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Bonds have gained so much premium, I don't know it is a good time to buy bonds. But again, inflation is nowhere insight. I would suggest muni bond funds for tax advantage and less risk than corportate bonds.
Message edited by: internetle on 2009-09-30 06:38:37 CDT
Any suggestions on where/how to research and educate oneself on muni bonds? I've looked at some, but I know so little about them, I'm afraid to buy any.... you know the old adage "don't invest in something you don't understand". That's me and muni bonds.
internetle said:Bonds have gained so much premium, I don't know it is a good time to buy bonds. But again, inflation is nowhere insight. I would suggest muni bond funds for tax advantage and less risk than corportate bonds.
agree that bonds have risen much more than usual over the past year. since interest rates are so low, they can only go up (course hard to say just when). so this may be the time to sell bonds and wait for interest rates to go up before buying, since prices of exiting bonds will then go down. sell high now, buy low later.
Ideally we could have one sticky thread linked to the CD thread, this thread, and the APY liquid account thread. One stop shopping for the best interest rates.
erinm said:Any suggestions on where/how to research and educate oneself on muni bonds? I've looked at some, but I know so little about them, I'm afraid to buy any.... you know the old adage "don't invest in something you don't understand". That's me and muni bonds.
There's a few things you can read into for some generalizations about a given bond fund: Duration / Interest Rate Risk Credit Quality Yield To Maturity / Coupon / Yield % What it is invested in
frugalpete said:internetle said:Bonds have gained so much premium, I don't know it is a good time to buy bonds. But again, inflation is nowhere insight. I would suggest muni bond funds for tax advantage and less risk than corportate bonds.
agree that bonds have risen much more than usual over the past year. since interest rates are so low, they can only go up (course hard to say just when). so this may be the time to sell bonds and wait for interest rates to go up before buying, since prices of exiting bonds will then go down. sell high now, buy low later.
what do you do with the money until bond price come back down? I would hold the bond fund (to earn interest) until it falls past your risk loterance (for example 5% in premium). Saving and money market sux now.
internetle said:frugalpete said:internetle said:Bonds have gained so much premium, I don't know it is a good time to buy bonds. But again, inflation is nowhere insight. I would suggest muni bond funds for tax advantage and less risk than corportate bonds.
agree that bonds have risen much more than usual over the past year. since interest rates are so low, they can only go up (course hard to say just when). so this may be the time to sell bonds and wait for interest rates to go up before buying, since prices of exiting bonds will then go down. sell high now, buy low later.
what do you do with the money until bond price come back down? I would hold the bond fund (to earn interest) until it falls past your risk loterance (for example 5% in premium). Saving and money market sux now.
you can time to your risk tolerance as you say. i'm selling in increments so not all at once. online savings and CDs around 2% and high yield checking 4-5%%. interesting sign that Ally and a couple of others have slightly increased interest rates by 0.05% recently.
VBMFX (Vanguard Total Bond Market Index): Unfortunately, Charles Schwab imposes a $49.95 transaction fee on this fund. Otherwise, looks like a good fund. Annual fee 0.22%. Morningstar Ratings: Category: Intermediate-Term Bond Overall Rating 4 3-Year 5-Year 10-Year 4 4 4 Historical Return Historical Risk: Above Average Return; Below Average Risk.
VIPSX (Vanguard Inflation-Protected Secs): again, Charles Schwab imposes a $49.95 transaction fee on this fund. In 2008, total return was -2.85%. Looks like a pretty volatile fund to me. Annual fee 0.25%. Morningstar Ratings: Category: Inflation-Protected Bond Overall Rating 4 3-Year 5-Year 10-Year 3 4 N/A Historical Return Historical Risk: Above Average Return; Average Risk
JASBX (Janus Short-Term Bond fund). Charles Schwab no-load/no-fee fund (good!). Otherwise, looks like a good fund. Annual fee 0.65% (a little bit too high...). Morningstar Ratings: Category: Short-Term Bond Overall Rating 5 3-Year 5-Year 10-Year 5 5 4 Historical Return Historical Risk: High Return; Below Average Risk
I think the choice of fund should be driven by your risk-tolerance and investment horizon.
Many on this forum (me too) consider bond funds as a (imperfect) replacement to rewards checking accounts, e.g. for stashing BT money for 9-12 months. This is a very short (in the bonds world) horizon. The "intermediate-term bonds" are sensitive to the interest rates changes.
Said that... let me throw in a few more tickers (selection criteria: "no-load/no-fee" at Schwab; low maintenance fee).
Intermediate-term: DBIRX (DREYFUS BOND MKT INDEX) FBIDX (FIDELITY US BD INDEX) SAMFX (RIDGEWORTH TOTAL RETURN) SAMIX (RIDGEWORTH INTERMEDIATE)
Short-term: JASBX (JANUS SHORT TERM BD FD) (already mentioned by craig10x) PLDDX (PIMCO LOW DURATION FUND)
JASBX (Vanguard Total Bond Market Index). Charles Schwab no-load/no-fee fund (good!). Otherwise, looks like a good fund. Annual fee 0.65% (a little bit too high...). Morningstar Ratings: Category: Short-Term Bond Overall Rating 5 3-Year 5-Year 10-Year 5 5 4 Historical Return Historical Risk: High Return; Below Average Risk
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