how would you invest money in fixed income now?
how would you invest money in fixed income now?
I want to sit my money somewhere for a year for a fixed income. What would you invest in?
Thanks
Thanks
Re: how would you invest money in fixed income now?
Tbills and ibonds
Re: how would you invest money in fixed income now?
As the poster above said, Treasuries and I-Bonds are attractive right now.
Treasuries or CDs are paying a little under 3% for 1-year maturities now.
I-Bonds are a little more complicated, but are currently paying 9.62% for the first 6 months, then the rate will reset based on inflation for the next 6 months (and every 6 months thereafter). Redeeming after 1 year will incur a 3-month interest penalty, but even if you don't count anything for the second 6 months, you'd still earn 4.81% for the year. They are limited to $10K per person per year though. I like them more for longer-term holding (with the possibility to liquidate early in an emergency).
Treasuries or CDs are paying a little under 3% for 1-year maturities now.
I-Bonds are a little more complicated, but are currently paying 9.62% for the first 6 months, then the rate will reset based on inflation for the next 6 months (and every 6 months thereafter). Redeeming after 1 year will incur a 3-month interest penalty, but even if you don't count anything for the second 6 months, you'd still earn 4.81% for the year. They are limited to $10K per person per year though. I like them more for longer-term holding (with the possibility to liquidate early in an emergency).
Re: how would you invest money in fixed income now?
Last week I bought a 1 year Treasury at 2.9. I also bought a 3 yr. CD at 3.1. I'd park 1 yrs worth of fixed income in a t bill.
Re: how would you invest money in fixed income now?
Are there Vanguard mutual funds for those?
Re: how would you invest money in fixed income now?
muni is attractive to me now
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Re: how would you invest money in fixed income now?
It would help to give an approximate amount of the money you are investing.
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Re: how would you invest money in fixed income now?
Stay the course, sit back, and wait for my now-higher yielding bonds to pay off. I moved my short term savings from HY savings to VUSB.
Re: how would you invest money in fixed income now?
Make sure you pick funds that are duration matched to your investment timeframe! Intermediate and Long term bonds are *not* the place to put money right now that you expect to reallocate within a year. We may very well see more bond fund valuations drop as the Fed continues to raise rates.
1 year Treasury or IBonds are good.
1 year Treasury or IBonds are good.
Re: how would you invest money in fixed income now?
The key here is "for a year". If you are going to spend the money in a year, you don't want it in a long-term bond fund that could gain or lose more than 10% if interest rates fall or rise. A one-year CD would be appropriate, or in a high tax bracket, something like Vanguard Short-Term Tax-Exempt with a one-year duration.
If you are going to spend the money over several years, beginning one year from now, then your time horizon is a bit longer than one year, so you might use a short-term bond fund.
Re: how would you invest money in fixed income now?
Thank you! Do you guys buy T-Bills through regular brokers (ie Etrade,..)? Or is there a better way? There's no limit in buying T-bills, unlike i-bonds right?
For the penalty of
How's the redeeming process? Any gotcha's?
For the penalty of
Wow! penalty in redeeming! I thought they would happily keep your money after the maturity date.Atgard wrote: ↑Wed Jun 22, 2022 7:44 pm As the poster above said, Treasuries and I-Bonds are attractive right now.
Treasuries or CDs are paying a little under 3% for 1-year maturities now.
I-Bonds are a little more complicated, but are currently paying 9.62% for the first 6 months, then the rate will reset based on inflation for the next 6 months (and every 6 months thereafter). Redeeming after 1 year will incur a 3-month interest penalty, but even if you don't count anything for the second 6 months, you'd still earn 4.81% for the year. They are limited to $10K per person per year though. I like them more for longer-term holding (with the possibility to liquidate early in an emergency).
How's the redeeming process? Any gotcha's?
Re: how would you invest money in fixed income now?
Regular brokers are fine.luk wrote: ↑Thu Jun 23, 2022 10:26 pm Thank you! Do you guys buy T-Bills through regular brokers (ie Etrade,..)? Or is there a better way? There's no limit in buying T-bills, unlike i-bonds right?
For the penalty ofWow! penalty in redeeming! I thought they would happily keep your money after the maturity date.Atgard wrote: ↑Wed Jun 22, 2022 7:44 pm As the poster above said, Treasuries and I-Bonds are attractive right now.
Treasuries or CDs are paying a little under 3% for 1-year maturities now.
I-Bonds are a little more complicated, but are currently paying 9.62% for the first 6 months, then the rate will reset based on inflation for the next 6 months (and every 6 months thereafter). Redeeming after 1 year will incur a 3-month interest penalty, but even if you don't count anything for the second 6 months, you'd still earn 4.81% for the year. They are limited to $10K per person per year though. I like them more for longer-term holding (with the possibility to liquidate early in an emergency).
How's the redeeming process? Any gotcha's?
I Bonds are 30 year bonds that you can redeem with a 3 month penalty after 12 months up to 5 years. After 30 years, they will redeem automatically.
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Re: how would you invest money in fixed income now?
My first dollars would go into Ibonds, up to the maximum amount. The rest of the dollars is a crap shoot.
Re: how would you invest money in fixed income now?
1-yr T bills and 2 year T bonds.
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Re: how would you invest money in fixed income now?
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Last edited by AerialWombat on Thu Aug 25, 2022 6:55 pm, edited 1 time in total.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
Re: how would you invest money in fixed income now?
https://www.wsj.com/market-data/bonds/tips
In addition to ibonds, I may even consider TIPS a year out from maturity. You would earn approx 2% less than inflation.
In addition to ibonds, I may even consider TIPS a year out from maturity. You would earn approx 2% less than inflation.
Re: how would you invest money in fixed income now?
You can buy treasuries (including t-bills) through most brokers pretty easily, I would assume you could through E-Trade as well. No, there is no limit to buying treasuries.luk wrote: ↑Thu Jun 23, 2022 10:26 pm Thank you! Do you guys buy T-Bills through regular brokers (ie Etrade,..)? Or is there a better way? There's no limit in buying T-bills, unlike i-bonds right?
Wow! penalty in redeeming! I thought they would happily keep your money after the maturity date.Atgard wrote: ↑Wed Jun 22, 2022 7:44 pm As the poster above said, Treasuries and I-Bonds are attractive right now.
Treasuries or CDs are paying a little under 3% for 1-year maturities now.
I-Bonds are a little more complicated, but are currently paying 9.62% for the first 6 months, then the rate will reset based on inflation for the next 6 months (and every 6 months thereafter). Redeeming after 1 year will incur a 3-month interest penalty, but even if you don't count anything for the second 6 months, you'd still earn 4.81% for the year. They are limited to $10K per person per year though. I like them more for longer-term holding (with the possibility to liquidate early in an emergency).
How's the redeeming process? Any gotcha's?
Yes, for I-Bonds you can't redeem before a year, then there is a penalty of the last 3 months' interest if you redeem between 1 and 5 years, no penalty after that (maturity date is 30 years, when they are automatically redeemed with no penalty). Other than the penalty, I don't think there are any "gotchas," but I haven't redeemed any I-Bonds yet.
Re: how would you invest money in fixed income now?
And when they are returned to you at 30 years the deferred tax is due. One should plan for this or, in some cases, consider paying the tax annually. It would depend on the expected tax bracket at 30 years.Atgard wrote: ↑Fri Jun 24, 2022 10:25 pmYou can buy treasuries (including t-bills) through most brokers pretty easily, I would assume you could through E-Trade as well. No, there is no limit to buying treasuries.luk wrote: ↑Thu Jun 23, 2022 10:26 pm Thank you! Do you guys buy T-Bills through regular brokers (ie Etrade,..)? Or is there a better way? There's no limit in buying T-bills, unlike i-bonds right?
Wow! penalty in redeeming! I thought they would happily keep your money after the maturity date.Atgard wrote: ↑Wed Jun 22, 2022 7:44 pm As the poster above said, Treasuries and I-Bonds are attractive right now.
Treasuries or CDs are paying a little under 3% for 1-year maturities now.
I-Bonds are a little more complicated, but are currently paying 9.62% for the first 6 months, then the rate will reset based on inflation for the next 6 months (and every 6 months thereafter). Redeeming after 1 year will incur a 3-month interest penalty, but even if you don't count anything for the second 6 months, you'd still earn 4.81% for the year. They are limited to $10K per person per year though. I like them more for longer-term holding (with the possibility to liquidate early in an emergency).
How's the redeeming process? Any gotcha's?
Yes, for I-Bonds you can't redeem before a year, then there is a penalty of the last 3 months' interest if you redeem between 1 and 5 years, no penalty after that (maturity date is 30 years, when they are automatically redeemed with no penalty). Other than the penalty, I don't think there are any "gotchas," but I haven't redeemed any I-Bonds yet.
Re: how would you invest money in fixed income now?
T-Bills.
No bond funds at this time.
No bond funds at this time.
Real Knowledge Comes Only From Experience
Re: how would you invest money in fixed income now?
Right, I didn't count this as a "gotcha" since it's actually a benefit, but yes be prepared that taxes on I-bond interest are deferred until you redeem them, at which point they are all due.dbr wrote: ↑Sat Jun 25, 2022 8:11 amAnd when they are returned to you at 30 years the deferred tax is due. One should plan for this or, in some cases, consider paying the tax annually. It would depend on the expected tax bracket at 30 years.Atgard wrote: ↑Fri Jun 24, 2022 10:25 pmYou can buy treasuries (including t-bills) through most brokers pretty easily, I would assume you could through E-Trade as well. No, there is no limit to buying treasuries.luk wrote: ↑Thu Jun 23, 2022 10:26 pm Thank you! Do you guys buy T-Bills through regular brokers (ie Etrade,..)? Or is there a better way? There's no limit in buying T-bills, unlike i-bonds right?
Wow! penalty in redeeming! I thought they would happily keep your money after the maturity date.Atgard wrote: ↑Wed Jun 22, 2022 7:44 pm As the poster above said, Treasuries and I-Bonds are attractive right now.
Treasuries or CDs are paying a little under 3% for 1-year maturities now.
I-Bonds are a little more complicated, but are currently paying 9.62% for the first 6 months, then the rate will reset based on inflation for the next 6 months (and every 6 months thereafter). Redeeming after 1 year will incur a 3-month interest penalty, but even if you don't count anything for the second 6 months, you'd still earn 4.81% for the year. They are limited to $10K per person per year though. I like them more for longer-term holding (with the possibility to liquidate early in an emergency).
How's the redeeming process? Any gotcha's?
Yes, for I-Bonds you can't redeem before a year, then there is a penalty of the last 3 months' interest if you redeem between 1 and 5 years, no penalty after that (maturity date is 30 years, when they are automatically redeemed with no penalty). Other than the penalty, I don't think there are any "gotchas," but I haven't redeemed any I-Bonds yet.
Re: how would you invest money in fixed income now?
OTOH, intermediate-term bond funds such as Vanguard Total US Bond Market Index fund have lost about 11% YTD. It would be unprecedented wouldn't it if the fund lost another 10%? I think the probability that this fund goes up 5% in the next year is much higher than if it is down 5% from here a year from now.grabiner wrote: ↑Thu Jun 23, 2022 2:06 pmThe key here is "for a year". If you are going to spend the money in a year, you don't want it in a long-term bond fund that could gain or lose more than 10% if interest rates fall or rise. A one-year CD would be appropriate, or in a high tax bracket, something like Vanguard Short-Term Tax-Exempt with a one-year duration. ...
Re: how would you invest money in fixed income now?
Curious why you chose VUSB instead of t-Billsaristotelian wrote: ↑Thu Jun 23, 2022 6:00 am Stay the course, sit back, and wait for my now-higher yielding bonds to pay off. I moved my short term savings from HY savings to VUSB.
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Re: how would you invest money in fixed income now?
I thought about T Bills. VUSB was just personal preference.David_w wrote: ↑Sat Jun 25, 2022 8:29 pmCurious why you chose VUSB instead of t-Billsaristotelian wrote: ↑Thu Jun 23, 2022 6:00 am Stay the course, sit back, and wait for my now-higher yielding bonds to pay off. I moved my short term savings from HY savings to VUSB.
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Re: how would you invest money in fixed income now?
An intermediate-term bond fund.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
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Re: how would you invest money in fixed income now?
If you want an 80% approach and want a to be less hands-on with more automation, I would suggest a target date fund. Your portfolio is managed for you by automating diversification of your allocations across different stocks and bonds. The allocations are determined by your target retirement date (more aggressive allocations are placed in stocks early transitioning to a more safe and conservative approach in bonds as you get closer to retirement).
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Re: how would you invest money in fixed income now?
mikeanderson20, welcome to the forum .mikeanderson20 wrote: ↑Mon Jun 27, 2022 1:28 pm If you want an 80% approach and want a to be less hands-on with more automation, I would suggest a target date fund. Your portfolio is managed for you by automating diversification of your allocations across different stocks and bonds. The allocations are determined by your target retirement date (more aggressive allocations are placed in stocks early transitioning to a more safe and conservative approach in bonds as you get closer to retirement).
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: how would you invest money in fixed income now?
1 year holding period.
Do you want to ensure you get all of your initial investment (principal) back? Then CDs or individual treasuries. (Duration declining to zero).
If you are ok with getting approximately your initial investment back, more or less, then very short term bond fund (constant duration).
(Treasuries or CDs seem to me the obvious choice, unless you would like to wager that short term interest rates will fall, or at least remain the same over the coming year).
l2r
Do you want to ensure you get all of your initial investment (principal) back? Then CDs or individual treasuries. (Duration declining to zero).
If you are ok with getting approximately your initial investment back, more or less, then very short term bond fund (constant duration).
(Treasuries or CDs seem to me the obvious choice, unless you would like to wager that short term interest rates will fall, or at least remain the same over the coming year).
l2r
Re: how would you invest money in fixed income now?
I concur...seems like 10-year treasury at 3.2% yield is a buying opportunity...maybe with yields above 3%, treasuries will act as ballast should we have a recession that tanks stocks. We'll see...livesoft wrote: ↑Sat Jun 25, 2022 3:16 pmOTOH, intermediate-term bond funds such as Vanguard Total US Bond Market Index fund have lost about 11% YTD. It would be unprecedented wouldn't it if the fund lost another 10%? I think the probability that this fund goes up 5% in the next year is much higher than if it is down 5% from here a year from now.grabiner wrote: ↑Thu Jun 23, 2022 2:06 pmThe key here is "for a year". If you are going to spend the money in a year, you don't want it in a long-term bond fund that could gain or lose more than 10% if interest rates fall or rise. A one-year CD would be appropriate, or in a high tax bracket, something like Vanguard Short-Term Tax-Exempt with a one-year duration. ...