I am way out of balance when it comes to bonds in my 401k.
I was thinking about putting some future pay check deductions into Bond Mutual Funds.
When is it a good time to buy bonds (Mutual Funds - not individual bonds)?
I heard when interest rates are low the bonds loose value as the rates go up. Aren't interest rates still relatively low? Does that make Bond Funds a bad buy right now?
I have no clue when it come to Bonds ... I would think right now because the DOW and the S& P 500 (although a little volatile lately) are still trading near record highs - that this would be a great time to buy Bonds (Funds).
When Stock values are high ... Bonds are low? I am not sure it works that way though.
Anyway - thanks in advance.
Lots of great info there
Its a little work, but I buy 4 week treasuries from treasury direct for my fixed income portion of my portfolio. This isn't practical for a 401(k) so cash or money market funds are a safe alternative.
Lots of great info there
Will do ... Thanks.
Bogle started Vanguard ... didn't he?
A CD Ladder will have a positive return and you can roll them over if rates are still on the rise. Some of the Money Market Funds are now paying a decent rate. Treasury Direct can also be a good place to park money.
Beyond that, why on earth would you turn tax free income into taxable income, which is what would happen to the muni bond interest when it gets distributed out of the 401(k)?
I have exactly 3 choices in Bond Funds, 2 of the 3 are index funds which I always go to before actively managed funds.
I guess I should just continue to put money in stocks - maybe move to a small percentage cash position and then buy some Bonds when interest rates are much higher. They have been so low (nothing) for a long time now (IIRC - since the Housing Bubble exploded?). I am surprised they have not increased quicker but, then we probably would not have had the bull market as long as we have. I guess you just have to take what the market is offering and invest accordingly?
Thanks again (sincerely) for everybody's input !
A CD Ladder will have a positive return and you can roll them over if rates are still on the rise. Some of the Money Market Funds are now paying a decent rate. Treasury Direct can also be a good place to park money.
Are interest rates falling? I thought they were going up ... (though very slowly) and when interest rates go up Bonds (which are actually loans) lose some of their value. If you own a loan at 2% it becomes less valuable then a loan at 4% .... of course.
I have exactly 3 choices in Bond Funds, 2 of the 3 are index funds which I always go to before actively managed funds.
I guess I should just continue to put money in stocks - maybe move to a small percentage cash position and then buy some Bonds when interest rates are much higher. They have been so low (nothing) for a long time now (IIRC - since the Housing Bubble exploded?). I am surprised they have not increased quicker but, then we probably would not have had the bull market as long as we have. I guess you just have to take what the market is offering and invest accordingly?
Thanks again (sincerely) for everybody's input !
Short lease - I looked up some rough guidelines from the investing book I mentioned to you on asset allocation. If you are in your 50's the recommendation is to have somewhere between 15%-35% of your portfolio in bonds. When do you plan on retiring? If you are 5-10 years from retirement having all your money in stocks maybe be risky if there is another economic downturn. If the stock market drops 20-30% right before you retire that would really suck. Better to be safe then sorry and nobody should take on risks outside of their comfort zone. If the bond market is making you uncomfortable putting some of your money in a money market fund or a short term bond fund I think is a reasonable option.
And yes, I think it is wise to take what the market is offering. To use a Gettlemen quote that also applies to investing "You can't get too cute". If you are worried that you are not earning enough of a return on your money to retire, rather then trying to take on more risk, you could consider trying to save more money.
Does your company offer you some basic financial planning advice? I would highly recommend finding a trusted financial planner (this can be difficult though, as it is hard to find someone who is truly looking out for your interests and not just trying to make money off you like a stock broker).
Another option is to look for some asset allocation or target date mutual funds in your 401k. These are mutual funds that invest in other mutual funds, and do the asset allocation for you based upon your target date of retirement. That might be a good option to consider.
Lastly, interest rates are increasing.