Which fixed income ? Total Bond, Treasury, Inflation Protected

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LiveSimple
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Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by LiveSimple » Sat Feb 09, 2019 10:08 am

Which fixed income ? Total Bond, Treasury, Inflation Protected

Currently we are 100% Stock, 0% International 0% Fixed Income. Very comfortable with 100% stocks, as was able to hold tight in the last few ups and down. Planning to retire in the next 10 years and by all means, our expenses are low and can live on Social Security for sure. The investments are for anything that may come up health or travel or givings.

However, just thinking, if the equities go up 25% like in 2013, in any future years, wanted to park some $500 K in fixed income. This will stay "as is" will not rebalance to equities, just preserve some specific equity for retirement.

In this case, which one to choose, Total Bond, Treasury, or inflation protected just adding some fixed income funds from Vanguard, but open to other funds.

Vanguard Intermediate-Term Treasury Fund Investor Shares (VFITX)
Vanguard Inflation-Protected Securities Fund Investor Shares (VIPSX)
Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX)
Vanguard Intermediate-Term Bond Index Fund Admiral Shares (VBILX)
Last edited by LiveSimple on Sat Feb 09, 2019 10:53 am, edited 3 times in total.

lakpr
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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by lakpr » Sat Feb 09, 2019 10:25 am

Based on backtesting between 2000 and 2018, seems the winner is VIPSX.

https://www.portfoliovisualizer.com/bac ... ion3_3=100

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by dbr » Sat Feb 09, 2019 10:39 am

If a person wants to preserve specific assets for retirement as a lump sum, then it makes sense to hold inflation indexed bonds. Note that a fund of TIPS is still sensitive to interest rate risk depending on duration. VIPSX is not a bad overall choice.

For purposes of constructing a portfolio of stocks and bonds I feel that any low cost, diversified index fund, probably of intermediate duration is fine, including TIPS. If one is concerned to adjust risk and return of the portfolio, then one can adjust the stock/bond allocation. In short, there is no "choice" among the four options you mention. Throw darts to pick one.

I would not not make investment decisions based on back testing of specific short periods of time.

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by LiveSimple » Sat Feb 09, 2019 11:35 am

dbr wrote:
Sat Feb 09, 2019 10:39 am
Note that a fund of TIPS is still sensitive to interest rate risk depending on duration.
Trying to understand this....

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by retiredjg » Sat Feb 09, 2019 11:44 am

LiveSimple wrote:
Sat Feb 09, 2019 11:35 am
dbr wrote:
Sat Feb 09, 2019 10:39 am
Note that a fund of TIPS is still sensitive to interest rate risk depending on duration.
Trying to understand this....
Here is the simple version. Suppose you have a bond fund with a duration of 5 years. If interest rates go up 1%, the fund will lose about 5% in value. Then, after some lag time, the fund will start paying higher interest because...well...interest rates have gone up. :happy

Of course, interest rates do not usually go up 1% at a time. They go up in smaller increments.

Bond funds are not very volatile, but it would be a mistake to think that a bond fund cannot lose or gain in net asset value (price per share). Funds with short durations go up and down a small amount. Funds with long durations go up and down a lot compared to other bonds (but not in comparison to stocks).

For general investing, an "intermediate term" fund is generally recommended. Other than that, whether you use total bond or treasuries or something else is a matter of personal preference.

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by David Jay » Sat Feb 09, 2019 12:12 pm

Simple: Total Bond

Low effort: Purchase 5 and 10 year TIPs (actual notes, inside a tax-advantaged account) in a ladder.
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: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by retiredjg » Sat Feb 09, 2019 12:16 pm

LiveSimple wrote:
Sat Feb 09, 2019 10:08 am
In this case, which one to choose, Total Bond, Treasury, or inflation protected just adding some fixed income funds from Vanguard, but open to other funds.
Which one(s) you choose may depend on what funds are offered in your accounts. For example, a 401k type plan is the perfect place to put some or all of your fixed income assets. What is available there?

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by mariezzz » Sat Feb 09, 2019 12:21 pm

David Jay wrote:
Sat Feb 09, 2019 12:12 pm
Low effort: Purchase 5 and 10 year TIPs (actual notes, inside a tax-advantaged account) in a ladder.
Is there a way to do this with a TIRA at Vanguard?

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by Dandy » Sat Feb 09, 2019 12:41 pm

A lot depends on where you hold the 500k in fixed income - taxable or tax sheltered account. Also, You haven't given your current or projected nest egg amount so how much beyond the 500k is left in equities. Also, if held in taxable account do you have a state income tax.

The fact that you can meet future expenses with Social Security suggests that you have or will have "enough" i.e. the nest egg is for luxury items, travel, unexpected expenses or heirs. In retirement, especially if you don't need to withdraw from investments to meet normal expenses, a decent allocation to equities should provide a lot of inflation protection.

If 500k is in tax sheltered account (e.g. TIRA) I'd opt for 1/2 in Intermediate Treasuries and 1/2 in Total Bond Fund. I like Treasury exposure for flight to quality times i.e. 2008 when everything seemed to be failing.

If 500k is in taxable and you have a state income tax I'd opt for 1/2 in Intermediate Tax Exempt and 1/2 in Intermediate Treasury. This assumes you are in a relatively high tax bracket. - If not, I'd opt for the split above.

If in a relatively low tax bracket and their is no state income tax I'd opt for the first allocation above.

I am retired and allocate my fixed income about 1/3 FDIC products, 1/3 short term bond funds and 1/3 intermediate bond funds. I have some Inflation Protection Fund and Intermediate Treasury Fund in my TIRA. Many opt for a very simple fixed income allocation i.e. one fund. I think each fixed income product has pros and cons. If you know them all you can make wise choices. The larger your fixed income is the more likely you would be a candidate for more than one product. If your allocation is 80/20 I think one product can do. If you are 30/70 you may not want to go that route. If you have 100k it is different than if you have 500k in fixed income. I think this is especially true in or near retirement. Anyhow for me one fund was simple but a bit too simple for me. I don't fret about rebalancing within fixed income assets. Not really a big difference between a bit more in a short term bond fund than in an intermediate bond fund or a bit more in CDs than in short term bond funds.

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by LiveSimple » Sat Feb 09, 2019 3:00 pm

retiredjg wrote:
Sat Feb 09, 2019 12:16 pm
LiveSimple wrote:
Sat Feb 09, 2019 10:08 am
In this case, which one to choose, Total Bond, Treasury, or inflation protected just adding some fixed income funds from Vanguard, but open to other funds.
Which one(s) you choose may depend on what funds are offered in your accounts. For example, a 401k type plan is the perfect place to put some or all of your fixed income assets. What is available there?
In our case, we have rollover IRA, so all funds / ETFs are available. Will lean towards Vanguard funds / ETFs or iShares ETF, in general, as have researched these companies ETFs well. So the choice is not limited by the 401K constraints.

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by LiveSimple » Sat Feb 09, 2019 3:02 pm

retiredjg wrote:
Sat Feb 09, 2019 11:44 am
LiveSimple wrote:
Sat Feb 09, 2019 11:35 am
dbr wrote:
Sat Feb 09, 2019 10:39 am
Note that a fund of TIPS is still sensitive to interest rate risk depending on duration.
Trying to understand this....
Here is the simple version. Suppose you have a bond fund with a duration of 5 years. If interest rates go up 1%, the fund will lose about 5% in value. Then, after some lag time, the fund will start paying higher interest because...well...interest rates have gone up. :happy

Of course, interest rates do not usually go up 1% at a time. They go up in smaller increments.

Bond funds are not very volatile, but it would be a mistake to think that a bond fund cannot lose or gain in net asset value (price per share). Funds with short durations go up and down a small amount. Funds with long durations go up and down a lot compared to other bonds (but not in comparison to stocks).

For general investing, an "intermediate term" fund is generally recommended. Other than that, whether you use total bond or treasuries or something else is a matter of personal preference.
Appreciate the explanation, will learn or research. Then CD ladder may be an option, but prefer a fund or ETFs, will see.

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by hudson » Sat Feb 09, 2019 3:33 pm

Livesimple,

It depends. Are you investing in taxable or tax advantaged or both?
I like to look at credit quality, the expense ratio, the sec yield, Vanguard's Risk Potential, the distribution yield or TTM. I usually only buy intermediate term bonds.

Have you read Larry Swedroe's bond book or W. Bernstein's Four Pillars?

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by LiveSimple » Sat Feb 09, 2019 4:12 pm

hudson wrote:
Sat Feb 09, 2019 3:33 pm
Livesimple,

It depends. Are you investing in taxable or tax advantaged or both?
I like to look at credit quality, the expense ratio, the sec yield, Vanguard's Risk Potential, the distribution yield or TTM. I usually only buy intermediate term bonds.

Have you read Larry Swedroe's bond book or W. Bernstein's Four Pillars?
Our investments are both in taxable and tax advantage, thus we will do in tax advantaged accounts as it is a bond fund.

Yes have those books and read it; will read again. I got the risk factors, need to take risk, pay less tax, etc. I am trying to understand when we say bond is for safety then why does the bond lose initial value.

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by gmaynardkrebs » Sat Feb 09, 2019 4:27 pm

I'd vote for TIPS in an IRA, Vanguard short or intermediate muni fund in taxable if higher bracket, US gov bond index if lower bracket.

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by mmcmonster » Sat Feb 09, 2019 4:29 pm

In my tax advantaged accounts I have a mix of Vanguard Total Bond Index Fund and Vanguard Intermediate Term Treasury Fund.

In my taxable account I have a mix of Vanguard (insert-my-state-name) Long-Term Tax-Exempt Fund and Vanguard Intermediate-Term Tax Exempt Fund.

The more bonds I have in taxable (which are are municipal bonds and therefore considered more risky), the larger percentage of Treasury funds in the tax advantaged.

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by abuss368 » Sat Feb 09, 2019 4:33 pm

Dandy wrote:
Sat Feb 09, 2019 12:41 pm
If 500k is in tax sheltered account (e.g. TIRA) I'd opt for 1/2 in Intermediate Treasuries and 1/2 in Total Bond Fund. I like Treasury exposure for flight to quality times i.e. 2008 when everything seemed to be failing.
Total Bond Index includes a large allocation to Treasury bonds.
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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by abuss368 » Sat Feb 09, 2019 4:36 pm

In my opinion, any good short or intermediate term bond fund will do the job by providing safety and income to an investment portfolio.

The combination of Total Bond and TIPS is a good choice. I am unsure if you have increased exposure to inflation that an inflation protected bond fund is needed. Many investors and Bogleheads may chose only one bond fund (often Total Bond).

As an alternative, Vanguard investment experts recommend a two fund solution: Total Bond Index and Total International Bond Index.
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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by David Jay » Sat Feb 09, 2019 4:55 pm

mariezzz wrote:
Sat Feb 09, 2019 12:21 pm
David Jay wrote:
Sat Feb 09, 2019 12:12 pm
Low effort: Purchase 5 and 10 year TIPs (actual notes, inside a tax-advantaged account) in a ladder.
Is there a way to do this with a TIRA at Vanguard?
Yes. I intend to purchase 5 year TIPs at the April auction for my tIRA.
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: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by Dandy » Sat Feb 09, 2019 9:48 pm

Total Bond Index includes a large allocation to Treasury bonds.
I know it is about 43% last time I looked. All the better. :happy

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by hudson » Sat Feb 09, 2019 10:45 pm

LiveSimple wrote:
Sat Feb 09, 2019 4:12 pm
hudson wrote:
Sat Feb 09, 2019 3:33 pm
Livesimple,

It depends. Are you investing in taxable or tax advantaged or both?
I like to look at credit quality, the expense ratio, the sec yield, Vanguard's Risk Potential, the distribution yield or TTM. I usually only buy intermediate term bonds.

Have you read Larry Swedroe's bond book or W. Bernstein's Four Pillars?
Our investments are both in taxable and tax advantage, thus we will do in tax advantaged accounts as it is a bond fund.

Yes have those books and read it; will read again. I got the risk factors, need to take risk, pay less tax, etc. I am trying to understand when we say bond is for safety then why does the bond lose initial value.
Bonds may or may not lose value after purchase because of the rise or fall of interest rates. Even CDs do this.
A bond held to maturity doesn't lose any value. There's only a problem if you sell early. I don't concern myself with mutual funds turning over bonds as they do this constantly. Is that what you are asking?

If I was going to invest $500K in bonds, I would use CDs or VWIUX...Vanguard Intermediate Muni in taxable depending on federal and state taxes. In my tax advantaged account, I would use CDs or Vanguard Total Bond Mutual Fund or BND. Of course, I'm looking for the best rates; I'll split hairs.

Inflation Protect Bonds: I need to see what they are yielding now. A few years ago, I sold my holdings in these bonds because the yield was low. I need to do my homework on these again. I know that I probably should own some of these, but short term greed has taken over.

I would study the SEC Yield and distribution yield of each fund. I would choose the most favorable. In taxable, I would do the math on paper or spreadsheet showing the after tax dollars for each. In tax advantaged, I would ignore taxes to make a decision. After I made my decision, I would keep my eye on other intermediate funds and change horses if appropriate. I would keep my eyes open for tax loss harvesting opportunities.

Disclaimer: Larry Swedroe probably wouldn't approve of VWIUX because it doesn't have enought AAA/AA bonds. He would buy individual AAA/AA munis. He can do this because he's a pro. I'm not going there because there are too many minefields in buying individual munis. Larry wouldn't approve of total bond because it holds too much mortgage based bonds (24%). It also holds 16% industrial. bonds. W. Bernstein would probably go along with Larry; he likes short term safe bonds. He would be fine with CDs. Re-reading their books is a good move. I need to do the same.

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by gmaynardkrebs » Sat Feb 09, 2019 11:15 pm

LiveSimple wrote:
Sat Feb 09, 2019 10:08 am
However, just thinking, if the equities go up 25% like in 2013, in any future years, wanted to park some $500 K in fixed income. This will stay "as is" will not rebalance to equities, just preserve some specific equity for retirement.
What's the plan if equities go down 25%? At what age is "sitting tight" not a plan?

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by Sandtrap » Sun Feb 10, 2019 11:27 am

LiveSimple wrote:
Sat Feb 09, 2019 10:08 am
Which fixed income ? Total Bond, Treasury, Inflation Protected

Currently we are 100% Stock, 0% International 0% Fixed Income. Very comfortable with 100% stocks, as was able to hold tight in the last few ups and down. Planning to retire in the next 10 years and by all means, our expenses are low and can live on Social Security for sure. The investments are for anything that may come up health or travel or givings.

However, just thinking, if the equities go up 25% like in 2013, in any future years, wanted to park some $500 K in fixed income. This will stay "as is" will not rebalance to equities, just preserve some specific equity for retirement.

In this case, which one to choose, Total Bond, Treasury, or inflation protected just adding some fixed income funds from Vanguard, but open to other funds.

Vanguard Intermediate-Term Treasury Fund Investor Shares (VFITX)
Vanguard Inflation-Protected Securities Fund Investor Shares (VIPSX)
Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX)
Vanguard Intermediate-Term Bond Index Fund Admiral Shares (VBILX)
An option and suggestion:

If in the above highlights, you are addressing security of principal for "anything that might come up", and you are compartmentalizing it, then consider diversification of that 500k in any or mix of the following: (can be one thing or several in proportion to your comfort level)

Here's a not up to date Vanguard listing for interest rates on fixed. A good visual for what's available to you.

Image

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by LiveSimple » Sun Feb 10, 2019 12:39 pm

gmaynardkrebs wrote:
Sat Feb 09, 2019 11:15 pm
LiveSimple wrote:
Sat Feb 09, 2019 10:08 am
However, just thinking, if the equities go up 25% like in 2013, in any future years, wanted to park some $500 K in fixed income. This will stay "as is" will not rebalance to equities, just preserve some specific equity for retirement.
What's the plan if equities go down 25%? At what age is "sitting tight" not a plan?
Sitting tight is the current plan, as the portfolio is 100% stocks.
The only rebalance is to keep the slice and dice within the stock equities.
May tend to be all Total Stock Index, in the future as well.

So if the equities go down 25% or 40%, just sit tight.

That will be the plan in a decade or so, when we retire.
Last edited by LiveSimple on Sun Feb 10, 2019 12:41 pm, edited 1 time in total.

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by LiveSimple » Sun Feb 10, 2019 12:41 pm

Sandtrap wrote:
Sun Feb 10, 2019 11:27 am
Image
Thanks Sandtrap, this is helpful...

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by gmaynardkrebs » Sun Feb 10, 2019 1:14 pm

LiveSimple wrote:
Sun Feb 10, 2019 12:39 pm
gmaynardkrebs wrote:
Sat Feb 09, 2019 11:15 pm
LiveSimple wrote:
Sat Feb 09, 2019 10:08 am
However, just thinking, if the equities go up 25% like in 2013, in any future years, wanted to park some $500 K in fixed income. This will stay "as is" will not rebalance to equities, just preserve some specific equity for retirement.
What's the plan if equities go down 25%? At what age is "sitting tight" not a plan?
Sitting tight is the current plan, as the portfolio is 100% stocks.
The only rebalance is to keep the slice and dice within the stock equities.
May tend to be all Total Stock Index, in the future as well.

So if the equities go down 25% or 40%, just sit tight.

That will be the plan in a decade or so, when we retire.
I'm wondering about whether Soc Security alone is enough of a safety net. It could be, if you live in a pretty low cost area and both of you paid the maximum for 35 years -- it would be like $92K. But not that many people actually get that much or close to it, because salaries tend to be lower earlier in a person's career. Also, the death on one spouse means that the survivor loses the deceased's benefits. My only thought, and this is just a suggestion, is to get some more "safe" assets/annuity/TIPS/whatever, so that you won't have to dip into your equities at the worst times, like a major crash right after you retire. But, it really depends on your earnings history and where you live. Even $40-$50K might be enough in some areas. In DC, where housing costs are pretty high, we could live on our joint SS; but if one of us died, I don't think the other could afford to. Life insurance gets pretty expensive as you get into the retirement years.

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by Blueskies123 » Sun Feb 10, 2019 1:17 pm

retiredjg wrote:
Sat Feb 09, 2019 11:44 am
LiveSimple wrote:
Sat Feb 09, 2019 11:35 am
dbr wrote:
Sat Feb 09, 2019 10:39 am
Note that a fund of TIPS is still sensitive to interest rate risk depending on duration.
Trying to understand this....
Here is the simple version. Suppose you have a bond fund with a duration of 5 years. If interest rates go up 1%, the fund will lose about 5% in value. Then, after some lag time, the fund will start paying higher interest because...well...interest rates have gone up. :happy

Of course, interest rates do not usually go up 1% at a time. They go up in smaller increments.

Bond funds are not very volatile, but it would be a mistake to think that a bond fund cannot lose or gain in net asset value (price per share). Funds with short durations go up and down a small amount. Funds with long durations go up and down a lot compared to other bonds (but not in comparison to stocks).

For general investing, an "intermediate term" fund is generally recommended. Other than that, whether you use total bond or treasuries or something else is a matter of personal preference.
This the best explanation I have found, but you need to carefully read it:
https://www.etf.com/sections/swedroe-ti ... nopaging=1

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by LiveSimple » Sun Feb 10, 2019 1:25 pm

Blueskies123 wrote:
Sun Feb 10, 2019 1:17 pm
retiredjg wrote:
Sat Feb 09, 2019 11:44 am
LiveSimple wrote:
Sat Feb 09, 2019 11:35 am
dbr wrote:
Sat Feb 09, 2019 10:39 am
Note that a fund of TIPS is still sensitive to interest rate risk depending on duration.
Trying to understand this....
Here is the simple version. Suppose you have a bond fund with a duration of 5 years. If interest rates go up 1%, the fund will lose about 5% in value. Then, after some lag time, the fund will start paying higher interest because...well...interest rates have gone up. :happy

Of course, interest rates do not usually go up 1% at a time. They go up in smaller increments.

Bond funds are not very volatile, but it would be a mistake to think that a bond fund cannot lose or gain in net asset value (price per share). Funds with short durations go up and down a small amount. Funds with long durations go up and down a lot compared to other bonds (but not in comparison to stocks).

For general investing, an "intermediate term" fund is generally recommended. Other than that, whether you use total bond or treasuries or something else is a matter of personal preference.
This the best explanation I have found, but you need to carefully read it:
https://www.etf.com/sections/swedroe-ti ... nopaging=1
Thanks

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by ruralavalon » Sun Feb 10, 2019 2:28 pm

LiveSimple wrote:
Sat Feb 09, 2019 10:08 am
Which fixed income ? Total Bond, Treasury, Inflation Protected

Currently we are 100% Stock, 0% International 0% Fixed Income. Very comfortable with 100% stocks, as was able to hold tight in the last few ups and down. Planning to retire in the next 10 years and by all means, our expenses are low and can live on Social Security for sure. The investments are for anything that may come up health or travel or givings.

However, just thinking, if the equities go up 25% like in 2013, in any future years, wanted to park some $500 K in fixed income. This will stay "as is" will not rebalance to equities, just preserve some specific equity for retirement.

In this case, which one to choose, Total Bond, Treasury, or inflation protected just adding some fixed income funds from Vanguard, but open to other funds.

Vanguard Intermediate-Term Treasury Fund Investor Shares (VFITX)
Vanguard Inflation-Protected Securities Fund Investor Shares (VIPSX)
Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX)
Vanguard Intermediate-Term Bond Index Fund Admiral Shares (VBILX)
In my opinion any Vanguard intermediate-term or short-term bond fund with a low expense ratio is likely to do the job. Any of those you list is suitable.

I would not rely at all on backtesting to make the choice.

We use only Vanguard Intermediate-term Bond Index Fund Admiral Shares (VBILX).

The most popular bond fund here is probably Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX).
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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by schachtw » Sun Feb 10, 2019 2:33 pm

Taxable account: 15% bonds
VG Intermediate Tax Exempt fund

Tax Deferred: 100% bonds
40% TBM, 30% International Bond Fund,
30% Corporate Intermediate Bond Fund

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by UpperNwGuy » Sun Feb 10, 2019 2:56 pm

In tax-advantaged, Vanguard Total Bond. In taxable, Vanguard Intermediate-Term Tax-Exempt. Keep it simple.

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by abuss368 » Sun Feb 10, 2019 4:12 pm

Dandy wrote:
Sat Feb 09, 2019 9:48 pm
Total Bond Index includes a large allocation to Treasury bonds.
I know it is about 43% last time I looked. All the better. :happy
Agreed. I believe if agency bonds and GNMA are included Total Bond is 60%+.
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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by welderwannabe » Sun Feb 10, 2019 4:25 pm

abuss368 wrote:
Sat Feb 09, 2019 4:33 pm
Dandy wrote:
Sat Feb 09, 2019 12:41 pm
If 500k is in tax sheltered account (e.g. TIRA) I'd opt for 1/2 in Intermediate Treasuries and 1/2 in Total Bond Fund. I like Treasury exposure for flight to quality times i.e. 2008 when everything seemed to be failing.
Total Bond Index includes a large allocation to Treasury bonds.
Exactly. Since TBM already contains around 45% treasuries you would end up at 73% treasuries with the above strategy. This is ignoring the GNMAs it also includes. Might as well just go 100% and drop down to just the intermediate treasury fund.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

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Re: Which fixed income ? Total Bond, Treasury, Inflation Protected

Post by LiveSimple » Sun Feb 10, 2019 5:07 pm

IPS, says, when the portfolio, reaches $X, move $Y in fixed income and use of the the following for the fixed income.
Seeing all the responses, tend to think that these funds are well enough.
Just looking back, should have had some fixed income for say $10K, for the learning purpose, on how it behaves so will know how to act.

No need for TIPS / Treasury.
Vanguard Intermediate-Term Treasury Fund Investor Shares (VFITX)
Vanguard Inflation-Protected Securities Fund Investor Shares (VIPSX)


Keep the IPS the same, with these funds and pick one or two in some ratio or 50% / 50%
Vanguard Intermediate-Term Bond Index Fund Admiral Shares (VBILX)
(the fund invests about 50% of assets in corporate bonds and 50% in U.S. government bonds )
Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX)
(the fund invests about 30% in corporate bonds and 70% in U.S. government bonds of all maturities (short-, intermediate-, and long-term issues))

Appreciate all the responses, in helping understand the fixed income.

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