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Old 09-03-2018, 11:51 AM
 
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It seems to me Bond funds (or bonds) only makes sense if it's a large amount, say 6+ figures.
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Old 09-03-2018, 11:54 AM
 
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that make no sense . if you buy cd's with what you have in dollars , bond funds are no different . as long as you planned on holding the cd to maturity a high quality bond fund held for it's duration is no different .

Last edited by mathjak107; 09-03-2018 at 12:04 PM..
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Old 09-03-2018, 12:03 PM
 
30,856 posts, read 36,768,136 times
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Quote:
Originally Posted by snowmountains View Post
It seems to me Bond funds (or bonds) only makes sense if it's a large amount, say 6+ figures.
Huh? I don't get the logic in that.

I do happen to have 6 figures invested in bond funds, but I certainly held them long before that. Bonds are good for helping you keep your nerve when stocks get hammered. They won't eliminate losses, but will typically cushion the blow. That's a good reason to hold some bonds, regardless of your portfolio size.

Over the last 20 years, an indexed 60% Stock / 40% bond portfolio returned 6.5% annually. The total U.S. stock market returned 7.21% annually, but with a lot more volatility. Granted, this fairly narrow difference in returns between these two differently allocated portfolios isn't likely to repeat over the next 20 years, as the total U.S. stock market is likely to beat a 60/40 portfolio by at least a percentage point, maybe two, over the long run; but it shows you why it can be smart to have a portion of your portfolio allocated to bonds.

Vanguard Balanced Index Adm (VBIAX) MUTUAL FUND RESEARCH

Vanguard 500 Index Admiral (VFIAX) MUTUAL FUND RESEARCH

Last edited by mysticaltyger; 09-03-2018 at 12:12 PM..
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Old 09-03-2018, 09:40 PM
BMI
 
Location: Ontario
7,455 posts, read 7,217,810 times
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Quote:
Originally Posted by snowmountains View Post
I have owned bond funds from time to time, but have made little money, if not lost (did lose a lot in a long duration fund that was bought at exactly the wrong time). I simply don't understand them and don't plan to spend too much time studying them. Are there others here who don't buy bonds or bond funds at all and have done well?
Bonds are still a mystery for me. I owned a bunch because all the experts say you need to
diversify and should have bonds in your portfolio. I didn’t make a cent ....so I sold them all,
well except I still have some “balanced” funds that have a mix of stocks and bonds.
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Old 09-04-2018, 11:33 PM
 
Location: Silicon Valley
7,611 posts, read 4,515,404 times
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I've gone to the ordering page. I've looked at buying bonds, but I'm always hesitant. There's definitely a bid/ask difference to be worried about, and there's few trades per day. Plus there's minimums...so is it per transaction that fees are assessed as an order may not fill?



Of course, then there's the bond attributes itself...and does it auto-rollover or do I get my capital returned automatically at the end? If I pay a premium for a high interest rate, do I risk a loss if they call a bond in? In practice is that done?



For the longest time, I just paid more mortgage in lieu of bonds when I didn't like stocks....given the holding timeframe, that worked fine, albeit in after-tax dollars, but now that interest rates have risen, holding bonds and being able to pull that capital back out easily is looking more sensible. It would be nice to know what this stuff means.



Details

CUSIP 053015AD5 ISIN US053015AD56 SEDOL -- Pay Frequency SEMI-ANNUALLY Coupon 2.250 Maturity Date 09/15/2020 Moody's Rating AA3 S&P Rating AA Issuer Events YES Survivor Option N/A Bond Type Corporate Sector BUSINESS MACHINES Interest Accrual Date 09/15/2015 Redemptive Features

Call Protection View Schedule NO Continuously Callable YES Called Bonds NO Make Whole Call YES Sinking Fund Protection YES Sink Defeased NO Extraordinary Redemption NO Special Mandatory Redemption NO Special Optional Redemption NO Put Option NO Pre-Refunded -- Pre-Refunded Price N/A Escrow End Date -- Security Features

Minimum Investment Qty 9 Incremental Investment Qty 1 Marginable YES Original Issue Discount [OID] N/A Current Factor -- Current Factor Effective Date -- Previous Factor -- Previous Factor Effective Date -- 2nd Previous Factor -- 2nd Previous Factor Effective Date -- Tranche Type -- Delivery BOOK ENTRY Listed NO Symbol -- Exchange OTC TRACE Eligibility YES Issuer Information

Issue Date 09/08/2015 Dated Date 09/15/2015 First Coupon Date 03/15/2016 Next Coupon 09/15/2018 Last Coupon 03/15/2020 Workout Date 09/15/2020 Original Issue Amount $1,000,000,000.00 Issue Price -- Coupon Information

Coupon Type FIXED Current Rate Effective Date 09/08/2015 Day Count Basis 30/360 Trading Flat NO Reset Frequency TERM MODE Benchmark Reference -- Benchmark Formula -- Next Reset Date -- Next Reset Rate -- Minimum Rate -- Maximum Rate -- Convertible Information

Convertible NO Share Amount -- CUSIP (of equity security) -- Date (Convertible Information) -- Foreign Information

Global Indicator NO Foreign NO International NO Primary Country -- Domicile Country --


[CENTER] Depth of Book [/CENTER]
053015AD5

AUTOMATIC DATA PROCESSING INC NOTE 2.25000% 09/15/2020CALL MAKE WHOLE Bid Ask Price 98.846 Price 99.016 Qty(min) 1,000(10) Qty(min) 200(9) Yield / Type 2.840 / W Yield / Type 2.753 / W
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Old 09-05-2018, 04:18 PM
 
Location: Victory Mansions, Airstrip One
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^^
The only type of bond I have purchased as an individual security is a Treasury, and I can't see that ever changing in the future. Building and maintaining a corporate bond portfolio is too much effort, and there are plenty of funds with very low expense ratios today.

To the original post. If you want to learn about bonds I'd suggest buying a bond calculator or finding one you like online. Start plugging in numbers so you can see for yourself how prices and interest rates interact.
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Old 09-11-2018, 03:51 AM
 
30,856 posts, read 36,768,136 times
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Quote:
Originally Posted by BMI View Post
Bonds are still a mystery for me. I owned a bunch because all the experts say you need to
diversify and should have bonds in your portfolio. I didn’t make a cent ....so I sold them all,
well except I still have some “balanced” funds that have a mix of stocks and bonds.
If you have a balanced fund, you probably don't need to own separate bonds or bond fund. People don't seem to understand that balanced funds are supposed to be one stop shopping--or very close to it.
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Old 09-11-2018, 03:55 AM
 
105,802 posts, read 107,776,949 times
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i know our newsletter stopped using balanced funds years ago . the ability to select a proper bond fund when rates are rising can be very important .

having separate bond and stock funds adds a lot more flexibility when bonds are not in a bull market .

many balanced funds are limited to the bond types they can buy or percentages , like fidelity balanced vs puritan as an example .
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Old 09-11-2018, 04:37 AM
 
30,856 posts, read 36,768,136 times
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Quote:
Originally Posted by mathjak107 View Post
i know our newsletter stopped using balanced funds years ago . the ability to select a proper bond fund when rates are rising can be very important .

having separate bond and stock funds adds a lot more flexibility when bonds are not in a bull market .

many balanced funds are limited to the bond types they can buy or percentages , like fidelity balanced vs puritan as an example .
That's true for you because you understand this stuff. Most people's eyes glaze over.

I don't think percentage limits are always a bad thing. Funds like Franklin Income and American Funds Income Fund of America tend to binge on junk bonds, which often means they get hit harder than you'd expect when stocks are down.
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Old 09-11-2018, 04:51 AM
 
105,802 posts, read 107,776,949 times
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when it comes to bonds there is no one size fits all anymore . a nice percentage of bond money in high yield when the economy is strong like now is fine . but later on it is like owning stocks when the cycle reverses .

corporate bonds can be mixed . they behave like stocks yet in times of rising rates do awful .

treasuries , especially long term treasuries can take a beating when rates rise but they can soar in the negative side of the cycle .

right now i like floating rate bond funds . but in a weak economy they are not the place to be .

a strong dollar is hurting international bonds .

so the 40 years of just buy a total bond fund are pretty much gone at this stage . no one ever said investing is going to be easy and skill-less except for bogle . we were led to believe that because bonds were so easy to make money in for almost 45 years you can sit forever with voo and agg ..

Last edited by mathjak107; 09-11-2018 at 05:18 AM..
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