dealing with the low interest rates (taxes, investments, places, return)

[mathjak107]

WILLIAM LARKIN from cabot magmt had a very nice fixed income portfolio he came up with for those that dont want to invest in stocks.

he came up with a nice bond fund mix that covers all the different areas of fixed income...

he used the lowest cost funds he could find that always stayed focused in the area they invest in and except for the fidelity fund all are ETF'S which trade like stocks and can be bought by any broker.

25% AGG BOND INDEX, tracks a broadline of us bonds
25% LQD tracks an index of the most liquid ,quality long term bonds
10% FIDELITY FLOATING RATE HIGH INCOME FFRHX invests in short term floating rate bank loans
10% MBB invests in mortgage back securities
7.5% WIP invests in an index of non us inflation protect securities
7.5% PCY INVESTS IN EMERGING MARKET BONDS
7.5% TIP tracks an index of us inflation proof bonds
7.5% HYG HI YIELD JUNK BONDS


im tempted to try this myself, it looks very well balanced,,,,

again, do your own research, some of these can be quite volatile

[thrillobyte]

mathjak, are you sure you're not a salesperson? Your knowledge on this stuff is breathtaking for a mere lay person. From all your posts I'd swear you wrote the book on investing. Anyway, my simple rule for retirees: stay away from anything that's not gov't insured (FDIC) if you can't afford to lose the money. The unemployment lines are bursting with seniors who invested with Madoff because interest rates on CD's were low, they wanted 20-30% returns, and ol' Bernie promised them 20-30% returns. Greed can kill you--financially----AND physically!

[miokie]

Originally Posted by mathjak107

im tempted to try this myself, it looks very well balanced,,,,

again, do your own research, some of these can be quite volatile

Your last point is worth repeating.

"Balanced" in no way equates to safety or security. Further, any investment mix described as "quite volatile" is almost guaranteed not to offer safety or security of principle.

I'm far from impressed by the mix suggested in your post. You stated that it "covers all the different areas of fixed income" but provided no evidence or argument to support that statement.

[mathjak107]

huh ? you lost me.... what segment of the bond market is missing? as far as i can tell larkin pretty much has most areas covered except muni's.... what else would you like to see ?

want evidence of what?

want to see the fund holdings look up each etf he recommended , you can check holdings and performance but im not sure what your asking..

and yes volatile does not mean safe, this bond mix in no way is conservative but the overall swings arent as wild as some of the components ..., its for those that would rather own fixed income for potential gains instead of stock. i have seen a few of those funds swing 2% in a day up and down..... the overall swings are not as bad as stocks , some like the mortgage back securities dont swing much at all and AGG is so diversified it can temper things down overall but the international and hi yield segments can give you quite a ride if you just watch those by themselves... if you want diversification in the bond market arena i havent seen better coverage of the different areas. if you have then clue us all in.
its not always about the individual components broken out but rather how they interact and temper each other

harry browns permanent portfolio idea which uses gold, long term treasuries, cash and total market or aggressive mutual funds consists of 3 out of the 4 parts which are the most volatile and risky investments you can find,,,,,, but because of how they interact 20 years ago i abandoned the idea after almost dying of boredem watching it during a bull market...... as much as one part plunged another part would soar.... it made money almost every year from the 70's ... its one of the most conservative portfolios thats diversified that you can put together as far as covering every economic disaster or event but you wouldnt want to own any one of those on its own without the other parts if you were conservative ....... in fact each of those 4 segments alone i wouldnt even call investing but id call it speculating... you are hoping a single economic condition turns out your way... but as a whole i would reccomend the mix to my grandmother for safety and never beinging devasted by some economic disaster be it another depression , soaring inflation or prosperity and a bull market...

[mathjak107]

Originally Posted by thrillobyte

mathjak, are you sure you're not a salesperson? Your knowledge on this stuff is breathtaking for a mere lay person. From all your posts I'd swear you wrote the book on investing. Anyway, my simple rule for retirees: stay away from anything that's not gov't insured (FDIC) if you can't afford to lose the money. The unemployment lines are bursting with seniors who invested with Madoff because interest rates on CD's were low, they wanted 20-30% returns, and ol' Bernie promised them 20-30% returns. Greed can kill you--financially----AND physically!

awe shucks...... actually i am a salesman but not of financial products...

dont give me to much credit im not that smart, i just just frequent a few forums with some very smart people and i learn by evaluating what they say for myself. i try not believe my own bull crap which is all the bits and pieces i heard or was led to believe and thought it was all true until someone with more knowledge said your soooo off base and showed me why... a perfect example is when someone looks at the closing prices of their bond fund and sees an 8% yield and thinks that means 8% interest and thats what they are getting....... they dont realize that rate only applys to people buying in at that exact share price and has nothing to do with what your getting and your average share price you paid. the fund pays a dividend and that dividend coupled with your share price, not the share price of today that determines the yield you are getting ......how many never even realized this?????????????? its countless.... .. i have a few favorite authors of some books , the likes of harry brown ,ray lucia and bernstein and its their ideas and thought your reading..


one of the greatest collection of smart people on the subject of money can be found on the early retirement forum. ... i credit this forum with teaching me more than any other source ...its made up of thousands of successful ,savy investors and laymen who have been able to or are working towards being financially independent and retiring early.. they collectively have great ideas, fresh new thinking and different views .. they give me lots of things to research on my own and this is what i formulate and bring elsewhere to bring fire to the natiives ha ha ha

http://www.early-retirement.org/forums/index.php

but anyway im glad you get something out of the posts, thats what these forums are all about... i steal ideas from someone and pass em on to you ha ha ha.... i bet have one of the worlds biggest collections of stolen ideas right in my head

[Boompa]

I am retired but still have more income than expenses every month. I still have some CDs at 5.3% through next year and a Government TSP that managed 3.2% last year. Other than that it's disaster. My house is holding it's own but a bunch of CDs at 4.4% matured and I'd be lucky to get 1.8%.
As long as the FED keeps interest at functional 0% CDs are becoming worthless. I'd buy another house but Real Estates have become less honest than Politicians

[mathjak107]

actually its investors round the world keeping them there.... the fed only controls the feds fund rate which is the rates banks loan each other overnight. investors are supposed to take their cues from that and listen to papa fed....... but thats not always what happens

the cd rates usually look at other competitive rates like t-bills, notes and bonds and those are set by investors every minute of every trading day by world events and future perceptions....

many times investors go against the fed.... we had a period in the 90's where the fed was trying to signal they wanted short term rates higher and investors kept bidding them down....


we just went thru a period where the fed was raising short term rates on the fed funds rate and wanted long term rates to rise too but investors saw things differently and we ended up with an inverted yield curve where short term rates actually paid more then long term...

[MadManofBethesda]

Originally Posted by Boompa

I am retired but still have more income than expenses every month. I still have some CDs at 5.3% through next year and a Government TSP that managed 3.2% last year. Other than that it's disaster. My house is holding it's own but a bunch of CDs at 4.4% matured and I'd be lucky to get 1.8%.
As long as the FED keeps interest at functional 0% CDs are becoming worthless. I'd buy another house but Real Estates have become less honest than Politicians

Well, let's see.

You don't like the FED.
You don't like politicians.
And, you don't like Real Estates (sic).

How do you feel about corporate entities?

You can switch your TSP from the G Fund to the F Fund and invest in corporate bonds instead of government securities.

Over the last 12 months (Aug - July), the F Fund returned 7.87%, as opposed to the G Fund's 3.19%.

Of course, historical returns don't guarantee future etc. etc.

But this way, you won't have to worry about the FED. (Or have it as a convenient bogeyman.)

[MadManofBethesda]

Originally Posted by mathjak107

one of the greatest collection of smart people on the subject of money can be found on the early retirement forum. ... i credit this forum with teaching me more than any other source ...its made up of thousands of successful ,savy investors and laymen who have been able to or are working towards being financially independent and retiring early.. they collectively have great ideas, fresh new thinking and different views .. they give me lots of things to research on my own and this is what i formulate and bring elsewhere to bring fire to the natiives ha ha ha

Thanks for posting that link (although I think that it may eventually be removed as a TOS violation). I've already perused several threads over there this morning, although I'm not to the point of passing judgment on their collective intellect yet.

[Missourimomo]

I'm not that impressed with them folks overthere... but I is with these here folks...
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