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Post by FD1000 on Oct 14, 2022 21:09:42 GMT
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Post by flipperxxx on Oct 14, 2022 21:35:08 GMT
yes what which? iow, at V, are you buying secondary or via the auction, since presumably you can do both at V the way you can at schwab and fidelity, etc?
Just auctions. thanks. think i will do the same |
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Post by marquay on Oct 16, 2022 15:48:04 GMT
Wow, now 6 month T bill @4.33% at Vanguard.
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Post by yogibearbull on Oct 16, 2022 16:00:14 GMT
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Post by marquay on Oct 16, 2022 16:32:59 GMT
Yogi, Thank you very much,
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Post by chang on Dec 2, 2022 16:08:16 GMT
Any favorites among VGSH VCSH BSV FNSOX now? TIA. retiredat48 |
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Post by retiredat48 on Dec 3, 2022 4:04:55 GMT
Any favorites among VGSH VCSH BSV FNSOX now? TIA. retiredat48 I'm time challenged and cant research in depth...but: --VCSH is a corporate bond fund with higher yield, but I am staying away from corporates for awhile...waiting for recession time, AND some key corporate bankruptcies...then go corporate. However one can't make too big an error with short duration. I also will prefer corp bond funds run by the guru houses such as PIMCO or Doubline as opposed to Vgd and Fido...as gurus have done better in past. --BSU...not enough yield. Also it is 75% gvt; 25% corporate. Why mix the two together. Buy separate funds for each category. --FNSOX...index fund...70% gvt; 30 % corp---why buy together? VGSH---I now own. I am going all gvts for awhile.. Like the 4.58% SEC yield and short duration. I view such treasury bond funds as almost commonidized...anyone can do it., Lowest costs matters, so do not need bond guru fund houses. It would be my choice. I also own VGIT interm gvt bond etf. Note BSU has a built in cap gain as price to par is 93; FNSOX prtopar is 92, which are better than VGSH at 95...so you get more in cap gains in the long run. But almost marginal difference. R$8 |
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Post by FD1000 on Dec 3, 2022 14:28:02 GMT
Any favorites among VGSH VCSH BSV FNSOX now? TIA. retiredat48 I'm time challenged and cant research in depth...but: --VCSH is a corporate bond fund with higher yield, but I am staying away from corporates for awhile...waiting for recession time, AND some key corporate bankruptcies...then go corporate. However one can't make too big an error with short duration. I also will prefer corp bond funds run by the guru houses such as PIMCO or Doubline as opposed to Vgd and Fido...as gurus have done better in past. --BSU...not enough yield. Also it is 75% gvt; 25% corporate. Why mix the two together. Buy separate funds for each category. --FNSOX...index fund...70% gvt; 30 % corp---why buy together? VGSH---I now own. I am going all gvts for awhile.. Like the 4.58% SEC yield and short duration. I view such treasury bond funds as almost commonidized...anyone can do it., Lowest costs matters, so do not need bond guru fund houses. It would be my choice. I also own VGIT interm gvt bond etf. Note BSU has a built in cap gain as price to par is 93; FNSOX prtopar is 92, which are better than VGSH at 95...so you get more in cap gains in the long run. But almost marginal difference. R$8 Let's repeat what I said from the beginning of this thread. VGSH sec=4.58%. The SEC yield is the potential for months to come, right now, based on the last ex date of 12/1/22, dist it's only 2%. MM offer the following: FZDXX=3.82(min $100K)...FMPXX=3.93(min 1 million). CD/Treasuries offer 4.6%-4.75% for 6-12 months. Easy choice: 1) For liquidity and potential trades, MM. MM will catch up as the Fed fund will go up. MM pays just 0.4-0.6% lower than the 3 months CD/treasuries. Not bad at all. 2) For no-brainer, bird in the hand, guaranteed, zero volatility, buy CD/Treasuries, and Treasuries don't have state tax. 3) Rates are stabilizing, this means IT-LT bonds will do much more, since 11-07-22 VGSH made 1.1% while IT-LT made at least 5%, but wait, SHM(ST IG Munis) with duration=2.6 years made 2.1%. Look at the chart, how SHM is much smoother than VGSH as rates have less influence. Yield is never everything you should care about. 4) What do think will happen to VGSH, after the Fed will raise rates in mid Dec? Is it going up? There is a good reason why I never owned ST IG bonds. |
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Post by retiredat48 on Dec 4, 2022 16:42:36 GMT
FD1000,...who posted: "VGSH sec=4.58%. The SEC yield is the potential for months to come, right now, based on the last ex date of 12/1/22, dist it's only 2%." ------------------------ My time is limited and I can't take this on more other than to say, over and over, I disagree here with FD. No, you do not only get the distrivbution yield. The other cap gain yield is ACCRUED into the NAV price. Simply, you cannot wait until a day before the bonds mature, to buy them, and capture the full yield. Simple example. A fund owns one, $1000 zero coupon 2 yr treasury bond (google it). The bond pays zero percent interest. The fund paid $930 for the bond. You get no distributional yield. The total return is all in the cap appreciation when the bond matures. However, you cannot wait until a day before and buy, as the bond has a mark-to-market value that is ACCRUED by the fund into its daily NAV price. No free lunch here. You get the full total return yield, daily accrual. Period. R48
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Post by FD1000 on Dec 4, 2022 22:18:34 GMT
FD1000 ,...who posted: "VGSH sec=4.58%. The SEC yield is the potential for months to come, right now, based on the last ex date of 12/1/22, dist it's only 2%." ------------------------ My time is limited and I can't take this on more other than to say, over and over, I disagree here with FD. No, you do not only get the distrivbution yield. The other cap gain yield is ACCRUED into the NAV price. Simply, you cannot wait until a day before the bonds mature, to buy them, and capture the full yield. Simple example. A fund owns one, $1000 zero coupon 2 yr treasury bond (google it). The bond pays zero percent interest. The fund paid $930 for the bond. You get no distributional yield. The total return is all in the cap appreciation when the bond matures. However, you cannot wait until a day before and buy, as the bond has a mark-to-market value that is ACCRUED by the fund into its daily NAV price. No free lunch here. You get the full total return yield, daily accrual. Period. R48 I like when others disagree with me, that create brainstorm. All the explanation of par, coupon, duration, and yield are not a guarantee to show up in TR, which is the only important thing. I know, I said it many times. But, so far, since the beginning of this thread, or a buy in the next 2 months proved that VGSH still lost money. The question is, do you want to make money or discuss bond internals? I already posted more than once about all the other options: why the bird in the hand (MM,CD,treasury) are better because are all guaranteed with no volatility. If I want volatility, then I can sell you much better TR options. I'm in several right now and they already made in one month a lot more than what VGSH will do in one year. Right now longer duration is a better choice because the Fed blinks. For posters who like a chart, see it below. VGSH + VMFXX(MM) since OP(3/23/2022) + 2 months later and even June. Don't forget that since June, we posted about CD/Treasury with much better income than MM. MM is catching up very quickly and gives you all the flexibility. The first chart shows VGSH performance since the OP(3/23/2022). The second chart shows VGSH,SHM,DODIX,NVHIX since the bottom. The following did much beter...SHM= ST(duration=2.6) IG muni...DODIX=typical IG managed fund...NVHIX=ST(duration=4) HY muni. As you can see, they made a lot more because treasuries are influenced most by rates, while the other don't. Attachments:
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Post by retiredat48 on Dec 7, 2022 17:00:47 GMT
re, seems to be some postings, like from FD1000, that my tresury bond fund purchases that last two months have been problematic, or not the best.
Well, first of all, I AM POSTING MY TRADES REAL TIME, (not after 2-4 weeks have passed).
Second, my returns have been excellent except an early VGSH buy is "about even". In this regard, I also post on the Fidelity Forum. Here is what some top notch bond investors replied to me:
poster sellsputscalls to retiredat48: "Since 11/4/22, your comments have hit it out of the park!"
next post by dickoncapecod
Level 30
In response to retiredat48
11-25-2022 09:16 AM
Agreed. Once it can be said with certainty that Fed has completed its tightening cycle, the cap gains party will likely be over.
Regards, Dick
---------------------------------------------------
I now have some huge cap gains in some of my Treasury bond funds (like VGIT and TLT), as recognized by these posters on Fidelity Forum. I have recommended same on this forum. I also suggested that at 4+% yields for Longer Term treasuries, buy quickly as they could be gone in a heartbeat. This is what happened.
R48
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Post by retiredat48 on Dec 10, 2022 16:04:15 GMT
A fidelity forum (partial) post:...by Dickoncapecod:
"...Implied forward rates continue to express confidence in Fed's inflation fight. Futures still predict a fed funds peak around 5% in Q2-2023 and a hold at that level until a December retreat. The Treasury 5yr 5years forward in Q4 2027 is estimated at 3.39 %. Inflation from breakevens are 5yrs 2.34%....10yrs 2.28% and Fed favorite 5yr forward inflation is 2.22%
This week we get CPI Tuesday with expectations 0.3% headline and 0.4% core. Who knows how markets will take that? What we do know --- and what Fed knows if they haven't caught stupid --- is that NOV and DEC CPIs are probably really DOWN 5-8%. Why? Fed uses LIST prices, so the refrigerator you bought for 600 is still counted as 1100, as is every other "on sale 30% 40% 50% off!" It counted at list price as well. Sadly, we are stuck with two primary Fed data guides --employmentvand CPI --- that are not only lagging indicators but DEEPLY flawed stats that wildly overstate inflation and overstate the health of the job market. Since I think/hope Fed knows this, I'm guessing Dec 50 bps, then next meeting 25bps then done and watching what the most rapid tightening in recent history has done to '23 and '24.
Other stuff: Thursday retail sales predicted MINUS 0.2% and industrial production flat.
Aside: despite a generally bullish predisposition, I think Treasury prices have gotten WAY WAY over their skis, and are due for a serious pullback. IF fed funds are going to be near 5% for at least most of '23, 3.5% is not the right price for 10yrs."
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Post by richardsok on Dec 10, 2022 16:33:02 GMT
Good post, r. Thanks.
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Post by Fearchar on Dec 10, 2022 17:03:54 GMT
retiredat48, time will tell about 10 year treasuries...  However notice that in 2018, it was demonstrated that they were not sustainable over 3%. Longer term, suspect they are headed towards 2.5%
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Post by retiredat48 on Dec 11, 2022 4:23:27 GMT
It's tempting to take some recent cap gains (VGIT and TLT) off of the table...and buy back later if prices fall...or the trend strenthens.
Nice to have such decisions to make.
R48
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Post by FD1000 on Dec 15, 2022 4:47:11 GMT
Here is the nice thing about HY Munis. ORNAX made almost 3 times as VGIT, but volatility is much lower. The chart below shows how lately, VGIT lost about 0.9%, at the same time ORNAX lost only 0.3%. Better performance with lower volatility is a good recipe to hold longer. stockcharts.com/h-perf/ui?s=VGIT&compare=ORNAX&id=p63286792793 |
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Post by chang on Dec 15, 2022 23:30:27 GMT
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Post by retiredat48 on Dec 16, 2022 5:02:11 GMT
FWIW, Capecod had a very detailed analysis/post re tips, and his conclusion is he would not own any. Dick's Rationale: "TIPs are something that by owning, you give up current ongoing yield/total return so you are "protected" when inflation comes. HOWEVER, when inflation comes, treasury bonds will have rising yields and you can get the same or better returns with current treasury bonds."
From info I read, this appears to be true during this current period.
I own no TIPs.
R48
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Post by chang on Dec 16, 2022 7:33:32 GMT
retiredat48 I guess my main issue with TIPS is the uncertainty in principal. What I’m looking for in bonds, mainly, is stability, certainty, ballast, and a fixed income. TIPS actually provide none of this. Perhaps more to the point, nobody has correctly predicted where inflation is going. So buying TIPS, if one thinks that they will return more than an equivalent-duration T-bond, is really a conjecture or a gamble. And again that’s now what I want to do with bonds. The equity market provides plenty of opportunities for gambling. What TIPS can provide is insurance against extreme, black swan inflation. And frankly I don’t really need that.
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Post by FD1000 on Dec 20, 2022 5:20:35 GMT
It's tempting to take some recent cap gains (VGIT and TLT) off of the table...and buy back later if prices fall...or the trend strenthens. Nice to have such decisions to make. R48 I made this decision last week after the Fed raised the Fed fund rate. This was based ONLY on my LT indicator who signaled SELL. |
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Post by habsui on Dec 20, 2022 7:05:37 GMT
It's tempting to take some recent cap gains (VGIT and TLT) off of the table...and buy back later if prices fall...or the trend strenthens. Nice to have such decisions to make. R48 I made this decision last week after the Fed raised the Fed fund rate. This was based ONLY on my LT indicator who signaled SELL. You owned VGIT? |
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Post by FD1000 on Dec 20, 2022 12:56:11 GMT
No
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Post by sortatino2 on Dec 21, 2022 7:09:13 GMT
Schwab MM already to 4.31% and should be 4.45% by week end. 4.7% by start of Feb. Still not understanding locking in a 6 month treasury at 4.6%. Already at 4.71% and futures says it will go higher.
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Post by chang on Dec 21, 2022 8:05:15 GMT
Schwab MM already to 4.31% and should be 4.45% by week end. 4.7% by start of Feb. Still not understanding locking in a 6 month treasury at 4.6%. Already at 4.71% and futures says it will go higher. At Schwab, 4.31% is for a $1,000,000 investment. Otherwise it's 4.16%. Your comment is misleading. www.schwab.com/money-market-fundsAt 4.6% the interest paid is 0.089% weekly. So, waiting a week to get another (hypothetical) 0.11% (4.71 - 4.60) annual = 0.055% semi-annual does not make sense: I would lose 0.089% by waiting and gain 0.055% in increased yield. You can't wait forever.  |
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Post by chang on Dec 21, 2022 8:14:58 GMT
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Deleted
Deleted Member
Posts: 0
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Post by Deleted on Dec 21, 2022 10:50:36 GMT
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Post by sortatino2 on Dec 21, 2022 20:23:36 GMT
Lost Time (inability to invest most of your savings for 6 months) = $
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Post by chang on Dec 22, 2022 12:19:49 GMT
Lost Time (inability to invest most of your savings for 6 months) = $ Eh? I don't follow (but ... please don't try to explain. Some things I know are going to be a waste of your time and mine.) My T-bill is paying 4.6% ... FZDXX is paying 3.82%. That's more money in my pocket every day.My equities are fully invested the way I want them. That's actually where most of my savings is. Should I choose to sell the T-bill, of course, I can do so with a click of the mouse. Incidentally, yields dropped today across the board. The 6M is now yielding 4.51%. I could sell my T-bill right now at a nice profit! home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_bill_rates&field_tdr_date_value_month=202212If yields continue to rise, I will benefit through my 1/3 investment in FNSOX. Meanwhile, I'm happy to have locked in the 6M T-bill at 4.6%. |
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Post by sortatino2 on Dec 22, 2022 19:24:42 GMT
Sounds like it works for you which is all that matters.
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Post by xray on Dec 22, 2022 21:40:12 GMT
SmartAsset
Want 9.62% Yield Guaranteed? Try This Govt-Backed Asset
Mike Obel
Thu, December 22, 2022, 9:00 AM EST
SmartAsset: Investing in Series I Savings Bonds (iBonds)
There’s a bond that pays a 9.62% interest rate and is guaranteed by the U.S. Treasury. Investors should keep some limitations and conditions in mind before investing, but as inflation has topped 8% since March 2022, this could be an attractive option for the fixed-income portion of your portfolio. Consider working with a financial advisor as you seek capital appreciation or capital preservation in a high-inflation environment.
Don’t miss out on news that could impact your finances. Get news and tips to make smarter financial decisions with SmartAsset’s semi-weekly email. It’s 100% free and you can unsubscribe at any time. Sign up today.
What Are iBonds?
Known as the Series I Savings Bonds, or iBonds for short, the Treasury created them in 1998 as a way to help savers deal with inflation. They come in durations that range from one year to 30 years. This bond has two rates: a fixed rate, which is always zero, and an inflation rate, which is linked to the Consumer Price Index for all Urban Consumers (CPI-U). The interest earned every six months is added to the value of the bond’s principal. Also, in May and November, the Treasury adjusts this bond’s inflation rate in line with the latest CPI-U reading.
Together the interest rate and the inflation adjustment on the iBonds, which are sold at face value, are called the “composite rate.” The composite rate on a this kind of bond can never fall below zero, even in the rare event that deflation would otherwise drag a bond’s composite rate into negative numbers.
Pros of iBonds
There are several aspects of these bonds that make them attractive:
They currently have one of the highest rates of interest available. From May 2022 through October 2022 these bonds pay 9.62% interest. That’s hard to ignore when the Bloomberg U.S. Aggregate bond index has paid a negative 9.4% rate so far in 2022. Series I Savings Bonds are not subject to state or local taxes. They have the security of a U.S. government guarantee.
Series I Savings Bonds are easy to buy. You can buy up to $10,000 worth of them online. You also can buy an additional $5,000 of paper bonds using your federal income tax refund.
Potential Drawbacks of iBonds
These bonds carry a few conditions and limitations that may dampen their appeal to some fixed-income investors. For one thing, their future returns can decline since they are pegged to the CPI-U. Only U.S. citizens, legal residents or civilian employees of the U.S. government (regardless of citizenship or residency) may buy iBonds. There’s no market for your iBond. Finally, iBonds also carry these deadlines:
Within one year of purchase: You cannot cash the bond. Within one year and five years of purchase: You can cash the bond, but you’ll forfeit the previous three months’ interest payments. This is known as early redemption. Five years or longer: If you want to avoid a penalty, you have to wait at least five years.
After 30 years of purchase: The bond ceases to pay interest and so becomes vulnerable to inflation.Why Other High-Yielding Bonds Are Less Attractive (Right Now). A Series I Savings Bond is an exception to the caution currently being voiced by financial experts about other higher-yield bonds.
Charles Schwab, for example, says credit spreads, the difference in rates between corporate bonds and government bonds of similar duration, are small. Corporate bonds pay more than government bonds to reward investors for taking the risk of lending to a private enterprise that could default. But currently the difference in rates between the two is still too small to justify buying the higher-yielding corporate bonds. Schwab also notes that corporate profit growth is slowing, citing inflation, supply chain issues and borrowing costs. “Rising borrowing costs via higher interest payments can eat into corporate profits,” the firm said. “Meanwhile, wage gains are good for consumers, but can be a pain point for corporations, as it’s another input cost on the rise.”
Finally, the yield curve is not looking favorable for high-yield bonds – except iBonds. The yield curve is a curve on a graph that tracks the yield of bonds of various durations. Normally, shorter duration bonds yield less longer duration bonds, and high-yield bond total returns relative to Treasurys have been strongest when the yield curve is steep (long duration bonds paying more than short duration bonds). However, as of May 2022, the yield on 2-year and 10-year government bonds was very close, and in fact the previous month the 2-year actually exceeded the 10-year, which is called an inversion. That strains the profitability of high-yield bond issuers like banks.
Bottom Line
Series I Savings Bonds are a powerful anchor to windward, financially speaking. They are low-risk savings bonds issued by the U.S. government that pay a very high interest rate. Through October 2022 they were paying a lofty 9.62%. You may purchase these either electronically via TreasuryDirect (up to $10,000) or you can use your IRS tax refund to buy paper Series I bonds (up to $5,000). By combining electronic and paper purchases, you can buy up to $15,000 of Series I bonds each year. Keep in mind that there is no secondary market for them.
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Live Long and Prosper....
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