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  1. #17926
    Join Date
    Jun 2020
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    4,110
    Well yeah. I guess I assumed he didnít want the hassle of changing institutions.

  2. #17927
    Join Date
    Apr 2006
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    Target date funds are very heavy into bonds as they get close to the target date. There is interest rate risk associated with those funds as they near their target date and move more of their holdings out of equities and into bonds.

    If rates continue to go up, those target date funds are going to lose money as the coupon value of the bonds they hold goes down.

    This won't be a problem if you believe the Fed is done raising rates. If they continue to raise rates though...

  3. #17928
    Join Date
    Sep 2005
    Location
    Not in the PRB
    Posts
    31,705
    Vanguard's funds are simply a mix of 4 (I think it's 4) index funds, and they balance down (move out of equities, but they still keep some) as they get closer to target. You can increase the equity mix by choosing a later target date (for ex, I have some money on a 2040 fund though I sure as fuck better be retired by 2035).

    Obviously, if the mix they use doesn't appeal to you, then it's not good. But it is pretty much the easiest comprehensive way to invest for a future date.
    "fuck off you asshat gaper shit for brains fucktard wanker." - Jesus Christ
    "She was tossing her bean salad with the vigor of a Drunken Pop princess so I walked out of the corner and said.... "need a hand?"" - Odin
    "everybody's got their hooks into you, fuck em....forge on motherfuckers, drag all those bitches across the goal line with you." - (not so) ill-advised strategy

  4. #17929
    Join Date
    Apr 2006
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    Yes, it is easy. My point is that there is interest rate risk in near dated target date fund because they move heavily into bonds as they near maturity. If interest rates continue to go up, the bond funds you are invested in through the target date funds will lose value.

    Buzz might be better off moving to money market funds instead of target date funds if he expects interest rates to continue to rise because a near dated target date fund (and it's underlying bond index fund) will likely lose value in the short term in a rising interest rate environment. Money market funds don't have that risk and will perform better if rates continue to rise.

    Someone with a longer time horizon (kids don't got to college until 2030 or 2035) is probably better off just using a target date fund for the simplicity of it and because the likelihood of a long dated target fund over performing money market funds in the long term.

  5. #17930
    Join Date
    Oct 2006
    Location
    MA
    Posts
    6,875
    Quote Originally Posted by Kevo View Post
    Yes, it is easy. My point is that there is interest rate risk in near dated target date fund because they move heavily into bonds as they near maturity. If interest rates continue to go up, the bond funds you are invested in through the target date funds will lose value.

    Buzz might be better off moving to money market funds instead of target date funds if he expects interest rates to continue to rise because a near dated target date fund (and it's underlying bond index fund) will likely lose value in the short term in a rising interest rate environment. Money market funds don't have that risk and will perform better if rates continue to rise.

    Someone with a longer time horizon (kids don't got to college until 2030 or 2035) is probably better off just using a target date fund for the simplicity of it and because the likelihood of a long dated target fund over performing money market funds in the long term.
    What rates have risen? 6month tsy out to 30year yields have fallen the last 2 months.


    Anyway if you need the money in 3 months put it in a money market, make 4+% and take it out when you need it. Iíd say the same if mm rates were back at 0.05% like the last 10-15 years. Liquidity is your #1 concern. Not timing the market from an internet chat room.


    That saidÖvanguard doesnít use an allocation to commodities in the bulk (all?) of their target date strategies. ďKeep it simpleĒ doesnít work quite as well in an inflationary regime. Others (fidelity, blackrock, state street) I believe do.
    Decisions Decisions

  6. #17931
    Join Date
    Apr 2006
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    Movin' On
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    3,615
    Brock, I think we're saying the same thing but you are coming from a more academic perspective and I'm layering in pontification about the potential for interest rates to continue to rise.

    I think there is a chance of rates continuing to rise despite recent drops in 6 month to 30 year bond rates. Today's employment report was better than expected and wage growth was much higher than expected.

    Brock knows more than I do and I'd do what he was suggesting if it were my kid's college fund and said kid was starting college in the fall.

  7. #17932
    Join Date
    Oct 2006
    Location
    MA
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    6,875
    Quote Originally Posted by Kevo View Post
    I think there is a chance of rates continuing to rise despite recent drops in 6 month to 30 year bond rates. Today's employment report was better than expected and wage growth was much higher than expected.
    If the fed were to hike again (chances before this morning were very low but deffffinitely not 0 now) rates would go DOWN. Like they have the last 2 months.

    We are near the end of the hiking cycle if not already there. Inflation is coming down. The rate hikes will eventually hit businesses which will hit workers and consumers. Cuts are priced in for later this year and 2024. Why? Because shits going to get real.

    Thatís why at this point, the more the Fed raises the front end, if they do, anything 5 years and out yields will likely fall. And if the Fed has to cut its because shits hitting the fan. And yields will drop. And thatís why you put money into longer dated bonds. Especially when theyíre paying 4%.
    Decisions Decisions

  8. #17933
    Join Date
    Feb 2014
    Posts
    1,407
    Is there a high level reason for the disparity in growth of indexed mutual funds vs etfs on a day like today?

    VFIAX 3.70 vs VOO 3.73
    VTSAX 0.97 vs VTI 2.05

    Or is this something more in the weeds like specific allocations, expense ratios, etc?

  9. #17934
    Join Date
    Oct 2006
    Location
    MA
    Posts
    6,875

    Is the stock market going to tank?

    Isnít everything up ~1% today?


    Mutual funds price after close. ETFís price in real time. But everything should be aligned by now.
    Decisions Decisions

  10. #17935
    Join Date
    Feb 2014
    Posts
    1,407
    You're totally right, my stocks app reverted to price change instead of percentages.

  11. #17936
    Join Date
    Oct 2003
    Location
    Sandy
    Posts
    13,424
    Quote Originally Posted by Kevo View Post
    Yes, it is easy. My point is that there is interest rate risk in near dated target date fund because they move heavily into bonds as they near maturity. If interest rates continue to go up, the bond funds you are invested in through the target date funds will lose value.

    Buzz might be better off moving to money market funds instead of target date funds if he expects interest rates to continue to rise because a near dated target date fund (and it's underlying bond index fund) will likely lose value in the short term in a rising interest rate environment. Money market funds don't have that risk and will perform better if rates continue to rise.

    Someone with a longer time horizon (kids don't got to college until 2030 or 2035) is probably better off just using a target date fund for the simplicity of it and because the likelihood of a long dated target fund over performing money market funds in the long term.
    Iíll be discussing this my my dad, coming up from AZ for my daughterís graduation next week. For the time being I did pull half of each fund into the cash reserves fund, as to keep some money safe from market fluctuations.

  12. #17937
    Join Date
    Mar 2006
    Posts
    19,612
    33 yr high on the Nikkei 225

  13. #17938
    Join Date
    Mar 2006
    Posts
    19,612
    IEP going to $5. Old man Icahn stayed too long. No way he recovers. Wall Street eats their own.

  14. #17939
    Join Date
    Dec 2005
    Location
    STL
    Posts
    12,831
    Jesus Christ people must be choking on vol. it’s like the market is rigged. I don’t think I can remember a crazier time where the mkt just goes fucking no where. Must be little to no risk on. Boring.

    I’m going out in a limb and predicting a more than usual volatility summer.

  15. #17940
    Join Date
    Jan 2017
    Location
    on the banks of Fish Creek
    Posts
    6,936
    Bless your heart.

  16. #17941
    Join Date
    Dec 2020
    Location
    Idaho
    Posts
    1,536
    Anybody sell TSLA after the last months increase? I did this am, sold my 50 shares in the YOLO account. Managed to eke out a decent profit but individual stocks are not for me any longer.

  17. #17942
    Join Date
    Dec 2005
    Location
    STL
    Posts
    12,831
    No, paid 108 ish. 220 was a good spot to sell, but it’s in my Sep ira so I’m not going to ruin a good entry that should hold up.

  18. #17943
    Join Date
    Jan 2008
    Location
    Paper St. Soap Co.
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    3,190
    crazy amount of t-bill auctions being announced. Not sure if I should buy t-bills or bet on buying a lower s&p(guessing sell off as people move into t-bills). Last 52/26 week t-bills was just over 5%...I'm guessing might hit 6% in next few auctions.

  19. #17944
    Join Date
    Mar 2006
    Posts
    19,612

    Is the stock market going to tank?

    Treasury supply has never been an issue that overrides macro sentiment. I doubt it does this time.

    That said, Iím liking TLT on this pullback. Claims ticking up and inflation could surprise lower.

  20. #17945
    Join Date
    Apr 2006
    Location
    Movin' On
    Posts
    3,615
    It is confusing to me why anyone would buy a T bill directly instead of buying a treasury money market fund like VUSXX.

    You can have all the liquidity of cash and still get paid just about the same as short term T bills.

  21. #17946
    Join Date
    Feb 2014
    Posts
    1,407
    Tax efficiency? VUSXX has been lagging tbill rates by ~.2%? Ability to lock in a long term rate with a tbill?

  22. #17947
    Join Date
    Mar 2008
    Location
    the ham
    Posts
    13,051
    and/or simply can't buy it on whatever platform you use

  23. #17948
    Join Date
    Apr 2006
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    Quote Originally Posted by ghosthop View Post
    Tax efficiency? VUSXX has been lagging tbill rates by ~.2%? Ability to lock in a long term rate with a tbill?
    My understanding is that VUSXX lags because it holds short term T bills, many of which have rates from treasury auctions that took place a month or so ago.

    Since we're in a rising interest rate environment, VUSXX lags a little behind the most recent T bill yields. If treasury rates were to decline, VUSXX would be a little higher than the most recent T bill auctions on the way down.

  24. #17949
    Join Date
    Mar 2006
    Posts
    19,612
    Quote Originally Posted by ghosthop View Post
    Tax efficiency? VUSXX has been lagging tbill rates by ~.2%? Ability to lock in a long term rate with a tbill?
    52 weeks is the longest term on a t-bill. 15 months ago they yielded nothing. So you get 5% for one year. Then what? Itís called duration risk.

    LQD yields almost 4% with 9 year duration. Thatís not great for that much duration.

    BOND has a 6 year duration with current yield at 4.17 and a yield to maturity of 5.17. While is does have some principal risk youíve basically locked in a 4% yield for at least 5 years.

    T-bills are great but you need a longer term strategy to match your goals.

  25. #17950
    Join Date
    Dec 2005
    Location
    STL
    Posts
    12,831
    Tesla!

    Iíll be tempted to sell at 300. But I wonít.

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