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I think any money you might need in the next 2 years should be put aside in cash.
Any money you wouldn't need for 3-5 years could go into a bond fund such as:
Dodge & Cox Income
Vanguard Intermediate Term Bond Index
Thompson Bond
Vanguard GNMA (The most this one has ever lost in a calendar year is 2.33% in 2013...It's been around since 1980 and has had only 2 losing years since that time).
There are also bond ETFs but I just don't follow ETFs as much as mutual funds...but I'm sure you can find either a short or intermediate term bond ETF to invest in. I wouldn't invest in long term bonds, though...too risky if interest rates go up.
For anything longer than 5 years, I like:
Vanguard Wellesley Income (60% investment grade bonds & 40% stocks).
If you really think that you won't need any (or some portion) of the money for more than 5 years, you might want to go with Vanguard Wellington, which is 35-40% bonds and 60-65% stocks.
Also, if you like Fidelity, both Fidelity Puritan and Fidelity Balanced are good funds. They are typically 65% stocks & 35% bonds...although these funds are a bit riskier because they typically pick more aggressive stocks than Vanguard Wellington does.
Thank you, I will definitely look into these. I believe when I stick to the Fidelity funds, there are no fees. At least, that's been my experience with the ETFs. I also hear about Vanguard a LOT. These investment sites are pretty overwhelming due to the volume of choices, it's sometimes hard to know where to even start.
Thank you, I will definitely look into these. I believe when I stick to the Fidelity funds, there are no fees. At least, that's been my experience with the ETFs. I also hear about Vanguard a LOT. These investment sites are pretty overwhelming due to the volume of choices, it's sometimes hard to know where to even start.
Yes, it would make sense that if you stick with Fidelity there would be no transaction fees with their funds.
Fidelity specific choices:
2 years or more:
--Fidelity Short Term Bond
--Fidelity Limited Term Bond
--Fidelity GNMA instead of Vanguard GNMA. Fidelity's isn't as good because of the higher expense ratio but still a solid choice.
3 Years or more:
--Fidelity Total Bond (This one is more aggressive, can invest a certain % in junk bonds
--Fidelity Investment Grade Bond--This one has lower returns, but is also a bit lower risk. I like the above fund better...but both are OK. Personally, I like Dodge & Cox Income or Vanguard Intermediate Term Bond Index better than both of these...but the Fidelity bond funds are respectable.
5 Years or more
--Fidelity Strategic Income: This is a fairly aggressive bond fund that can invest heavily in junk and foreign bonds, but also has solid returns to back up the risks it takes. Compared to other "multisector" bond funds, it's not too racy. It did lose about 11% in 2008, which was a really bad year for these funds, but that put it in the top third of it's category. 5 & 10 year returns are north of 6%.
I really like this fund. Even though it invests almost exclusively in bonds, it gets returns very close to what balanced funds get with lower risk. The one caveat to that is interest rates are really low all over the world right now, so it probably won't do as well over the next 10 years as it has over the previous 10. But it has a lot of flexibility to maneuver around the bond market. It's a good fund if you're seeking solid mid single digit returns (or more, but only if you're lucky) without stomach churning volatility. Vanguard really doesn't have a comparable offering to this fund.
The other comparable, but more aggressive offering somewhat equivalent to Fidelity Strategic Income fund is Loomis Sayles Bond. The expense ratio of .92% makes me gag, but it keeps clocking great returns year in and year out. Ok, I'll concede that previous statement isn't completely true. It did blow up in 2008 losing 22%, but it came roaring back in 2009 with a gain of 33%. I think this fund is too aggressive for you, but it has top notch returns for the multisector bond category. It can also invest up to 25% in dividend paying and/or preferred stocks, although it usually holds much less than that. I own this fund and love it, but you have to stick with it.
--Fidelity Balanced & Fidelity Puritan....I like both of these, but I admit I like Vanguard Wellington and Vanguard Wellesley Income better. The Vanguard funds have super low expense ratios and are less aggressive and less volatile, yet have the nearly same (Wellesley Income) or better (Wellington) long term returns. But, once again, the Fideltiy funds are solid "runner up" choices and it's not out of the question that they'll do better than the Vanguard funds in the future.
Ok, that's enough choices. I've probably overwhelmed you already!!
Last edited by mysticaltyger; 11-21-2014 at 11:41 PM..
Yes, it would make sense that if you stick with Fidelity there would be no transaction fees with their funds.
Fidelity specific choices:
2 years or more:
--Fidelity Short Term Bond
--Fidelity Limited Term Bond
--Fidelity GNMA instead of Vanguard GNMA. Fidelity's isn't as good because of the higher expense ratio but still a solid choice.
3 Years or more:
--Fidelity Total Bond (This one is more aggressive, can invest a certain % in junk bonds
--Fidelity Investment Grade Bond--This one has lower returns, but is also a bit lower risk. I like the above fund better...but both are OK. Personally, I like Dodge & Cox Income or Vanguard Intermediate Term Bond Index better than both of these...but the Fidelity bond funds are respectable.
5 Years or more
--Fidelity Strategic Income: This is a fairly aggressive bond fund that can invest heavily in junk and foreign bonds, but also has solid returns to back up the risks it takes. Compared to other "multisector" bond funds, it's not too racy. It did lose about 11% in 2008, which was a really bad year for these funds, but that put it in the top third of it's category. 5 & 10 year returns are north of 6%.
I really like this fund. Even though it invests almost exclusively in bonds, it gets returns very close to what balanced funds get with lower risk. The one caveat to that is interest rates are really low all over the world right now, so it probably won't do as well over the next 10 years as it has over the previous 10. But it has a lot of flexibility to maneuver around the bond market. It's a good fund if you're seeking solid mid single digit returns (or more, but only if you're lucky) without stomach churning volatility. Vanguard really doesn't have a comparable offering to this fund.
The other comparable, but more aggressive offering somewhat equivalent to Fidelity Strategic Income fund is Loomis Sayles Bond. The expense ratio of .92% makes me gag, but it keeps clocking great returns year in and year out. Ok, I'll concede that previous statement isn't completely true. It did blow up in 2008 losing 22%, but it came roaring back in 2009 with a gain of 33%. I think this fund is too aggressive for you, but it has top notch returns for the multisector bond category. It can also invest up to 25% in dividend paying and/or preferred stocks, although it usually holds much less than that. I own this fund and love it, but you have to stick with it.
--Fidelity Balanced & Fidelity Puritan....I like both of these, but I admit I like Vanguard Wellington and Vanguard Wellesley Income better. The Vanguard funds have super low expense ratios and are less aggressive and less volatile, yet have the nearly same (Wellesley Income) or better (Wellington) long term returns. But, once again, the Fideltiy funds are solid "runner up" choices and it's not out of the question that they'll do better than the Vanguard funds in the future.
Ok, that's enough choices. I've probably overwhelmed you already!!
Thank you again! Fidelity's transaction fees are only about $8, so I'm not necessarily tied to their funds. When I read the many websites giving investment advice on Mutual Funds, Vanguard comes up all the time, so they may be worth the $8.
Honestly, I don't know how people follow all these different funds. The information overload on each one has me glazed over after about three clicks. And I work in Finance! LOL When it came to buying ETFs, I resorted to just looking at star ratings, reading "stock picks" articles and then crossing my fingers.
With one exception: When the tech stocks crashed back in the early 2000's, I bought Amazon and EBay at about $15 a share. That was one of those "faith in these companies" moves after hearing Suze Orman say "everything is on sale right now". Needless to say, that was a pretty good move. I could use a few more of those moves right now!
Thank you again! Fidelity's transaction fees are only about $8, so I'm not necessarily tied to their funds. When I read the many websites giving investment advice on Mutual Funds, Vanguard comes up all the time, so they may be worth the $8.
Yeah $8 is annoying but may still be worth it if you keep your buying and selling to a minimum.
Quote:
Originally Posted by LoriBee62
Honestly, I don't know how people follow all these different funds. The information overload on each one has me glazed over after about three clicks. And I work in Finance! LOL When it came to buying ETFs, I resorted to just looking at star ratings, reading "stock picks" articles and then crossing my fingers.
Most people don't keep up. I love data and numbers, so it's fun for me. I check out morningstar.com all the time, as well as Yahoo's finance page. I can't believe most other people don't find this sort of thing interesting and enjoyable, but they don't
Quote:
Originally Posted by LoriBee62
With one exception: When the tech stocks crashed back in the early 2000's, I bought Amazon and EBay at about $15 a share. That was one of those "faith in these companies" moves after hearing Suze Orman say "everything is on sale right now". Needless to say, that was a pretty good move. I could use a few more of those moves right now!
Well, I'll admit I am not good at picking individual stocks. I don't have the stomach for it. However, if I was going to start investing in individual stocks, I'd start with solid, boring, dividend payers. Buying Amazon & EBay at those low prices was great...but like I said, I don't have the stomach for individual stocks in the first place, especially those that pay no dividends.
I don't think there are any screaming bargains out there right now...but energy stocks are relatively cheap (not super cheap) right now. Otherwise, there aren't a whole lot of bargains out there right now.
Chevron & Exxon Mobile are two companies that come to mind that are currently undervalued and have above average dividend yields.
Vanguard Index Funds are the answer for 95% of the people out there looking for a passive investment strategy. No, I am not affiliated with Vanguard. Yes, I hold Vanguard funds.
Yes, it would make sense that if you stick with Fidelity there would be no transaction fees with their funds.
Fidelity specific choices:
2 years or more:
--Fidelity Short Term Bond
--Fidelity Limited Term Bond
--Fidelity GNMA instead of Vanguard GNMA. Fidelity's isn't as good because of the higher expense ratio but still a solid choice.
3 Years or more:
--Fidelity Total Bond (This one is more aggressive, can invest a certain % in junk bonds
--Fidelity Investment Grade Bond--This one has lower returns, but is also a bit lower risk. I like the above fund better...but both are OK. Personally, I like Dodge & Cox Income or Vanguard Intermediate Term Bond Index better than both of these...but the Fidelity bond funds are respectable.
5 Years or more
--Fidelity Strategic Income: This is a fairly aggressive bond fund that can invest heavily in junk and foreign bonds, but also has solid returns to back up the risks it takes. Compared to other "multisector" bond funds, it's not too racy. It did lose about 11% in 2008, which was a really bad year for these funds, but that put it in the top third of it's category. 5 & 10 year returns are north of 6%.
I really like this fund. Even though it invests almost exclusively in bonds, it gets returns very close to what balanced funds get with lower risk. The one caveat to that is interest rates are really low all over the world right now, so it probably won't do as well over the next 10 years as it has over the previous 10. But it has a lot of flexibility to maneuver around the bond market. It's a good fund if you're seeking solid mid single digit returns (or more, but only if you're lucky) without stomach churning volatility. Vanguard really doesn't have a comparable offering to this fund.
The other comparable, but more aggressive offering somewhat equivalent to Fidelity Strategic Income fund is Loomis Sayles Bond. The expense ratio of .92% makes me gag, but it keeps clocking great returns year in and year out. Ok, I'll concede that previous statement isn't completely true. It did blow up in 2008 losing 22%, but it came roaring back in 2009 with a gain of 33%. I think this fund is too aggressive for you, but it has top notch returns for the multisector bond category. It can also invest up to 25% in dividend paying and/or preferred stocks, although it usually holds much less than that. I own this fund and love it, but you have to stick with it.
--Fidelity Balanced & Fidelity Puritan....I like both of these, but I admit I like Vanguard Wellington and Vanguard Wellesley Income better. The Vanguard funds have super low expense ratios and are less aggressive and less volatile, yet have the nearly same (Wellesley Income) or better (Wellington) long term returns. But, once again, the Fideltiy funds are solid "runner up" choices and it's not out of the question that they'll do better than the Vanguard funds in the future.
Ok, that's enough choices. I've probably overwhelmed you already!!
my two picks from fidelity for todays scenario for risk vs reward is a mix of total bond and corporate bond. results from 2008-2009 for most bond funds were a fluke from playing around with paper that while it fit the mold for what they could buy it turned out to be toxic.
it really was an isolated incident as even money markets lost money from it so any comparisons to 2008-2009 are pretty isolated and in no way indicate the volatility of most bonde funds today,
my two picks from fidelity for todays scenario for risk vs reward is a mix of total bond and corporate bond. results from 2008-2009 for most bond funds were a fluke from playing around with paper that while it fit the mold for what they could buy it turned out to be toxic.
it really was an isolated incident as even money markets lost money from it so any comparisons to 2008-2009 are pretty isolated and in no way indicate the volatility of most bonde funds today,
Fidelity Total Bond is ok. If we're sticking only with Fidelity and not wanting to get too risky, I agree. But I think a fund like Dodge & Cox Income would be better.
I still think Fidelity Strategic Income is Fidelity's best bond fund...but I tend to like the racier bond funds that have more flexibility to go to all areas of the bond market (with some constraints).
strategic income used to be held in some of the model portfolios but had been dropped because of its high junk bond and emerging market holdings quite a while ago.
75% of assets fall in junk ,emerging market or developing market debt. 25% is in gov't debt.
it has the same ytd return as total bond but carries a much higher risk level for the same return. on the other hand corporate bond is up about 30% more than strategic and carries a fraction of the risk. total bond is 50% gov't bonds and 33% corporate with a smidgeon of other debt areas.
corporate bond is 85% corporate bonds ranging from AAA TO BBB
since 2009 total bond has surpassed dodge and cox income by quite a bit.
Last edited by mathjak107; 11-23-2014 at 04:21 PM..
strategic income used to be held in some of the model portfolios but had been dropped because of its high junk bond and emerging market holdings quite a while ago.
75% of assets fall in junk ,emerging market or developing market debt. 25% is in gov't debt.
it has the same ytd return as total bond but carries a much higher risk level for the same return. on the other hand corporate bond is up about 30% more than strategic and carries a fraction of the risk. total bond is 50% gov't bonds and 33% corporate with a smidgeon of other debt areas.
corporate bond is 85% corporate bonds ranging from AAA TO BBB
since 2009 total bond has surpassed dodge and cox income by quite a bit.
I still like Strategic Income even though it's riskier...but I admit it's not for everyone. It's a less risky version of Loomis Sayles Bond and has a lower expense ratio as well. But, like you say, it all depends on one's pucker factor.
To your last statement, I guess we have a different definition of "quite a bit". Dodge & Cox Income trails Fidelity Total Bond by .14% for the most recent trailing 5 year period but it actually beat the Fidelity fund for the trailing 10 year period. It also held up a lot better than Fidelity Total Bond in 2008. I also like the fact that Dodge & Cox is managed by a team of long tenured managers. Fidelity is a revolving door environment for managers. Seems to be less of a problem for them now than it was in the past, but Dodge & Cox has a proven reputation for stable long term management.
The Fidelity fund is a decent choice, though. And if the Fidelity fund was free vs. paying $8 for the Dodge & Cox fund, I'd probably go with the Fidelity fund.
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I could use a few more of those moves right now!
