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@MikeM and @Ted, are cash/CD viable alternatives to bond fund, at least for the next 6-12 months? Money market funds now pay a bit over 1%. The upcoming Fed meeting is near end of March and 25 basis point raise is expected.
...are cash/CD viable alternatives to bond fund, at least for the next 6-12 months?
@Sven, I guess it all depends on what you believe total return on your bonds funds will be over the next year. If you believe intermediate and multi-sector funds will continue to cruise along with past performance of 3-6% return, then I guess it would not be time for CDs. On the other hand, if you extrapolate bond returns from over the last 3 months, your bond fund return by the end of 2018 will be -3 to -5%. It's possible, maybe very likely you will lose principle going forward.
Which direction are you going to bet on? You can get MMs returning 1.5% now. 1 year CDs are 2%+ now. So I believe yes, they are not only viable, but a better "bet" than bond funds going forward - only because I believe there is little to no up side for bond funds.
But that's just my 2-cent bet. Everyone has to weigh the data in their own way. (not to say you can't find categories and sectors where bond funds will out perform.
@Sven, depending on your need to access that cash you could build a CD ladder at Fidelity ( and I'm sure other places) that will get you closer or above 2% returns. A couple of examples can be found here:
@MikeM, I reduced my equity and bond allocation by 15% early in the year and have been holding double digit in cash. We had a good run last year but the geopolitic situation has worsen and the possibility of a trade war. I may increase my TRP Capital Appreciation and let the manager to make that decision. He has been right on in last several years.
@Mark, thanks for the article. For now I don't need income from bonds, but just to counteract the stock asset class. A CD ladder sounds interesting now especially there maybe as many as four rate hikes this year. I will check out Fidelity and Vanguard.
This report is coming from the Gamboa Rain Forest Resort, Panama.
Old_Skeets market barometer closed the week with a reading of 156 which indicates that the S&P 500 Index is undervalued based upon the barometer's metrics.
I'm looking to see a reading around 162 before I start to consider buying.
Traveling and have limited wi-fi access so my my post will be few.
S&P lost 6.3% last week and now it is -3% for the year. I would wait a bit since there is likely more volatility to come. The trade war is just unfolding as one watch a car crash in slow motion.
I sold a portion of FMIJX today, but will probably hang on for a little while longer with the rest. It's definitely having a rough patch, as you said probably in part due to the currency hedging.
Comments
Which direction are you going to bet on? You can get MMs returning 1.5% now. 1 year CDs are 2%+ now. So I believe yes, they are not only viable, but a better "bet" than bond funds going forward - only because I believe there is little to no up side for bond funds.
But that's just my 2-cent bet. Everyone has to weigh the data in their own way. (not to say you can't find categories and sectors where bond funds will out perform.
derf
https://seekingalpha.com/article/4156499-retirement-strategy-cash-set-free-make-money
This report is coming from the Gamboa Rain Forest Resort, Panama.
Old_Skeets market barometer closed the week with a reading of 156 which indicates that the S&P 500 Index is undervalued based upon the barometer's metrics.
I'm looking to see a reading around 162 before I start to consider buying.
Traveling and have limited wi-fi access so my
my post will be few.
Sold out of FMIJX the other day due to its currency hedging posture given the looming trade war.
Looking to add to TWEIX, POGRX, and perhaps others in the near future on continued weakness.
Yup, sold the whole thing. (I'm not worried about taxes.)
It's re-opening again soon anyway so I can always go back in if I want.