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@Baseball_Fan. Asking myself the very same question. If this bunch of low risk money is in a taxable account the answer will be different than if a tax deferred situation. Are you willing to increase the risk level for this pile of money? Is it money you will want access to in the next 36 months or so? Sorry,,,,, more questions than answers. We knew that 5% risk free wouldn’t last forever …
If you liked ”CDs/Tbills/MMKT funds” a year ago, you should love them now. On a relative basis they’ve gotten cheaper. Both the S&P and NASDAQ are ahead more than 27% year-over-year. I wouldn’t be throwing new money into the latter.
“Walls of money” is a curious figure of speech. Apparently reference to cash-centric investors who were happy to settle for 5 - 5.5% returns, but who are disillusioned at the prospect of 4 - 4.5%? It’s all relative. The higher rates were available as consumer prices spiked 5 or 6% year-over-year. With annual price rises coming in at half that (or less) the return on safe money should be lower - a lot lower.
If the question is about where to get the best short-term interest rates now, it’s a good question. I don’t really know. You pretty much have to “go with the flow” and take what’s available (if you want super-safe money). If you have a 3 year time horizon … maybe short to intermediate term bond funds? NEAR was mentioned recently. I’m looking at that and also TDTT. For 5 years out I’m using CVSIX and LQDH for my conservative money. Should net a percent or so over cash. But over shorter periods both have the potential to lose money.
BTW - TBUX is highly rated. But it is what it is - an ultra-short bond fund. (“Nothing to see here. Move on.”)
MMKT Funds can't get "cheaper". Each share is maintained (hopefully) at $1.00. Not guaranteed, but trust me- all hell will break loose if they ever bust the buck, as we know because it happened in 2008 when Lehman went belly-up.
The point I tried to make was that cash is a better value now compared to stocks than it was a year ago (cheaper on a relative basis). That is - unless you expect stocks to keep generating 27% annual returns year after year.
I'm cribbing some of my response to the Crossing Bridge thread. The return period under discussion is since April 30.
I added CBLDX to the bond fund gaggle in my IRA because it had a positive return in 2022. I'm guessing XONE would have too. Since April 30 XONE is up 2.87 to CBLDX's 2.54.
The rest of my deck chairs are THOPX, up 5.08%, USTB up 4.72, and TBUX up 3.05. Stock Charts doesn't seem to recognize WSHNX. These funds all had various negative returns in 2022
As you can see, a mix of shorter durations and credit qualities. By this time next year I expect 'll have this list narrowed down considerably.
All of these buys have been commented on in the buy, sell, why thread.
I'll leave a small amount in the mmk in my IRA in case of unforeseen buying opportunities.
I am definitely staying on the short side of duration since I am inclined to think that amnesia is a comorbidity with inflationary periods. I don't trust either party to avoid foolish behavior after the election is over and everyone is seated. I do follow the Anna Karenina formula, which I paraphrase here: Happy families are all alike. Unhappy families are each unhappy in their own way.
I'm not interested in complex alternatives to bonds.
Wall of Money looking to go somewhere in the face of lower rates..... What I have in the MMKT is now earmarked to be grown for travel next year. So, short-term. With gradually falling rates, I'd still be happy there, at 4%. Virtually risk-free. And it's not in the Markets. Otherwise, my (nearly) 60/40 portfolio won't change much. I'm hoping stocks will thrive with lower rates, even if my bond fund yields come down a couple of notches. "Same difference," is the logic. But all battle plans are perfect until contact with the enemy.
I’ve got a bunch of CDs and Treasuries coming due, and some CDs that are likely to be called. I’ll probably invest some of the cash in more CDs but more likely in bond funds. Not likely to invest in more stocks unless the markets crash.
I posted since last year that RPHIX,CBLDX,RSIIX are great funds managed by the same manager. RPHIX would be my closest thing to MM, the other 2 are just good risk/reward funds. THOPX is another option that I found this year.
Never in my life I owned CD because I can find better bond funds.
@ FD. For several years the total return on CD’s killed bond funds for everyone but you. The situation was shorted lived but lots of risk free cash flow was fun while it lasted.
@ FD. For several years the total return on CD’s killed bond funds for everyone but you. The situation was shorted lived but lots of risk free cash flow was fun while it lasted.
First, the question is about now. Second, in the last 2 years the right bond funds killed CD...CBLDX made 15+%...OSTIX 20+%. There are better ones. The right bond funds have more to go. 2024 has been one of the easiest one to make money. Third, I know others who have done well too.
Still not sure the need to lower rates aggressively from here. S@P hit an all time high this morning. Junk bonds at all time highs. Several firms revising third quarter GDP higher. An interesting tidbit from market technician Ryan Detrick. Since 1980 the Fed has cut rates 20 times when the S@P was at or within 2% of all time highs. All 20 times the market was higher 12 months later with an average return of 13.9%.
@Junkster Still holding my Junk. The new Core-Plus fund is just 1.5% of portfolio. WCPNX. Enjoying the ride, though my junk funds are by no means leading the pack.
@Junkster Still holding my Junk. The new Core-Plus fund is just 1.5% of portfolio. WCPNX. Enjoying the ride, though my junk funds are by no means leading the pack.
@Crash, I give you credit for your persistence and glad it is working out for you.
CBLDX is 40% investment grade and 55% high yield. Curious to know how this can be a comparable to a MM or CD where principal is (almost) guaranteed.
Personally I would consider CBUDX as closer to a MM because 75% of holdings are investment grade.
Why compare CBLDX to MM when the Fed fund rates will be lower in months and MM income will go lower, and CBLDX will still make money. CBLDX already made about 2% more for YTD (https://schrts.co/frWeCzpD)
But you are right, if you want a guarantee, use CD+MM.
Question so harsh to answer. Still 12- 15 yrs til retirement 78% in stocks /22% Cash/cd (most cash in Corp bonds, sgov, $bil, and fbnd). 4% cryptos. Not sure if will sale afterdec 20th...after Xmas rally. 2025 could be recessed and poor returns?. I am so scare of large down turns from recessions now and 22% in cash.
For mama portfolio retirement -Most parked in Target date fund 2020, bonds, fbnd bnd, sgov, tbil. New div $ go into new Corp bonds (try look for ones return 4.9 - 5.3% ytm 4-10 yrs)
Try to place new incomes and cash to new corp bonds and jnk. Still also place cash secure puts and cover calls to generate weeklies incomes (until the indicators say market extremely overbought then may have have take profits and sell little more). Extremely lucky to learn options games and managing- looking for 1-3k weeklies Extra premiums incomes from optipns
Comments
Are you playing for yield or capital gains or a combination of the two? For each what are your expectations and which time frame?
Edit: you can share the answers and directly ask the bond experts (a la Junkster) for help with fund choices.
“Walls of money” is a curious figure of speech. Apparently reference to cash-centric investors who were happy to settle for 5 - 5.5% returns, but who are disillusioned at the prospect of 4 - 4.5%? It’s all relative. The higher rates were available as consumer prices spiked 5 or 6% year-over-year. With annual price rises coming in at half that (or less) the return on safe money should be lower - a lot lower.
If the question is about where to get the best short-term interest rates now, it’s a good question. I don’t really know. You pretty much have to “go with the flow” and take what’s available (if you want super-safe money). If you have a 3 year time horizon … maybe short to intermediate term bond funds? NEAR was mentioned recently. I’m looking at that and also TDTT. For 5 years out I’m using CVSIX and LQDH for my conservative money. Should net a percent or so over cash. But over shorter periods both have the potential to lose money.
BTW - TBUX is highly rated. But it is what it is - an ultra-short bond fund. (“Nothing to see here. Move on.”)
The point I tried to make was that cash is a better value now compared to stocks than it was a year ago (cheaper on a relative basis). That is - unless you expect stocks to keep generating 27% annual returns year after year.
I'll leave a small amount in the mmk in my IRA in case of unforeseen buying opportunities.
I am definitely staying on the short side of duration since I am inclined to think that amnesia is a comorbidity with inflationary periods. I don't trust either party to avoid foolish behavior after the election is over and everyone is seated. I do follow the Anna Karenina formula, which I paraphrase here: Happy families are all alike. Unhappy families are each unhappy in their own way.
I'm not interested in complex alternatives to bonds.
@Crash- yes, that's also pretty much my approach right now.
RPHIX would be my closest thing to MM, the other 2 are just good risk/reward funds.
THOPX is another option that I found this year.
Never in my life I owned CD because I can find better bond funds.
Second, in the last 2 years the right bond funds killed CD...CBLDX made 15+%...OSTIX 20+%. There are better ones. The right bond funds have more to go. 2024 has been one of the easiest one to make money.
Third, I know others who have done well too.
But, if you like CD, by all means use them.
Personally I would consider CBUDX as closer to a MM because 75% of holdings are investment grade.
Still holding my Junk. The new Core-Plus fund is just 1.5% of portfolio. WCPNX. Enjoying the ride, though my junk funds are by no means leading the pack.
https://www.nytimes.com/2024/09/18/opinion/paul-krugman-fed-rate-increase.html
CBLDX already made about 2% more for YTD (https://schrts.co/frWeCzpD)
But you are right, if you want a guarantee, use CD+MM.
Still 12- 15 yrs til retirement
78% in stocks /22% Cash/cd (most cash in Corp bonds, sgov, $bil, and fbnd). 4% cryptos. Not sure if will sale afterdec 20th...after Xmas rally. 2025 could be recessed and poor returns?. I am so scare of large down turns from recessions now and 22% in cash.
For mama portfolio retirement -Most parked in Target date fund 2020, bonds, fbnd bnd, sgov, tbil. New div $ go into new Corp bonds (try look for ones return 4.9 - 5.3% ytm 4-10 yrs)
Try to place new incomes and cash to new corp bonds and jnk. Still also place cash secure puts and cover calls to generate weeklies incomes (until the indicators say market extremely overbought then may have have take profits and sell little more). Extremely lucky to learn options games and managing- looking for 1-3k weeklies Extra premiums incomes from optipns
Nobody know for sure what futures will bring