Investing

I’ve never cared much for bond funds. They never mature. Their NAV is at the mercy of Federal Reserve policy. 
I like how individual bonds mature and return my investment, but I don’t want the risk of owning individual issues. 
I nearly brought this question up in Mark Corothers ‘Flipin’ post, but didn’t want to send his discussion about real bond returns down the wrong rabbit hole.
So here goes. I have a CD ladder to protect me from a lost decade.

With the current fixed income environment, have you given any thought to your portfolio asset allocation?
For most of the last 15 years bonds paid next to nothing, a big fat zero actual return. For a stretch in 2021 they actually paid less than nothing: 10-year TIPS traded at negative real yields, meaning you were paying the government for the privilege of protecting your own purchasing power. In that world, equities weren’t one part of the growth engine.

EVERY THREE MONTHS, a small committee meets in Manhattan to make decisions that dictate where billions of retirement dollars flow. You won’t see them on financial television. They belong to the Index Committee at S&P Dow Jones Indices.
Nearly all readers here likely know the S&P 500 isn’t a mindless tally of America’s 500 largest businesses. Yet in an era dominated by mega-cap hype, it is worth remembering just how ruthlessly disciplined that curated roster really is.

I have been reading in some of the comments on the Forum recently that some of you use a total portfolio approach for your investments.  I tried to look it up in Jonathan’s guide but couldn’t find it. I don’t know what this is and was hoping some of you might be able to explain it in a way I could understand. I am not sure if this is something I need to research more?  I tried to look it up on Mother Google but didn’t understand what the AI said it was.  

An e-mail I received from Retirement Researchers by Wade Pfau contains this:
“If a retiree owns 1,000 shares before receiving a dividend and still owns 1,000 shares afterward, it can seem as though nothing has been spent. Selling 20 shares feels different because the account now holds fewer shares. That visual difference can reinforce the idea that dividends allow you to spend income while preserving principal.
For example, suppose a company is trading at $100 per share,

Be careful out there. Index composition is a key to getting consistency in your investment outcomes. Vanguard vs iShares vs State Street vs etc. As Jason Zweig writes in the Wall Street Journal, it all depends on the composition of the index.
 
https://www.wsj.com/finance/investing/how-a-few-hot-stocks-can-make-twin-funds-act-like-strangers-0ef7c52b?st=6mxLt3&reflink=desktopwebshare_permalink
 

I saw this on the back page of today’s Wall St Journal.
“On this day in 1971, Wells Fargo launched the world’s first stock-index fund. One mutual-fund manager’s reaction: “If people start believing this random-walk garbage and switch to index funds, a lot of $80,000-ayear portfolio managers and analysts will be replaced by $16,000-a-year computer clerks. It just can’t happen.”

We all remember the 2022 bond collapse, triggered by rising interest rates. Most of us were caught out, a supposedly safe asset class posting double-digit losses. Some of those bond funds are still slightly underwater four years later. Which brings me to a question worth thinking about.
Right now, Treasury Inflation-Protected Securities (TIPS) are offering guaranteed real returns of roughly 2-3% above inflation. That’s a compelling, ultra-safe option for liability matching in retirement, and I think most people would do well to look into it.

TIPS are US Government securities that currently pay two to three percent real return depending on the maturity selected. You can buy them from your broker, Treasury Direct account, Exchange Traded Funds (ETFs) and mutual funds. So, if inflation for a time period is three percent, your bonds earn five to six percent depending on the time period. These real returns are guaranteed by the US Treasury. I will not give all the details here and am not giving advice.

Nice! On top of other recent gains, the only individual stock I owned was up two days in a row and had reached the sell price I had in mind for months. Shortly before the market closed on Friday, I logged in to E*TRADE and stepped off the rollercoaster ride once and for all.
The sale came almost 17 years to the day that I first purchased that company stock via an employee stock purchase program (ESPP).

In a previous post I recounted how luck and stupidity kickstarted my retirement savings journey, but I glossed over one important detail: the cost.
In the mid-eighties, high-fee front-loading was standard practice, and these products were typically sold by people whose entire compensation depended on shifting them. The pressure to sell was enormous, and the salespeople were good at their jobs.
My twenty-year-old self walked straight into one of them. He was slick, he was persuasive,

I recently received an email from Vanguard informing me they’re updating the prospectus on a developed world fund I hold with them. The change relates to concentration limits. Under existing European regulation, no single company can normally represent more than 10% of a fund. However, there is a pre-existing exemption available to index-tracking funds that allows this ceiling to be raised to 20%. Vanguard are now choosing to apply that exemption.
Here’s what caught my attention: no company has actually hit that 10% threshold yet.

I used AI as an editorial assistant to help organize and refine my thoughts; the underlying ideas and personal experiences remain my own.
Rebalancing sounds simple. Pick your target allocation and, whenever a holding drifts too far, trade back to target.
That’s how I thought about it as I started managing my risk portfolio. The problem was that I never stopped to ask what “too far” meant. I found myself reacting to routine market movements that had little effect on my long-term plan.

My great aunt survived the San Francisco earthquake of 1906 with nothing. We know this because she wrote a letter to my grandmother in Kansas asking her to sell the property they had inherited together. She and Billy had nothing left. Nothing at all. A Union soldier — that is how she described him in the letter — handed her a pair of long johns. That was what she had to wear.
She and her husband William F.

Here’s something I’m debating and hoping the collective brain trust of the HD community can push me in the right direction.
As a retired Fed, I have access to the Thrift Saving Plan G Fund.  For those not familiar, it’s basically a high yield savings account on steroids.  It pays rates comparable to medium/long-term Treasuries but has no default risk, duration risk, or interest rate risk.  It only pays interest and can never fall in value.