I know this has been beat to death

[Robbb]

But what is everyone doing to replace or augment their bond portfolio? I'm in the process of rebalancing and I'm struggling with having 30% of my portfolio earning 3 maybe 4% in BND or similar total bond funds.

[retiredguy123]

I keep about 15 percent of my bond investments in the Vanguard High Yield Bond fund. This fund is low grade corporate bonds, but it currently yields about 6.25 percent.

[jimhoward]

Treasuries are above 4%. So no reason to settle for 3%. If you are willing to have a relatively long duration (e.g. 10 years) in your bond portfolio and mix in agency and corporates, should have no problem getting above 5%. But that is if you own the securities and hold them to maturity. If you have a bond fund then you have interest rate risk, which could help you or hurt you depending on what rates do.

Personally, I keep my bond portfolio duration very short, and just settle for <5%.

[CoachKandSportsguy]

Look at BIL, very short term treasury bills, with both interest/dividends and cap gains.
With the yield curve very flat, you are getting the same rate as longer term treasuries.

So unless you go to a high yield index, which are the corporates, BIL will get the best return for all comparable treasury issued time periods.

As long as bonds are higher than inflation, they are doing their job in your retirement portfolio.

GFTU

Good Fortune to Us!

[snbrafford]

Instead of relying on folks you probably don't know and who have varying degrees of investment savy, get a PROFESSIONAL financial advisor.

[retiredguy123]

Instead of relying on folks you probably don't know and who have varying degrees of investment savy, get a PROFESSIONAL financial advisor.
What is a professional financial advisor? Most people who call themselves financial advisors are salespeople trying to make a commission or an AUM (assets under management) fee.

[manaboutown]

What is a professional financial advisor? Most people who call themselves financial advisors are salespeople trying to make a commission or an AUM (assets under management) fee.

Now THAT will cost you dearly if the advisor takes 1% of assets under management every year. Bonds bring in 4%; advisor takes 25% of income @ 1% of AUM; client is left with 3% return.

A fiduciary advisor paid a fee by the hour and seen every year or so is the way to go if one is uncomfortable making their own decisions or wants someone to talk things over.

[retiredguy123]

Now THAT will cost you dearly if the advisor takes 1% of assets under management every year. Bonds bring in 4%; advisor takes 25% of income @ 1% of AUM; clients is left with 3% return.

A fiduciary advisor paid a fee by the hour and seen every year or so is the way to go if one is uncomfortable making their own decisions or wants someone to talk things over.
If you see a fiduciary advisor every year or so, how can they make a living?

[manaboutown]

If you see a fiduciary advisor every year or so, how can they make a living?

Probably like my CPA who sees some clients once a year at tax time, others all year long.

[Fltpkr]

But what is everyone doing to replace or augment their bond portfolio? I'm in the process of rebalancing and I'm struggling with having 30% of my portfolio earning 3 maybe 4% in BND or similar total bond funds.

I think the question cannot really be answered without knowing a lot more, such as age and circumstances, risk tolerance, investment breakdown for the remainder of your portfolio, etc. I suggest joining Bogleheads Forum and posting your question and other information there for added advice.

[CoachKandSportsguy]

Instead of relying on folks you probably don't know and who have varying degrees of investment savy, get a PROFESSIONAL financial advisor.

oh please. . like no one here has any experience with their own retirement and we are sure that professionals are in the business to make money, so starting with experience here for free might not be a bad idea. .

you never know what you can learn from experienced posters. . .

[retiredguy123]

But what is everyone doing to replace or augment their bond portfolio? I'm in the process of rebalancing and I'm struggling with having 30% of my portfolio earning 3 maybe 4% in BND or similar total bond funds.
If you expect to earn significantly more than 4 percent in investment grade bonds, you are dreaming. You need to invest in low grade bonds or stocks that will carry some risk.

[Caymus]

What is a professional financial advisor? Most people who call themselves financial advisors are salespeople trying to make a commission or an AUM (assets under management) fee.

And in many states the requirements to be a financial advisor are less than those to be a licensed barber or plumber or other trades.

[CoachKandSportsguy]

If you expect to earn significantly more than 4 percent in investment grade bonds, you are dreaming. You need to invest in low grade bonds or stocks that will carry some risk.

For bonds, one is looking for 1-2% over the rate of inflation for a decent return.
The purpose of bonds is to reduce risk to the portfolio, as well as to have a return which is negatively correlated to equities. There are occassions when bonds and stocks are positively correlated, but that is not the long term relationship.

Bonds also provide cash return when stocks are losing. . effectively constantly supplying cash for withdrawal without impacting the equity portfolio.

I am sure that you would not like bonds at 8% or so as it will upset your equity portfolio much more than just a better return on bonds. .

[Robbb]

Instead of relying on folks you probably don't know and who have varying degrees of investment savy, get a PROFESSIONAL financial advisor.

I get this, however I have used 3 different advisors over my "career" and have never had results that beat a well balanced index portfolio.

[Boffin]

Might want to look at AAA Collateralized Loan Obligations e.g.: JAAA (current yield: 6.42%)

[CoachKandSportsguy]

"We're in an economic kayfabe right now."

- Paul Tudor Jones

TL;DR version:

possible Minsky moment in the next administration, so don't own the long end of the Treasury curve bonds. . stay at the very short end. .
Access Denied (https://www.cnbc.com/video/2024/10/22/watch-cnbcs-full-interview-with-tudor-investment-founder-paul-tudor-jones.html)

Note to the Karens: this link requires a subscription

[M2inOR]

Regarding investment advice:

I've been a private investor for decades, and am mostly self taught.

Check out your library for investment books that have received good reviews. Also check out book reviews in the New York Times as well as on Amazon.

Yes, you can even purchase books that can help you understand things, and if seeking a fiduciary or investment advisor, questions to ask about.

[HJBeck]

Vanguard charges nothing for advise if you have $1M in your account with them. Their average fee on funds is maybe 0.20%.’

[MandoMan]

But what is everyone doing to replace or augment their bond portfolio? I'm in the process of rebalancing and I'm struggling with having 30% of my portfolio earning 3 maybe 4% in BND or similar total bond funds.

Don’t believe the “wisdom” about holding bonds. That’s just how “wealth managers” keep you coming back so you can line their pockets. Buy into a good no-load low price index fund mutual fund that buys all or most of the Dow stocks. Hold onto it. I’ve never had bonds. In the past eight years the Dow has risen from around 20,000 to around 45,000. That’s a 125% growth. It dropped a lot during Covid, and there were a couple slow years, but I made around 20% this year. That’s four times what you earned BEFORE taking into account inflation, which ate up most of what you earned on your bonds. Why buy bonds?

[Nevinator]

I cut bonds from my portfolio in 2014 and never looked back. The rate of return was just too small to make any significant difference. I have relied on ETFs, individual high dividend stocks, and selling both put and call options. Unused funds reside in a 7 Day money market fund, currently paying 4.30%.

[rsmurano]

I have never had bonds in my portfolio and I never will. They don’t make you money. I’ve had a couple of ‘balanced’ funds decades ago (mix of stocks and bonds) and I didn’t have them long.
People mention 5-6% like it’s a good thing. This is terrible, especially if you are paying an advisor up to 1%.
I just looked at 1 of my index funds and for the last year, it’s up over 35%, low risk, good return, .02% expense, and a 3% dividend. This return is peanuts compared to dozens of stocks that have made 3x-8x more gains. These stocks aren’t any secrets: nvidia, apple, meta, tesla, and palantir that have made nice returns.
If you are nervous about losing money, put a trailing stop loss on all your etf’s and stocks with a low % or low $ amount and you will be able to sleep better at night.

No advisor that any of my friends have used in the past will get you into these type of index funds or in these stocks.

[MikePgh]

Right now with future rate cuts (beyond the one in December) being in question I would stand pat on making any big moves.
If the fed is going to continue cuts I would be moving away from short term bonds and bond funds and into intermediate bonds. You’re still looking at mid 4’s plus capital appreciation as rates go down.

Think total return, not just income. Yes you can spend total return. Cap gains rates may be lower than your income rate.

[opinionist]

I don't understand why people like bonds.
Subtract the inflation rate from the yield, and you will get a negative number.

Shadow Government Statistics - Home Page (https://www.shadowstats.com/)

[retiredguy123]

I don't understand why people like bonds.
Subtract the inflation rate from the yield, and you will get a negative number.

Shadow Government Statistics - Home Page (https://www.shadowstats.com/)
I use short and intermediate term bonds to balance my portfolio with stocks and cash. 40 percent stocks, 40 percent bonds, and 20 percent cash is a balanced, conservative portfolio. If you want to invest all of your money in stocks, that is fine, but it is more risky. I sleep better with a conservative portfolio.

[SaucyJim]

Instead of relying on folks you probably don't know and who have varying degrees of investment savy, get a PROFESSIONAL financial advisor.

Fee-based, perhaps. Never commission-based. Personally, I’m of the belief that know one can possibly care more about my money than I do.

[bragones]

Instead of relying on folks you probably don't know and who have varying degrees of investment savy, get a PROFESSIONAL financial advisor.

Disagree. There have been some very good idea on this forum from regular posters. If you do your own investing, you quickly get a sense of the knowledgeable investors. I enjoy doing my own research on suggestions posted, but be careful. One poster insisted the sky was falling and to get into all cash. That was a year ago. Ouch to anyone who followed that advice. Personally, I doubt anyone would take that type of drastic action from a forum post, but to dabble in small amounts on posters who seem to know what they are doing is always interesting.

[Postreader]

I recently transferred funds from a traditional IRA to a 7-year 5.00% Multi-Year Guaranteed Annuity. I trying to minimize investment risk with a reasonably good return.

[bragones]

I keep about 15 percent of my bond investments in the Vanguard High Yield Bond fund. This fund is low grade corporate bonds, but it currently yields about 6.25 percent.

I’m not a fan of VWEHX. Yes, 6.25% yield but over the last 2 years I’ve lost principle which brings total return down. Also, .22% expense seems a tad high. I’ve been moving from treasuries to BBB corporate bonds. So far, so good. Very easy to research and find good corporate bonds on Fidelity >Research > Fixed Income

[bragones]

Treasuries are above 4%. So no reason to settle for 3%. If you are willing to have a relatively long duration (e.g. 10 years) in your bond portfolio and mix in agency and corporates, should have no problem getting above 5%. But that is if you own the securities and hold them to maturity. If you have a bond fund then you have interest rate risk, which could help you or hurt you depending on what rates do.

Personally, I keep my bond portfolio duration very short, and just settle for <5%.

You can purchase long term bonds on Fidelity and sell them at anytime on the open market if you decide you don’t / can’t hold them to maturity.

[CoachKandSportsguy]

I don't understand why people like bonds.
Subtract the inflation rate from the yield, and you will get a negative number.


its called Portfolio Construction, Optimization, and Risk Management, if you care to read up on some how money management for the long term works.

Bonds are not just about after inflation yield in a portfolio.

Here is at least a graduate level overview. . written by Aswath Damodaran, who writes and documents with data, market valuation processes. Yes, I have his first book, after my MBA and even then, he hasn't covered all topics used today for portfolio valuation.

just a web page introduction, don't assume its more than that.

An Introduction to Portfolio Management (https://pages.stern.nyu.edu/~adamodar/New_Home_Page/background/portmgmt.htm)

good luck. .

[bragones]

I cut bonds from my portfolio in 2014 and never looked back. The rate of return was just too small to make any significant difference. I have relied on ETFs, individual high dividend stocks, and selling both put and call options. Unused funds reside in a 7 Day money market fund, currently paying 4.30%.

Selling covered calls = GOOD investment strategy. Selling puts = Dangerous investment strategy with potential for very large losses. Some investment firms won’t allow selling puts for good reason.

[rsmurano]

I mentioned palantir a couple of hours ago as a great investment during the last year. I just heard that palantir will be used by the federal government to track down illegal immigrants. If this is true, This stock still has legs.

Somebody mentioned holding 20% cash, why? You are losing money every day. I use my money market funds as my emergency cash stash, can sell right now and transfer the money the same day, all while making 5.4%.
Somebody else mentioned about somebody indicating they recommended getting out of the market a year ago. Not sure if I said this but I did say this at the end of 2021 and I did exactly that, moved everything into money market making 5.x%. This is the 1st time I did this in my life, stayed in during 2000’s, 2007, and 2020, but now, why when I can tell things aren’t looking good.
I made money throughout 2022 and part of 2023 while everybody invested lost 30% or more. So when I thought it was time to get back in, I started off where I left off at the highs of 2021 instead of waiting months or longer for my portfolio to get back to where it was in 2021. Plus, the environment was different when Tesla, meta, Apple were way down, some less than $100. If I was all invested, I wouldn’t be able to take advantage of buying these stocks, which I did when some of these stocks were < $100 and Apple was in the $120’s. Have you seen where each of these stocks are today?
The days of riding out a recession or a large downturn, are gone for me. I have trailing stop losses on my etfs and stocks so I take the emotion out of selling.

[roadrnnr]

A fiduciary advisor paid a fee by the hour and seen every year or so is the way to go if one is uncomfortable making their own decisions or wants someone to talk things over.

That's what I need. How do I find one around here?

[retiredguy123]

I mentioned palantir a couple of hours ago as a great investment during the last year. I just heard that palantir will be used by the federal government to track down illegal immigrants. If this is true, This stock still has legs.

Somebody mentioned holding 20% cash, why? You are losing money every day. I use my money market funds as my emergency cash stash, can sell right now and transfer the money the same day, all while making 5.4%.
Somebody else mentioned about somebody indicating they recommended getting out of the market a year ago. Not sure if I said this but I did say this at the end of 2021 and I did exactly that, moved everything into money market making 5.x%. This is the 1st time I did this in my life, stayed in during 2000’s, 2007, and 2020, but now, why when I can tell things aren’t looking good.
I made money throughout 2022 and part of 2023 while everybody invested lost 30% or more. So when I thought it was time to get back in, I started off where I left off at the highs of 2021 instead of waiting months or longer for my portfolio to get back to where it was in 2021. Plus, the environment was different when Tesla, meta, Apple were way down, some less than $100. If I was all invested, I wouldn’t be able to take advantage of buying these stocks, which I did when some of these stocks were < $100 and Apple was in the $120’s. Have you seen where each of these stocks are today?
The days of riding out a recession or a large downturn, are gone for me. I have trailing stop losses on my etfs and stocks so I take the emotion out of selling.
I consider a money market fund to be cash.

[msilagy]

Vanguard does not give advice anymore for $1 mil or over. That has changed

[rsmurano]

The notion to have X% invested in bonds as you get older is old news. The other old standard is taking 4% out of your portfolio each year to live on. Some of the new standards are 0% in bonds and up to 8% withdrawal rate.
It all depends on how much you have in your portfolio, how much you need to live off of, and your risk tolerance.
Just because you retire or you turn 65, that doesn’t mean you have to stop making money.
I have a VP of the brokerage house I have my portfolio in that calls me once a year to see how things are going. I do my own trades, I don’t use and of this firms brokers. She looks over my accounts and always tells me you have done well this year and has always told me to think about bonds, she has done this for 2 decades, and she knows I won’t.
I’d rather be in a money market making 5+% than getting in bonds.

[retiredguy123]

One reason to buy bonds is if you think interest rates will decrease. With a bond, you can lock in a specific interest rate for the term of the bond.

[bragones]

One reason to buy bonds is if you think interest rates will decrease. With a bond, you can lock in a specific interest rate for the term of the bond.

Also, if you think interest rates will fall, the face value of the bond will rise so it can be sold for a profit. Bond prices move inversely to interest rates.

[Caymus]

That's what I need. How do I find one around here?

That advice works in theory but not too well in practice. I contacted numerous "fee only/ fee based" advisors and couldn't find a match. Some wanted a retainer; some didn't seem that knowledgeable. I keep looking for when my cognitive abilities diminish (more than now):icon_wink:

[retiredguy123]

That's what I need. How do I find one around here?
You may want to consult with a certified financial planner, CFP. Google "find a cfp" and you can find them located in The Villages. A CFP is trained in all aspects of finance, including investments, retirement, taxes, estate planning, and insurance. They will probably want to sell you a comprehensive writtten financial plan for about $1,500 to $2,000. For some people, this is a good way to go. But, if you just want to pay someone $200 or so to ask questions, it will be difficult to find someone who will meet your needs. They will more likely want to manage your investment portfolio for an annual percentage of your assets.

[rsmurano]

Good luck on finding anybody good to manage your portfolio. I 1st looked for 1 over 3 decades ago. I had a good friend that was vp of Smith Barney and he wanted me to sell all of my stuff to move everything into a couple Smith Barney funds. Same went for a Fidelity guy, was going to is all fidelity funds. Tried again with a credit union brokerage fund and he wanted to invest in Oppenheimer funds that had a 5% load.
I was doing my own stuff back then and after all these interviews, i doubled down to learn all i can about how to invest, subscribed to all the morningstar technical monthly publications on stocks/funds, and read dozens and dozens of books from Bogle, Cramer, motley fool, and many others.
I save tens of thousands of $$$ per year, over $600,000 every 10 years that i do this stuff myself. It’s never too late to learn.

[retiredguy123]

Good luck on finding anybody good to manage your portfolio. I 1st looked for 1 over 3 decades ago. I had a good friend that was vp of Smith Barney and he wanted me to sell all of my stuff to move everything into a couple Smith Barney funds. Same went for a Fidelity guy, was going to is all fidelity funds. Tried again with a credit union brokerage fund and he wanted to invest in Oppenheimer funds that had a 5% load.
I was doing my own stuff back then and after all these interviews, i doubled down to learn all i can about how to invest, subscribed to all the morningstar technical monthly publications on stocks/funds, and read dozens and dozens of books from Bogle, Cramer, motley fool, and many others.
I save tens of thousands of $$$ per year, over $600,000 every 10 years that i do this stuff myself. It’s never too late to learn.
I agree. One way to start slowly is to buy a subscription to Money magazine. It is easy to read and not very technical.

[LeRoySmith]

I've been talking to a guy in Ocala (the brick city group) about managing my money and I cant seem to make the leap. Its not that I don't trust him, but no one cares about your money as much as you do. The other part that's hard to swallow is the ~1% fee. That covers all my living expenses for a year and he is looking for a target that's lower than what I typically make on my own (he does make a very good case about lower volatility).

I've always stumbled my way to pretty decent results but as I age and my mind gives up on me it feels like I need help.

[retiredguy123]

I've been talking to a guy in Ocala (the brick city group) about managing my money and I cant seem to make the leap. Its not that I don't trust him, but no one cares about your money as much as you do. The other part that's hard to swallow is the ~1% fee. That covers all my living expenses for a year and he is looking for a target that's lower than what I typically make on my own (he does make a very good case about lower volatility).

I've always stumbled my way to pretty decent results but as I age and my mind gives up on me it feels like I need help.
Don't agree to pay him 1 percent of all of your assets. If you have bonds and cash investments that you feel comfortable managing, you shouldn't be paying any percentage to an advisor. But, if you think the advisor can manage the equity portion of your portfolio better than you can, then you may want to agree to pay 1 percent of those assets only as a reasonable fee.

[manaboutown]

I've been talking to a guy in Ocala (the brick city group) about managing my money and I cant seem to make the leap. Its not that I don't trust him, but no one cares about your money as much as you do. The other part that's hard to swallow is the ~1% fee. That covers all my living expenses for a year and he is looking for a target that's lower than what I typically make on my own (he does make a very good case about lower volatility).

I've always stumbled my way to pretty decent results but as I age and my mind gives up on me it feels like I need help.

I have the same concern. Who can I hire to step in and manage my investments when I start to lose it?

Right now I have lined up a trust company named in my revocable living trust and testamentary documents which works with accountants and financial advisors selected by their clients. The problem is finding a capable asset manager or team. I have heard some horror stories about what happened when investors who had done relatively or very well turned the management of their financial assets over to "professionals". In some cases many millions went down the drain. I find that scary. It has taken me a lifetime to accumulate what I have through hard work and sacrifices. I would like its value increased or at least retained for my heirs and devisees.

[Caymus]

I have the same concern. Who can I hire to step in and manage my investments when I start to lose it?

Right now I have lined up a trust company named in my revocable living trust and testamentary documents which works with accountants and financial advisors selected by their clients. The problem is finding a capable asset manager or team. I have heard some horror stories about what happened when investors who had done relatively or very well turned the management of their financial assets over to "professionals". In some cases many millions went down the drain. I find that scary. It has taken me a lifetime to accumulate what I have through hard work and sacrifices. I would like its value increased or at least retained for my heirs and devisees.

The ability to make the best financial decisions peaks at age 53-54. Almost all of us are on "borrowed" time.:laugh::laugh:

At what age do we make our best financial decisions? - Blog (https://www.ngpf.org/blog/question-of-the-day/question-of-the-day-at-what-age-do-we-make-our-best-financial-decisions/)

[GoldenBoy]

Are you really asking for financial advice from Talk of the Villages participants? P.T. Barnum just rolled over in his grave. This is the place where people ask "How do I buy a House in the Villages?". Good luck!

[manaboutown]

The ability to make the best financial decisions peaks at age 53-54. Almost all of us are on "borrowed" time.:laugh::laugh:

At what age do we make our best financial decisions? - Blog (https://www.ngpf.org/blog/question-of-the-day/question-of-the-day-at-what-age-do-we-make-our-best-financial-decisions/)

I made my last significant real estate purchase at age 54 and a couple others afterward. I sold two large properties at 81 and 82. No longer feeling as sharp and quick as I used to I take more time to make decisions. My judgment based on years of experience now plays a huge role, not so much in my younger years when I depended more on mathematical analysis of deals rather than their "feel". Having majored in both physics and mathematics in college I think my math skills peaked in my twenties, though.

[CoachKandSportsguy]

I have the same concern. Who can I hire to step in and manage my investments when I start to lose it?

Right now I have lined up a trust company named in my revocable living trust and testamentary documents which works with accountants and financial advisors selected by their clients. The problem is finding a capable asset manager or team. I have heard some horror stories about what happened when investors who had done relatively or very well turned the management of their financial assets over to "professionals". In some cases many millions went down the drain. I find that scary. It has taken me a lifetime to accumulate what I have through hard work and sacrifices. I would like its value increased or at least retained for my heirs and devisees.

A better answer is to start distributing it right now, why wait, if you are concerned that your wealth might be pilfered.

So what if you have to pay taxes. . you can't take it with you, and just give a portion of it to them each year, not alot, not all at once, just a portion, so that there is less to pilfer, if you are really that concerned. . .

[Robbb]

I have the same concern. Who can I hire to step in and manage my investments when I start to lose it?

Right now I have lined up a trust company named in my revocable living trust and testamentary documents which works with accountants and financial advisors selected by their clients. The problem is finding a capable asset manager or team. I have heard some horror stories about what happened when investors who had done relatively or very well turned the management of their financial assets over to "professionals". In some cases many millions went down the drain. I find that scary. It has taken me a lifetime to accumulate what I have through hard work and sacrifices. I would like its value increased or at least retained for my heirs and devisees.

Vanguard 0.3%

[manaboutown]

A better answer is to start distributing it right now, why wait, if you are concerned that your wealth might be pilfered.

So what if you have to pay taxes. . you can't take it with you, and just give a portion of it to them each year, not alot, not all at once, just a portion, so that there is less to pilfer, if you are really that concerned. . .

I have been doing that for almost 12 years on a case by case basis for my children as well as my grandchildren for whom I have funded 529 plans. For differing reasons neither child is interested in or capable of managing a portfolio of securities or commercial real estate investments. My concern isn't so much pilferage as poor financial management, loss of principal.

[CoachKandSportsguy]

My concern isn't so much pilferage as poor financial management, loss of principal.

semantics, similar results. . .

[brianherlihy]

i put mine in a coffee can