride or the $1000 at maturity.

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dwickenh
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Re: Suggestions for Reasonably Safe Funds

Post by dwickenh » Sat Feb 24, 2018 8:17 pm

Iliketoridemybike wrote:
Sat Feb 24, 2018 7:30 pm
dwickenh wrote:
Sat Feb 17, 2018 8:01 am
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:28 pm
mega317 wrote:
Wed Feb 14, 2018 7:19 pm
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:13 pm
You can buy a highly rated bond at about 3% and see no price fluctuation if held to maturity and if you go shorter duration, your purchasing power won’t be eaten up as quickly.
Some bonds in that range include a 10 year treasury, a 5 year corporate at Aa/AA or a 3 year corporate at an A rating.
I don't know if I'd recommend individual bonds for someone so risk averse, or really most people. And just because you might not see price fluctuations it doesn't mean the value of a bond doesn't change.
Hmmmm
If held to maturity, the value does not change. A $1000 bond pays $1000 at maturity, plus the interest paid at the coupon dates. Highly rated bonds are in many cases better options than a fund of bonds, which right now are dropping like a rock.
Sell your bond on the open market right now and I bet it takes a hit also. That is why you match a funds duration to your need for the funds much like a single bond maturing. Bonds and bond funds are not different if you sell them on a whim(immediate need for cash).
You buy a bond to hold to maturity. If you need the funds soon, you buy shorter durations.
That's why individual bonds are sold on the secondary market all the time- some people need the money sooner than the bond matures. They not only sell them at a profit, but also sell them at a loss.
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

racy
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Re: Suggestions for Reasonably Safe Funds

Post by racy » Sat Feb 24, 2018 8:26 pm

LXEX55 wrote:
Wed Feb 14, 2018 6:34 pm
... I want to move my money to Vanguard. Can anyone recommend a reasonably safe mutual fund that pays slightly higher return than the stable value funds I am presently in? ... I am only looking for something like a 3% return rate. Any suggestions?
Yes, it's better than stable value, it's reasonably safe, but it's not quite 3% (although it will match inflation): Short-term Investment Grade Bond Fund https://personal.vanguard.com/us/funds/ ... irect=true

02nz
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Re: Suggestions for Reasonably Safe Funds

Post by 02nz » Sat Feb 24, 2018 8:51 pm

Vanguard Wellesley Income is also worth considering. It's actively managed, so slightly higher cost, but still very low (0.22%). It has a similar stock/bond mix as LifeStrategy Conservative Growth but has significantly outperformed it over the past 10 years, in part because it dropped quite a bit less in the 2008-2009 bear market. Of course, past performance is no guarantee of the future.

Iliketoridemybike
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Re: Suggestions for Reasonably Safe Funds

Post by Iliketoridemybike » Sat Feb 24, 2018 11:36 pm

dwickenh wrote:
Sat Feb 24, 2018 8:17 pm
Iliketoridemybike wrote:
Sat Feb 24, 2018 7:30 pm
dwickenh wrote:
Sat Feb 17, 2018 8:01 am
Iliketoridemybike wrote:
Wed Feb 14, 2018 7:28 pm
mega317 wrote:
Wed Feb 14, 2018 7:19 pm

I don't know if I'd recommend individual bonds for someone so risk averse, or really most people. And just because you might not see price fluctuations it doesn't mean the value of a bond doesn't change.
Hmmmm
If held to maturity, the value does not change. A $1000 bond pays $1000 at maturity, plus the interest paid at the coupon dates. Highly rated bonds are in many cases better options than a fund of bonds, which right now are dropping like a rock.
Sell your bond on the open market right now and I bet it takes a hit also. That is why you match a funds duration to your need for the funds much like a single bond maturing. Bonds and bond funds are not different if you sell them on a whim(immediate need for cash).
You buy a bond to hold to maturity. If you need the funds soon, you buy shorter durations.
That's why individual bonds are sold on the secondary market all the time- some people need the money sooner than the bond matures. They not only sell them at a profit, but also sell them at a loss.
Or rebalancing.

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