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As usual, disregard the noise and follow markets in real time. In mid April 2025, after I was out for several weeks I posted that for the first time in my life I invested directly in an international fund. A couple months later, I increased it to 99+% of all our money. It is still there. For "sub" cash HOSIX and SCFZX have done well. See the chart vs PAAA, and AGZD.
I was looking at TBUX as a MMKT substitute as well. The slim margin of improvement is not guaranteed for 2026, but we have to try. Receiving only ~3.5% on cash will not cut it in this environment, and we all know that the buffoon would like to cut rates further.
When I go to buy these things called "groceries" (such a strange word to some, groceries) or durable goods and prices keep going up, it puts pressure on to reach for yield.
Inflation has not subsided contrary to what was promised early last year. The current administration insists on a much lower fed funds rate. This imprudent policy, if implemented, will only exacerbate inflation. Higher real yields generated by MMKT and "near-cash" funds are more important in the current environment.
On a loaf of good bakery bread here in Northern CA- from $5.50 to $6.00 in one week. That's about 10% folks, and just one item of many groceries that are going up... up... up...
We prefer active bond managers/funds over index fund. Our 401(k) has only BND and TSP G funds. In IRAs, we invest in multi-sector PIMIX, PYLD, and RSIIX (MFO considered it as flexible income), oversea DODLX and NRDCX.
This year, we are moving away from bank loan funds and we turned more cautious. Still think about EM bonds.
I was about to move a large slug of moneys from 3.5% Fido mmf to TBUX but had a meeting upcoming with my Fidelity 'adviser' (no fee, no pressure, just some veteran kid, so to speak, also fiduciary, who likes to talk every year or so; not sure I have acted before on anything he discussed).
He said, "I hate to use the word annuity but since you have so much our 3.5% mmf, we offer a bond annuity of varying lengths, shortest is 3y, currently this week 4.4% guaranteed, next week resets lower lower [this part too I believe], and you can access 10% anytime no penalty and the penalty is only 7% if you need to bail. Through the Fidelity Insurance Network."
Anyway, so I am researching that. FWIW. Providers are Fidelity Investments Life Insurance and also Guardian, MassMutual, Nationwide, New York Life, Pacific Life, USAA, and Western & Southern.
I don't know minimums but 3y is short enough that I will be considering a few hundred thou. I think. If I proceed. Just fyi.
A market value adjustment makes an annuity behave like a bond in terms of interest rate risk. If you have a 4% bond and rates go to 5%, your principal goes down. Similarly, if you have a 4% fixed rate annuity and rates go to 5%, you'll get less than your original investment (minus the 7% penalty) if you cash out early.
Of course if rates fall, then you'll get back more than your original investment (minus the 7% penalty).
In short, MVA adds interest rate risk if you're thinking about the early withdrawal "escape clause."
Comments
In mid April 2025, after I was out for several weeks I posted that for the first time in my life I invested directly in an international fund. A couple months later, I increased it to 99+% of all our money. It is still there.
For "sub" cash HOSIX and SCFZX have done well.
See the chart vs PAAA, and AGZD.
https://schrts.co/qInPfZAf
When I go to buy these things called "groceries" (such a strange word to some, groceries) or durable goods and prices keep going up, it puts pressure on to reach for yield.
The current administration insists on a much lower fed funds rate.
This imprudent policy, if implemented, will only exacerbate inflation.
Higher real yields generated by MMKT and "near-cash" funds are more important in the current environment.
FALN wins by Total Return, though. (1-year chart.)
investment grade (aka "fallen angels").
This year, we are moving away from bank loan funds and we turned more cautious. Still think about EM bonds.
When I left that company, when rolled over I used BCOSX in my IRA's.
I'm in my 40's and a simple core fund is all I really care to use at this point.
I was about to move a large slug of moneys from 3.5% Fido mmf to TBUX but had a meeting upcoming with my Fidelity 'adviser' (no fee, no pressure, just some veteran kid, so to speak, also fiduciary, who likes to talk every year or so; not sure I have acted before on anything he discussed).
He said, "I hate to use the word annuity but since you have so much our 3.5% mmf, we offer a bond annuity of varying lengths, shortest is 3y, currently this week 4.4% guaranteed, next week resets lower lower [this part too I believe], and you can access 10% anytime no penalty and the penalty is only 7% if you need to bail. Through the Fidelity Insurance Network."
Anyway, so I am researching that. FWIW. Providers are Fidelity Investments Life Insurance and also Guardian, MassMutual, Nationwide, New York Life, Pacific Life, USAA, and Western & Southern.
I don't know minimums but 3y is short enough that I will be considering a few hundred thou. I think. If I proceed. Just fyi.
Once in annuity, you can do 1035 exchanges among providers.
While we can debate whether a penalty is small if it is "only" 7%, I have a different concern with "only". Most of the SPDAs offered by Fidelity are Market Value Adjustment (MVA) annuities.
https://www.annuity.org/annuities/rates/market-value-adjustment/
A market value adjustment makes an annuity behave like a bond in terms of interest rate risk. If you have a 4% bond and rates go to 5%, your principal goes down. Similarly, if you have a 4% fixed rate annuity and rates go to 5%, you'll get less than your original investment (minus the 7% penalty) if you cash out early.
Of course if rates fall, then you'll get back more than your original investment (minus the 7% penalty).
In short, MVA adds interest rate risk if you're thinking about the early withdrawal "escape clause."