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posted: Sep. 29, 2009 @ 8:55p
sonic2000
Senior Member
posted: Sep. 30, 2009 @ 2:47a
If your going to suggest it you should recommend some...
internetle
Senior Member
posted: Sep. 30, 2009 @ 6:35a
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.
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
internetle
Senior Member
posted: Oct. 2, 2009 @ 6:40a
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.
still no suggestions for funds to look into? gotta start somewhere.
airblade
Handsome Member
posted: Oct. 3, 2009 @ 7:04a
VIPSX, but you didnt hear it from me...
craig10x
Senior Member - 5K
posted: Oct. 3, 2009 @ 8:40a
JASBX.....outstanding performance...both on the short term and long term basis....(check it on yahoo finance).....
SaulHudson
Senior Member
posted: Oct. 3, 2009 @ 9:27a
airblade said: VIPSX, but you didnt hear it from me...
I second this, along with VBMFX. End thread.
ymf
Addicted Member
posted: Oct. 3, 2009 @ 1:32p
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
edit: fixed JASBX name.
ymf
Addicted Member
posted: Oct. 3, 2009 @ 1:45p
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)
fwratz1
Ancient Member
posted: Oct. 3, 2009 @ 1:59p
ymf said:
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
Are there bond index funds for specific sectors? Also, can anyone explain the dip these funds experienced at the same time the rest of the stock market dipped? Was it a fear of the companies defaulting on their debt? Otherwise, I imagine bond index funds being quite stable in the short and long run.
ymf said: VBMFX (Vanguard Total Bond Market Index): Unfortunately, Charles Schwab imposes a $49.95 transaction fee on this fund. Otherwise, looks like a good fund.That's odd. Vanguard doesn't charge any fees for it....
craig10x
Senior Member - 5K
posted: Oct. 3, 2009 @ 5:54p
i don't think Vanguard has a "no transaction fee" mutual fund agreement with most of the brokerage houses...it's only fee free when bought directly with Vanguard's brokerage.....
Janus funds are No Transaction Fee with most brokerage houses....and i use Janus Short Term Bond Fund in my Schwab Brokerage with no fees....
airblade
Handsome Member
posted: Oct. 4, 2009 @ 3:48a
Vanguard will not pay the 25 to 40 basis points fee that most brokerages extort from the no load funds to "qualify" as a NTF funds. You end up paying, as the funds add the fee to their expense ratios.
ymf
Addicted Member
posted: Oct. 4, 2009 @ 8:54a
I happened to get Schwab brokerage account as part of Schwab card deal. Schwab is open about how it is paid by the 3rd party mutual funds (you must log in Schwab to view the link):Schwab's Financial and Other Relationships with Mutual Funds... No Transaction Fee Funds Schwab receives various fees for the recordkeeping, shareholder services and other administrative services Schwab provides to OneSource and other No Transaction Fee (NTF) funds, including asset-based fees and one-time set up fees... The amount of the asset-based fee may differ based on when the fund first became available through Schwab’s Mutual Fund OneSource service or other factors. The annual fee can range up to 0.45% of the average fund assets held at Schwab, but most OneSource and NTF funds pay Schwab’s standard OneSource/NTF fee of 0.40%... ...C. An Example. Assume that on January 1 you invest $10,000 in a fund and hold your position through December 31. Based on Schwab’s standard OneSource/NTF fee rate of 0.40% per year, and assuming no change in the fund’s value over the course of the year, the Fund would pay Schwab $40 for the shareholder services Schwab provides to you. Remember, this $40 does not come out of your $10,000 investment, but is instead paid out of fund expenses (or by a fund affiliate or fund service provider). Keep in mind, if the fee is paid in full or in part by the fund, the portion paid by the fund is included in the fund’s OER and borne indirectly by fund shareholders. The amount of a fund’s OER also affects overall fund performance. With that in mind, there are non-Schwab bond funds with very low annual expences that you can buy via Schwab. E.g. SAMIX, SAMFX: 0.32% expense ratio, no-load.
jcbrooks said: Are there bond index funds for specific sectors? Also, can anyone explain the dip these funds experienced at the same time the rest of the stock market dipped? Was it a fear of the companies defaulting on their debt? Otherwise, I imagine bond index funds being quite stable in the short and long run.
There are many ETF bond funds recently released or soon to be that target specific niches. If you look around, you probably can find a specific ETF for many categories/niches (i.e. short duration TIPS, or broad high yield/junk).
My general understanding for last year was a flight to Treasurys and fear/uncertainty of default drained demand and the market value on a broad level for most bonds. High rated corporate bonds I am guessing have mostly returned close to the levels they were prior, don't think high yield is there yet though. Look up AGG (aggregate/overall bond fund) and HYG (high yield fund) for a comparison.
short term bond funds - lowest risk intermediate term bond funds - medium risk long term bond funds - highest risk
Check out these three as alternative to money market: Vanguard Short-Term Treasury VFISX Vanguard GNMA VFIIX Vanguard Total Bond Market Index VBMFX
jdmetz
Thrifty Member
posted: Oct. 13, 2009 @ 12:51p
If you need to get your bond fund through Schwab, then look into DBIRX - Dreyfus Bond Market Index Fund with only a 0.15% ER and no fee through Schwab.
[Edit - My monthly 401k contribution hit my account today, and when I went to make my DBIRX purchase, I found that it now has a transaction fee, so I no longer recommend it unless you are making bulk purchases.]
This thread isn't going to work nearly as well as the best CD / Money Market threads because the best bond fund depends on both your brokerage account and on your target - short, intermediate, or long term, government, corporate, or both, inflation linked or not, etc.
Chuu
Member
posted: Oct. 17, 2009 @ 10:59p
How exactly do inflation linked bond funds work? I don't think I've ever seen an inflation linked individual bond.
ymf
Addicted Member
posted: Oct. 18, 2009 @ 7:56a
Chuu said: How exactly do inflation linked bond funds work? I don't think I've ever seen an inflation linked individual bond. Those funds derive from TIPS.
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