Disagree --- one should invest in whatever type of accounts they have the opportunity to invest in - 401, 403, IRA/Roth IRA, deferred, taxable. While it's probably ok for someone to just throw their 40X into a TD fund and be done with it, I believe that anyone who says primarily invest in your retirement account -- which implies ignore taxable accounts -- is crazy since there are caps on a) contributions and b) what you might have access to in terms of funds and expense ratios.

I understand your argument with (b), but (a)? If your income is large enough to be able to max out contributions to your 401(k) and IRA ($24k next year), you really shouldn't be too worried about money.

Disagree --- one should invest in whatever type of accounts they have the opportunity to invest in - 401, 403, IRA/Roth IRA, deferred, taxable. While it's probably ok for someone to just throw their 40X into a TD fund and be done with it, I believe that anyone who says primarily invest in your retirement account -- which implies ignore taxable accounts -- is crazy since there are caps on a) contributions and b) what you might have access to in terms of funds and expense ratios.

I'm bumping this thread to the top of the stack as I have edited my comment of 10/22.

FYI: Q: I'm just starting my career and my 401(k) is invested in a diversified portfolio of stocks that tracks the overall stock market. I'm trying to decide whether to simply increase my contribution to my company plan or start investing outside my 401(k) so I can earn a higher return by focusing on specific sectors of the market, such as technology or health care. Which do you recommend?
A: Generally, I think you're better off doing your retirement savings within your 401(k). You get lucrative tax benefits and employer matching funds in most cases, plus the automatic payroll deductions ensure that you actually end up saving for retirement rather than planning to but not getting around to it.
Regards,
Ted
https://www.fidelity.com/insights/retirement/investing-beyond-401k?print=true

FYI: Hedge funds entered 2017 coming off their eighth-straight year of trailing U.S. stocks (as measured by the S&P 500 Index) by significant margins.
Regards,
Ted
http://www.etf.com/sections/index-investor-corner/swedroe-why-do-hedge-funds-exist

1. Press 0.
2. If no response, press 0 #.
3. If that doesn’t work, start screaming “Representative!” like a mad-man.
Not pretty - but usually gets their attention.

Evening @Old_Joe et al.
Holy Moly...........
https://english.stackexchange.com/questions/189970/what-is-a-thorpe
the stuff we learn from investing discussions, eh? See here!
Now, ASCII, hexadecimal and binary I did study and know in the much earlier days of my brain cells. Don't recall any other "octo" related to "thorpes".
One might presume threads may travel far from the path, in the near future; if the folks from the northern states at this forum find a most disagreeable winter period, as in "cabin fever".

FYI: ETF.Com is reporting that TD Ameritrade is gathering feedback on it plan to drop a number of ETFs from it's platform including some 30 Vanguard ETFs. According to RIABiz.Com this was the result of Michael Kitces taking them to task on his blog.
Regards,
Ted
https://www.kitces.com/blog/etf-market-center-eliminates-vanguard-ishares-core-disrupts-institutional-fiduciary-ria-advisors/
ETF.Com Link:
https://riabiz.com/a/2017/10/20/td-ameritrade-is-gathering-feedback-after-michael-kitcess-blogged-overture-for-ria-collective-bargaining-on-wholesale-etf-line-up-shift
Regards,
Ted

Maybe I missed it, but does John Bogle discuss what impact stock buybacks have had on equities returns and dividend yields? This is especially important when a company finances these stock buybacks with a bond offering. Do we as investors own the bonds that buyback the stock or the now higher priced stock that now has taken on the debt to service these buybacks? Any then there is the hope of repatriating corporate earning into stock buybacks and it's implication of the markets.
From a Forbes article:

“There has been only one major driving force during the market rise of the past eight years: stock buybacks!”

Link (2017):
stock-buybacks-the-greatest-deception
and,

It’s an incredible thought that the driving force of the bull market in stocks may have been these buybacks. It has important implications for investors.

Link (2013):
why-are-stocks-rising
As we move away from a low interest rate environment and less and less QE, many of these financially engineered strategies could negatively impact future investor returns. Are these issues on the radar of smart guys like Mr. Bogle?
Everyone is hoping for a beautiful unwind as the Fed removes QE while at the same time raises interest rates. Not everyone will have chair when the music stops and the cost of capital returns to normal.

A different take on the mini-selloff, focusing on PCI: the thesis is that slight ticks down in the rate of NAV appreciation were the trigger. (Could apply to most Pimco CEFs.) The author traces the phenom back a few months.
Imho, it's a little hard to believe all the sellers noticed the slight, short-term leveling off of NAV gains, which were easy to miss and still beat the distribution rate; maybe a few got the ball rolling and general selling followed (?).
Hat tip to Aalan on M* for the link.

@msf: Thanks for the fact-checking. Sloppy work on my part. I guessed at the 1.5% figure by discounting the reported 30-day SEC yield of 1.73% for TRBUX somewhat. What I overlooked was that it’s much harder nowadays for managers to play games with their consumer level money market funds (ala Dick Strong / Mercury Capital) with those new reforms in place. Have corrected my numbers in the above post.
Something I might have added is that the SEC reforms forced money market funds to drop some higher tier corporate debt that the ultra shorts were all too happy to pick up. So, indirectly, the reforms aided the ultra shorts’ relative performance. That’s the point where I moved all my cash with TRP from money market to ultra short.

I agree with nearly everything hank wrote. The one exception is the juxtaposition of these two bullet items:
- Short term rates have risen since 2011, albeit not by much. But compared to a half-percent back in 2011, the near 1.5% available in money market funds today looks better than it did by comparison in 2011. And rates are expected to rise further.
- Recent SEC mandated rules on money market funds have arguably made them safer in comparison with RPHYX than they might have appeared back in 2011.
What the SEC did was bifurcate MMFs into safer ones (government MMFs) and ones with higher, or at least different, risks (prime MMFs). The risks are different because they may now slow redemptions or impose redemption fees in times of stress.
I've talked with Fidelity about this, and as near as we can figure out (didn't get a clear answer), it's possible to be charged a redemption fee for merely writing a check. This can happen if you're using a prime MMF (position fund) as a backup for your core account, and that check draws from the prime MMF at a time it's imposing redemption fees.
The safer funds (second bullet item) are government funds. These pay less than prime MMFs, and none is currently above 1% (first bullet item). Very close though (0.99%), and worth considering for their added convenience if the one you want is available NTF at your usual brokerage.
Current top MMF rates:
http://www.barrons.com/public/page/9_0204-trmfy.html

To put this in perspective, the new DOL regs for fiduciaries allow different levels of compensation for selling different categories of products, up to a certain level.
BICE allows higher compensation for selling complex products that require more work to explain to the customers. (DOL FAQ: "variation [in commission] is permitted ... based on neutral factors, such as the time and complexity associated with recommending investments".) This arises from the reasonable compensation rule.
At the same time, BICE forbids the additional compensation to be so high as to create an incentive to push these products. More generally (again from DOL FAQ) "financial institutions cannot 'use or rely upon quotas, appraisals, performance or personnel actions, bonuses, contests, special awards, differential compensation or other actions or incentives that are intended or would reasonably be expected to cause Advisers to make recommendations that are not in the Best Interest of the Retirement Investor.'"
If it takes someone twice as much time and effort to sell product A as product B, and compensation is equal, that person has a disincentive to sell (or "push", as Ms. Morgenson wrote) product A. That is true regardless of how much more or less profitable one product or the other is for the company. Unequal compensation for different products can be reasonable. Whether the differences merely equalize the sales incentives for different products or bias them (presumably toward the more profitable product) is a matter of the magnitude of the differences in compensation.
According to the DOL, the mere existence of compensation differences does not automatically create an incentive to sell one over the other, Ms. Morgenson aside. Yet she leaps immediately to the conclusion that it must, with no numbers, no explanation.
The TIAA Form ADV Part 2A that she cited mirrors the DOL regs: "TIAA’s compensation philosophy aims to reward Advisors with appropriate compensation, recognizing the degree of effort generally required of the Advisor in gathering and retaining client assets in appropriate TIAA accounts, products and services offered by TIAA affiliates."
Ms. Morgenson also leaps from writing about "advisers" in the first paragraph (who are bound by fiduciary duty, BICE, etc. not to be incentivized to "push" higher profit products) to "sales representatives" in the second paragraph, who are under no such constraints. Which one is it? Is the undisclosed complaint talking about sales reps or advisers?
That matters because, as I stated before, while this doesn't help TIAA's reputation, it doesn't paint them as an exceptionally bad actor. I've written before about Fidelity's reps having similar compensation schedules. Here's Fidelity's 2017 Introduction to Representatives’ Compensation.
"Certain representatives also receive differing compensation for different product types, for example, managed account and insurance product sales, which require more in-depth engagement with clients, provide more compensation than products such as money market funds." For example, Fidelity reps get quarterly compensation of 1 basis point for investments in MMFs, while10 basis points for investments in Fidelity's Portfolio Advisory Services and/or insurance products.
For anyone who's suggested going to a brokerage to discuss ideas "for free", tell me again how great a bargain that is.

I searched the fund and found volumes of discussions dating way back to July, 2011.
Hear’s one of the earliest - Riverpark Short-Term High Yield Fund Looks Like A Great Place to Park Money: https://mutualfundobserver.com/discuss/discussion/748/riverpark-short-term-high-yield-fund-rphyx-looks-like-a-great-place-to-park-money
Another early discussion - Riverpark Short-Term High Yield Fund - What Role in Your Portfolio?: https://mutualfundobserver.com/discuss/discussion/3384/rphyx-riverpark-short-term-high-yield-what-role-in-your-portfolio
With the proviso that I’ve never owned this fund and have only a limited understanding of the methodology employed, I’ll nonetheless venture a few thoughts:
- Short term rates have risen since 2011 - albeit not by much. Compared to a half-percent back in 2011, the near 1%* available in money market funds today makes them appear better in comparison than in 2011. (*near 1.5% corrected to near 1%)
- New SEC rules governing money market funds have made them safer in comparison with RPHYX than they might have appeared back in 2011.
- Both equities and high yield bonds have appreciated greatly since than. I haven’t heard a knowledgeable observer dispute for months that spreads between investment grade debt and high yield are about as narrow today as they’ve ever been.
Re #3 above - A manager in a distressed debt fund likely has been confronted with two choices since 2011: (1) reach for yield and compromise portfolio quality, or (2) settle for lower (relative) returns while maintaining portfolio quality. Some of the comments regarding “underperformance” of RPHYX suggest to me, anyway, that the fund’s managers have elected the second choice in order to preserve investor capital.
While I don’t follow RPHYX closely, I periodically compare returns against TRBUX (investment grade ultra short) which I own. RPHYX has consistently outperformed my fund (though with a higher risk profile).
Is RPHYX still a good investment? As @msf and others have noted, it all depends on your overall investment aporoach and time horizon. How much additional risk are you willing to take on in your cash / cash alternative sleeve in pursuit of incrementally higher yield on that portion of your investments? Personally, I could construct a portfolio in which RPHYX would meet a need. Presently it doesn’t fit.

What troubles me is this:

According to internal and S.E.C. documents, TIAA advisers receive more money if they put clients into what the company calls complexity products — in-house offerings like annuities and life insurance as well as costlier private asset management accounts and fee-based Portfolio Advisor accounts.
This creates an incentive, former employees said, for sales representatives to push retiring professors or administrators to move money from their institutional plan, with annual costs of around 0.3 percent of assets under management, to managed accounts charging fees of 0.7 percent to 1 percent.

While I enjoy Ms. Morgenson's columns and generally agree with them, they nevertheless tend to resemble hit pieces with the occasional questionable statement or two. Never factually wrong, but laden with innuendo.
She decries the "often hefty costs associated with TIAA funds". Yet elsewhere in the article she she states that "the average asset-weighted expense ratio on TIAA’s mutual funds was 0.32 percent in 2016", and acknowledges that this was "lower than the 0.57 percent mutual fund industry average".
She attempts some jiujitsu by arguing that this is still too high (though not calling the fees "hefty" in this section). Here's how she does that:
:
"Although lower than the 0.57 percent mutual fund industry average, it is more expensive than a low-cost provider like Vanguard, whose average expense ratio was 0.11 percent in 2016."
She gives M* as her data source. Here's what M* had to say:

The asset-weighted average fee of Vanguard’s funds fell to 0.11% from 0.14% during the past three years [2013-2016]. This 21% decline was the largest percentage decline among the largest fund providers, thanks to large flows into Vanguard’s low-priced ETFs and index funds and falling fees in some of Vanguard’s largest funds as the fund company passes improving efficiencies to fundholders. During that period, Vanguard has strengthened its leading position, as its market share rose to 22% from 18%. Vanguard’s 2016 asset-weighted average expense ratio of 0.11% was significantly below that of the second-lowest-cost provider, SPDR State Street, at 0.19%, followed by Dimensional Fund Advisors at 0.36%.

What we glean from this is that (a) you need to look at active/passive mix before chastising a family for high fees or lauding it for low ones, and (b) TIAA's 0.32% is right in line with other low cost families. Is Vanguard the only family that advisors are now allowed to use? Who are these other low cost providers that are like Vanguard?
That's not to say TIAA may not have been taken some dubious actions. Likely enough to take some of the shine off its white knight image. But ISTM not enough (or at least not enough documented) to paint it as an especially bad actor.
The one complaint she linked to seems to have merit IMHO. We have to take her word on the whistle-blower complaint though, since it is currently confidential. We don't know what else is in it, just as we didn't know the additional M* data that I gave above. (Yup, there's my own innuendo, without AFAIK misstating facts.)
To repeat, I like Ms. Morgenson's columns, I think she does a great job at digging through the underside of the financial world. But I don't take them (or any columnist piece) as gospel.

You can also read my responses in that thread. RPHYX has not had a single losing year, and only one losing quarter. Theoretically it should be impossible to outperform cash (under your mattress) 100% of the time while maintaining the same liquidity.
Put money at risk, any risk, and sooner or later a bad thing will happen (though perhaps not in your lifetime, let alone within your investment horizon). That includes putting money in banks (which can and do fail, freezing funds for short periods of time) and MMFs (which can break a buck and/or put a hold on your cash).
It's not a question of whether it is "worth taking risk" to outperform cash - if you want to generate any income from cash you have to take on risk. It's a question of characterizing the risks (lower return/loss of principal, volatility, liquidity), quantifying them, and then seeing if you're satisfied with the returns given the estimated levels of risk.
Actual performance of RPHYX does not appear to have been declining over the past three years. Its three year performance (as of Sept. 30th) was 2.20%, its one year performance was 2.32%, and its nine month YTD performance is 1.72% (which annualizes to 2.30%, though based on its October month-to-date performance is a figure that likely won't be achieved).

I wrote this post on RPHYX / RPHIX not too long ago: https://mutualfundobserver.com/discuss/discussion/35593/target-return-of-riverpark-short-term-high-yield-rphyx-rphix
Basically, RPHYX / RPHIX was originally billed as targeting a return of 3.5% - 4.5% a year, but the actual performance has been closer to 2.5% and declining. I still have a bit of money there but questioning whether it is worth taking risk for this level of return (and they do have risk, as 2015 showed).

Don’t know if it’s relevant to the other active thread about cash. But couldn’t help noticing that Price currently sees fit to invest just 2.2% of this fund in cash. What does that tell you? (Let’s assume for the sake of argument that they haven’t taken complete leave of their senses, nor is the allocation designed to favor funds with higher ERs.)
Domestic Stock 38.1%
Domestic Bond 30.1%
Foreign Stock 19.8%
Foreign Bond 9.8%
Cash 2.2%
Convertibles 0.3%
Preferreds 0.2%
Above taken from T. Rowe Price’s website: Composition of TRLAX.

I've got to go along with hank here. If you want to say that "For me cash is cash", and "Calling any type of bond 'cash alternative' is a misnomer imho", then you have to go whole hog.
Those CDs that Skeet likes? Aside from a lack of instant liquidity, they're bank accounts - IOUs of a corporation. Sure they're insured, but at their core, they're nothing but promises to pay. You can't use a bank account as legal tender - you have to withdraw the cash first (or direct the bank to send the cash to your creditor).
T-bills are bonds, just very short ones, unlike multi-year T-bonds. Who knows if the US government will honor them after December, or next March, or whenever the Treasury runs out of cash absent Congressional action.
I qualify my "cash alternative" suggestions with the comment that it depends on what you want this for, and by implication how much liquidity you're willing to forsake and/or how much risk you're willing to assume.
Once we start talking about any return on cash, we're into cash alternatives. Whether that's a bank account or a "cash equivalents" like a T-bill or MMF. The question is just a matter of degree - how far one is willing to go with risk, with liquidity.