Investors Head For Fixed Income, Exposure Reaches 7-Year High
Bond and bond fund allocations rose 0.8 percentage points to 19.5%. Last month's increase keeps exposure
https://www.forbes.com/sites/investor/2020/05/12/investors-head-for-fixed-income-exposure-reaches-7-year-high/#19f66d8b5cf4
Many folks maybe staring to head for the hills now
Maybe good time to bail from stocks if near retirement

man, fwiw, I think this probably is backward --- add to retirement, add to equities, forget yield, do it, as bigtime as you can. How much time lies ahead before retirement?

I wasn't even invested 20 years ago. No money. But even with 58% bonds, 36% stocks, I'm down from my high-point by -7.5% tonight, including recent dividends. I'm not adding anything to the retirement portfolio. Minimal monthly additions into non-retirement account bond fund. So, not buying any more stocks, I am naturally more concerned about YIELD.

@Old_Joe
I agree completely. I think this is not going to be a "V" shaped recovery; It may not even be "U" shaped, but more "L" with a long tail.
All it will take to close movie theaters again is a couple of cases linked to a local theater. Same with restaurants, cruise lines fitness centers.. any business that depends on face to face public interactions etc.
Most REITS have reported collecting less than 70% of the rent owed them in April. How long before that number is lower?
If you can accept a 3 to 5 year stock market sag, I guess you are OK staying in the market, although it was down 80% in 1929- 1933 and did not fully recover until 1954, right?
People really need to consider why they are in the market. IF it is to fund a retirement 20 years away go for it. But if it is to get a dependable income stream for your current retirement I would be very very careful. I would much rather spend principal for a few months to live on than run the risk of a 25% decline
While I doubt the feds will help, maybe by mid to late summer if there is enough contact tracing and testing there will be the ability to identify cases quickly and keep the infection rate low. However, given the way the right wing is "weaponizing" Covid Politics, I think there are likely to be large areas of the country with significant disease for a long time
https://www.nytimes.com/2020/05/09/us/politics/coronavirus-death-toll-presidential-campaign.html?action=click&module=Top Stories&pgtype=Homepage

@msf
Thanks for the detailed explanation. I am recently retired and purposely reduced equity exposure before Covid as I was concerned about a 30 to 50% drop in my retirement accounts immediately if something like this came along. I guess I lucked out but now of course it is how and when to get back in. I am aiming to increase my income production gradually over the next year or so especially as MMF and most CDs are now paying almost as little as savings accounts. Fortunately I have enough to live on
It is very difficult to identify vehicles for reasonable ( over 2 or 3%) income returns without taking a lot of risk in these times. Many of the usual ideas like REITS and utilities have been decimated and will soon be forced to cut their dividends too. It will take a long time for a utility to recover from a 20 or 25% drop in share price.
Unfortunately many of the "income" strategies seem to ignore absolute returns claiming all that counts is the income, but I think that is short sighted, as dividend cuts usually follow share declines of this nature.

I would rather not have to set up another account, especially a retirement account to buy Marcus CDs. While FDIC guarantees work ( I lost two CDS during the 1980s housing crisis) it does take some time to get your money back so there is some opportunity cost.
1.5% after taxes will not beat inflation, unless you think there is a massive deflation coming. There are a number of 1 year A+ bonds paying up to 2.5% from companies that are highly unlikely to go bankrupt in the next year ie, Kimberly Clark, Home Depot, Wells Fargo. If a good analyst knows what they are doing I think they can avoid bankrupcies and make more than that with longer duration bonds.

Certainly moving money around in IRAs is more difficult. In a post I made on another board I acknowledged that. Here, it just didn't occur to me that the question concerned IRAs. You're right that they're more problematic.
I used to work with someone who had taken delight in putting money into the most shaky Texan S&Ls in the early 80s. He said that he had gotten his money back a few days after each institution failed. Apparently your mileage did vary :-)
I am curious about the bonds you're looking at. I did a search on Fidelity's site, expanding the parameters to look for corporate bonds with maturities through Nov. 2029, and S&P or Moody's rating of at least BBB+/Baa1 respectively. Fidelity showed an inventory of 1139 bonds. When sorted by YTW (highest to lowest), the highest yielding WF bonds I found were:
94974BGL8, 2.922%, BBB+/A3, 7/22/27
94974BFY1, 2.558%, BBB+/A3, 6/3/26
95000U2D4, 2.497%, A-/A2, 1/24/29 (call 10/23/28)
95001D6P0, 2.314%, A-/A2, 4/17/28 (call 4/17/22)
949746SH5, 2.181%, A-/A2, 10/23/26
949746RW3, 2.108%, A-/A2, 4/22/26 (and callable)
94974BFN5, 1.975%, BBB+/A3, 8/15/23
94974BGP9, 1.940%, A-/A2, 9/29/25
No other Wells Fargo bonds yielding at least 1.92%. The bond I bolded comes closest to what you were describing - it should be called in two years (not quite a one year bond) and it is rated just a couple of notches below your A+ or better requirement.
Corporates rated A+ or better that I can find with YTW over 2.5% that may be redeemed sometime in 2021 are premium bonds callable next year. One expects premium bonds to be called, so I would count these as 1-1.5 year bonds; at least until problems prevent them from being called. So some possibilities do exist, albeit with liquidity risk (they may not be called, and there are added trading costs to sell rather than wait for redemption).
They're largely from health companies and banks - BP Capital, Credit Suisse, Barclays, UnitedHealth, Merck, etc. But no Wells Fargo, no Home Depot, no Kimberly Clark. The Schwab screener lets you look for issuers, and the only bonds it shows for these three companies are generally rated A-/A2 for Wells Fargo, or A/A2 for the others.

@Bitzer SCPZX is one of the funds that did well this year esp in March, but M* is leery
"But such wins depend on precise timing, and mistakes can sting. The strategy slashed its 40% agency mortgage-backed securities stake to 4% in late 2008 and doubled down on commercial mortgage-backed securities (to 34%), for example, missing a rally in the former and getting hammered by the latter."
@msf I would rather not have to set up another account, especially a retirement account to buy Marcus CDs. While FDIC guarantees work ( I lost two CDS during the 1980s housing crisis) it does take some time to get your money back so there is some opportunity cost.
1.5% after taxes will not beat inflation, unless you think there is a massive deflation coming. There are a number of 1 year A+ bonds paying up to 2.5% from companies that are highly unlikely to go bankrupt in the next year ie, Kimberly Clark, Home Depot, Wells Fargo. If a good analyst knows what they are doing I think they can avoid bankrupcies and make more than that with longer duration bonds.
Unfortunately even the most conservation fund seems temped with asset backed securities and even emerging markets
I can't argue with cash, other than it pays very little and I want some diversification but also want to avoid the potential for capital loss.
Correlation are helpful in the big picture, but they are really backward looking as we don't know what is coming. While some individual companies will go under, the Feds entire reason to buy stuff is to keep the system from going under.

Hi again @Old_Joe.
Thus far this year ... and, I'm thinking that the only money I'll pull from the investmets is the required RMD from the retirement accounts and some of that will get repositioned back into investments.
.

FYI, under the CARES act, RMDs are waived this year so you don’t need to take it if you choose not to.

Hi again @Old_Joe.
Thus far this year ... and, I'm thinking that the only money I'll pull from the investmets is the required RMD from the retirement accounts and some of that will get repositioned back into investments. What I'm doing with most of the income that is generated from the investments is to increase my acreage by buying more shares of good funds. In this way, there will be a greater number of base shares to build from when the rebound comes (continues). Currently, wife and I live pretty well off of our SS checks, wife's school pension, and my contract work with my former full time employer before I retired from full time work. For us, life is good since we are debt free.
But, I also understand where you are coming from with how you are governing as well. 20% was a sizeable sum of our portfolio for us to hold in cash since it was paying next to nothing and losing to inflation. So, I over weighted my sleeve of good dividend paying equity funds in the growth & income section of my portfolio. Firured over the next five years or so I'd do ok with this strategy and grow my principal thus offsetting inflation and collect the dividend.
Much like a company if you are not growing principal and income then you are simply not progressing.
But, each of us on the board has to do what we feel is best. And, what I do might not be right for others. I understand that. But, I also understand, income has never gone out of style.

Thanks very much to both of you for your well-thought-through analysis on the bond situation. As you might know from some of my postings, when I hit 80 around a year or so ago I basically went to an all-cash situation. We are extremely fortunate to have ample retirement income from pensions and SS, and felt that at our ages we may not have time left to work through a five or ten year recovery cycle in the event of a serious downturn. (No prescience- certainly wasn't expecting the present situation!)
But the safety of MMKT and bank deposits is not only totally boring, but it's sort of like watching the inflation termites ever so slowly eat your house away from the inside. When I saw the post about MIAQX I wondered if maybe that might be a possible anti-termite move, but it seems that there just isn't any fool-proof answer to that problem.

@Bitzer, it ain't been a plus, obvs, but as someone who also holds PONAX and PDVAX (and MINT and GSY, fer krissake, also VCSH, and PCI and PDI in the recent past), I am not seeing that Gundlach's recent work and decisions are any worse. This even though I think he's a putz politically and in other ways.
Others smarter here have delved the various gogo bond areas each of these funds works in. Regardless, I am willing to believe that CAPE will do as well as / better than DSE_X in the near term and perhaps beyond, and am looking forward to getting out of my Pimco holdings when back to breakeven and into less gogo.
@BenWP, ty for VONG mention, was looking at that, had been thinking that in retirement I would just stick with the varsity, but will continue to, or perhaps resume is better, mull and reconsider. Some days I remain in poky mode.

Hi @bee. Thank you for your question. Have I ever considered using other funds and/or etf's as a benchmark? Yes, but I have not found a conserative asset allocation fund that generates the income stream that my master portfolio kicks off. And, besides being a former corporate credit manager I limit how much I will hold in any one fund. With this I spread it out over a number of positions.
In addition, I use to be more active and engage spiff positions more often as a source of income generation via realized capital gains. Now, I hold a good slug of CTFAX (about a 5% weighting) and I let this fund do this automatically for me. Thus, this has reduced the number of times I have been an active investor with my use of spiffs. I've got a lot of moving parts within my portfolio ... perhaps, to many for some ... but, not to many for me.
Again in review below is how I govern my portfolio as it does everything needed to meet my needs now in retirement. Why change now?
Old_Skeet's All Weather Asset Allocation.
My all weather asset allocation of 20% cash, 40% income and 40% equity affords me everything necessary to meet my needs now being in the distribution phase of investing. The benefit of this asset allocation is that it provides sufficient income, maximizes diversification, minimizes volatility, and provides long-term returns.
The 20% held in cash area provides me ample cash should I need a cash draw over and above what my portfolio generates plus it can provide the capital necessary to fund a special investment position (spiff) should I choose to open one during a stock market pullback. In addition, cash helps stabilize a portfolio during stock market volatility. Example of investments held in this area are cash, money market mutual funds and CD's.
The 40% held in the income area provides me ample income generation to meet my income needs in retirement. It is a well diversified area that incorporates a good number of income generating type funds. Some examples of investments held in this area are AZNAX, JGIAX & PONAX.
The 40% held in the equity area provides me some dividend income along with some growth, that equities generally provide, that offsets the effects of inflation plus, over time. Some examples of investments held in this area are IDIVX, NEWFX & SPECX.
My five largest positions are AMECX, CAIBX, CTFAX, ISFAX & FKINX. Two of these funds I have had positions in since my early teens AMECX & FKINX). I'm now 72+ years in age.
Generally, for my income distributions, I take no more than a sum equal to what one half of my five year average total return has been. In this way principal grows over time.
This works well for me and I have no plans to change the concept. I encourage others to develop something that works well for them and to stick with it even if is a two fund portfolio consisting of a stock index and a bond index fund. If this is what you want then why not use SFAAX? It's yield is too low for me at 1%.

Thanks for this info. I need to work through the app David linked. I imagine it’s similar to https://www.firecalc.com/
I like the idea of using the rates the IRS uses for RMDs - Which is discussed here:
https://www.bogleheads.org/wiki/Variable_percentage_withdrawal
I am somewhat of a believer in the “Retirement Redzone” theory which says you need to be somewhat conservative in your investments in the last 5 years before retirement. But also in the first 5 years of retirement when you have 30 more years to go living off what you have.

HSA doesn't convert to IRA after retirement. You can save all receipts and withdraw money from HSA account whenever you want. My employer HSA is with Fidelity and they allows us to invest anyway I want so I let the investment ride. No tax payment on withdrawal as long as you spend on deductible and vision expenses. I think recently the changes were passed where you can also use for OTC drugs (please confirm).

PRIJX is posterchild for not going with consensus - emerging markets was supposed to be the bomb. I own a smattering for my MIL and already took some tax losses.
Not sure what JoJo26 is thinking. Maybe one reason to avoid TRP international funds maybe they carry redemption fees? In any case, I think TRP ability is its target / balanced / retirement / allocation funds and is where they do good job.
Just my 2 cents.

Thanks for all of the links above.
In 2008, I was primarily in equity stocks. I just stopped looking at the market. And given some time, did fine. Stocks did what they were going to do.
Fast forward to now, in February/early March, having 50% of my retirement portfolio allocated to bonds, I switched from what I thought were riskier bond positions (riskier being credit/liquidity-wise) to more core-like ETFs, but was quite surprised to see how even core bond ETFs ended up being so volatile. There is something different in reading about the risks in a prospectus vs experiencing them. Lesson hopefully learnt.
The yahoo finance link on ETF bond pricing made clearer what I vaguely knew though was still disconcerting. But for a long term holder of these ETFs or mutual funds, does it actually matter? The interview with Matt Hougan, I thought suggested not, though he certainly seems to favor ETFs over mutual funds because of the price discounts when redemptions are involved.
With said volatility, it will be interesting to look back & see actual investor returns vs fund performance for bond funds. I suspect it will be more stock-like going forward.
How much does the ability to trade (individual investors &/or institutions ) bond ETFs throughout the day add to the volatility of pricing? Core mutual fund bond funds seemed to do better until the bailout occurred.

Using tools like Portfolio Visualizer (click on
metrics tab) an investor can review historical data on the safe withdrawal rate of their portfolio. For example a portfolio of 100% PRWCX would have a "Safe Withdrawal Rate" of 10% and a "Safe Perpetual Withdrawal Rate" of 5.6%. The rule of thumb for a Safe Perpetual Withdrawal Rate is 4% according to the Trinity Study (linked below).
Understanding these concepts is an important element of "safely" deriving a portion of one's income in retirement over a time frame of 30 - 50 years.
From the Article:

First, I wanted to see how this was working with recent stock market returns. The original study was only covering years up to 1995. I wanted to have more recent data. I wanted to make sure that the results were holding with more recent stock market behavior. So this simulation will cover returns until the end of 2019!
Secondly, the original study was only covering up to thirty years of retirement. I wanted to be sure that the portfolio can sustain withdrawals for much more extended periods. For people retiring early, I think that 50 years is not unreasonable.

The Trinity Study:
https://thepoorswiss.com/trinity-study/
The Update to the Trinity Study for 2020:
https://thepoorswiss.com/updated-trinity-study/
Here's a 4 Part Series on the Topic.
Part 1:
safe-withdrawal-rates-guide-part-1-background.html
Part 2:
https://fiprofessor.com/2019/07/14/safe-withdrawal-rates-guide-part-2-enough-data.html
Part 3:
https://fiprofessor.com/2019/07/21/safe-withdrawal-rates-guide-part-3-more-bootstrapping.html
Part 4:
https://fiprofessor.com/2019/07/27/safe-withdrawal-rates-guide-part-4-perpetual-rates.html

@bee can you please how you able to invest our HSA in BRUFX???

I simply set up an HSA account with Bruce Fund...I believe this was a paper application through the mail. I use my bank accounts billpay service to make month contributions electronically.
There website is spartan, but functions simply. No cash position. I am always invested 100% in BRUFX. I will eventually open another HSA with Fidelity where I can widen my fund choices and hold near cash.
I have done withdrawals from BRUFX for medical reimbursements, but I do this very in frequently. I consider the fund my Long Term Care policy which will hopefully fund / offset much of my healthcare costs in retirement.

@old_skeet you're very welcome. And thanks for posting your experiences with CTFAX I've added the fund in my taxable and retirement accounts at Fidelity and Schwab.

CTFAX's M* review states that their methodology was unproven. Last updated in 2019. Will be interesting to read the update. I do recall an article about how Columbia'starget retirement funds did things differently with the equity sleeve.