Fixed income: Brokerage CDs, bonds, or stable value fund?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
mtmingus
Posts: 679
Joined: Sun Jan 07, 2018 3:15 pm

Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by mtmingus »

For your fixed income portion of AA, do you leave it totally bond funds, or split among

Brokerage CDs (ladders)
Bonds (AA3 or higher)
401k stable value fund (around 2%)
Bond funds
jebmke
Posts: 25474
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by jebmke »

Except for a large Tip holding we bought in October, 2008, all of our fixed is in bond funds.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
student
Posts: 10761
Joined: Fri Apr 03, 2015 6:58 am

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by student »

Mostly in a stable value fund averaging a bit over 3%.
Topic Author
mtmingus
Posts: 679
Joined: Sun Jan 07, 2018 3:15 pm

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by mtmingus »

mtmingus wrote: Sun Jun 26, 2022 10:51 am For your fixed income portion of AA, do you leave it totally bond funds, or split among

Brokerage CDs (ladders)
Bonds (AA3 or higher)
401k stable value fund (around 2%)
Bond funds
Forgot the other two:

I bond
MMF (0%)
jebmke
Posts: 25474
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by jebmke »

mtmingus wrote: Sun Jun 26, 2022 11:13 am
mtmingus wrote: Sun Jun 26, 2022 10:51 am For your fixed income portion of AA, do you leave it totally bond funds, or split among

Brokerage CDs (ladders)
Bonds (AA3 or higher)
401k stable value fund (around 2%)
Bond funds
Forgot the other two:

I bond
MMF (0%)
My MMF is paying 1.38% -- but I only use if for a sweep account mostly. But it is certainly better than a savings account.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by dbr »

Excepting a certain amount of cash flow management everything is in bond funds.
User avatar
dual
Posts: 1383
Joined: Mon Feb 26, 2007 6:02 pm

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by dual »

here are some resources for interest rates:

Fidelity page with rates for bonds and CDs

https://fixedincome.fidelity.com/ftgw/fi/FILanding


Bloomberg treasury including TIPS rates
https://www.bloomberg.com/markets/rate ... -bonds/us
CloseEnough
Posts: 1290
Joined: Sun Feb 14, 2021 7:34 am

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by CloseEnough »

TIAA Traditional (with 3%, no restrictions) = 35%
BNDX (Vanguard Total International Index) = 25%
SWSBX (Schwab Short Term Bond index) = 12%
SWAGX (Schwab US Aggregate Bond index) = 25%
Cash (roughly one year expenses). = 3%

Comments, suggestions?
BernardShakey
Posts: 1147
Joined: Tue Jun 25, 2019 10:52 pm

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by BernardShakey »

mtmingus wrote: Sun Jun 26, 2022 10:51 am For your fixed income portion of AA, do you leave it totally bond funds, or split among

Brokerage CDs (ladders)
Bonds (AA3 or higher)
401k stable value fund (around 2%)
Bond funds
In order of decreasing size:
1. 401k Stable Value Fund
2. 401k Bond Index Funds (~intermediate duration)
3. TIPS
4. Cash
An important key to investing is having a well-calibrated sense of your future regret.
User avatar
JoMoney
Posts: 16260
Joined: Tue Jul 23, 2013 5:31 am

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by JoMoney »

I don't use a 'constant mix' asset allocation.
My current fixed income is a mix of Bank account, Money Market mutual fund, Series I Savings Bonds, 401k Stable Value fund.

Now that there are positive real yields I've been considering dabbling in a TIPS index fund (FIPDX) - the idea of TIPS appeals to me, but when real yields were negative they did not, also I've grown weary of Treasury Direct and looking for something that will replace my Series I Savings bonds whenever I get around to start funneling that money into retirement accounts (which is where I will keep the FIPDX Fidelity TIPS Index fund)
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
UpperNwGuy
Posts: 9475
Joined: Sun Oct 08, 2017 7:16 pm

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by UpperNwGuy »

Intermediate-term nominal bond ETFs.
User avatar
FoundingFather
Posts: 407
Joined: Fri Dec 18, 2020 9:20 pm

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by FoundingFather »

mtmingus wrote: Sun Jun 26, 2022 10:51 am For your fixed income portion of AA, do you leave it totally bond funds, or split among

Brokerage CDs (ladders)
Bonds (AA3 or higher)
401k stable value fund (around 2%)
Bond funds
Most of our fixed income is in I Bonds (first bought them around 15 years ago?). Have used short term or total bond funds at times when I bonds were not enough fixed income. As I have been learning more, I have been becoming more comfortable with the idea of individual bonds. I may consider purchasing those in the future.

I Bonds will continue to remain my largest fixed income holding.

Founding Father
"I do not think myself equal to the Command I am honored with." -George Washington (excerpt from Journals of the Continental Congress, 16 June 1775)
MikeG62
Posts: 5065
Joined: Tue Nov 15, 2016 2:20 pm
Location: New Jersey

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by MikeG62 »

Thankfully sold most bond funds last year.

Our fixed income is in a mix of the following in descending dollar value:

1. Individual Muni Bonds
2. CD's
3. HYSA's
4. Treasuries
5. Bond Funds
Real Knowledge Comes Only From Experience
CoAndy
Posts: 901
Joined: Thu Jun 06, 2013 4:45 pm

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by CoAndy »

401(k) is in a target retirement fund. 457 FI is spread among:

1. Total bond Fund
2. TIPS fund
3. Stable Value
4. Money Market funs
Dandy
Posts: 6701
Joined: Sun Apr 25, 2010 7:42 pm

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by Dandy »

I have a rather large portfolio and like to use a variety of fixed income products. Large allocation to VG Balanced Fund and Wellesley Income Fund (in my IRA), also have VG Inflation Protection Fund, VG Intermediate and Ltd Duration Tax Free Funds, CDs, Money Market Fund and Savings accounts and 2 Short Term Index Funds.

Wow, does that seem too complex? Does it really matter if you have a bit more in a CD than a bond fund?? I end up with about 25% no loss of principal e.g. FDIC products and Money Markets and Savings, 25% short term bond funds and 50% intermediate bonds. I focus on making sure I have enough No loss of principal and short term bond funds to support my wife's withdrawal needs to at least age 90 should I pass first. She will lose her SS (mine is higher) and 1/2 my pension and have to file single instead of joint.

I think with a drop of more than 10% in the Total Bond Fund others might consider at least some diversity in their fixed income --especially in retirement with a loss of human capital.
ivgrivchuck
Posts: 1672
Joined: Sun Sep 27, 2020 6:20 pm

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by ivgrivchuck »

Currently I use only I-bonds and EE-bonds.

In the past I've also used CDs, VTEB. I might consider a MYGA in the future.

It depends on the rates...
25% VTI | 25% VXUS | 12.5% AVUV | 10% AVDV | 2.5% VWO | 25% BND/SCHR/SCHP
CloseEnough
Posts: 1290
Joined: Sun Feb 14, 2021 7:34 am

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by CloseEnough »

Dandy wrote: Mon Jun 27, 2022 11:46 am
I think with a drop of more than 10% in the Total Bond Fund others might consider at least some diversity in their fixed income --especially in retirement with a loss of human capital.
Well I was lucky to have TIAA traditional as an option, and made a good decision a few years ago to diversify fixed income with it. But not smart enough to otherwise diversify within fixed income, so, yes, the loss in bond funds does make one re-think the fixed income side. I see so much discussion in this forum, especially in this down market, of how to allocate fixed income, and I guess the recent drop in bonds is why, combined with a return of higher inflation. On the other hand, the deltas of the various ways to diversify in fixed income (excepting junk bond type investments) doesn't really move the needle when compared to what happens on the equity side, and, I tend to think that overall asset allocation may be more important. That said, I would do things a bit differently on the fixed income side, if I had the benefit of 20/20 hindsight.
calwatch
Posts: 1447
Joined: Wed Oct 02, 2013 1:48 am

Re: Fixed income: Brokerage CDs, bonds, or stable value fund?

Post by calwatch »

I use I Bonds, EE Bonds, and VCSH (Vanguard short term corporate bonds). I have held HYG (the corporate junk bond ETF) in the past but have found that the interest rate premium was not worth the volatility in the net asset value.
Post Reply