Rob Berger is the best financial source I know of. Not just on TH-cam, but anywhere. He’s extremely impressive in his data-based approach, and he explains things clearly. I also note he has the intellect and confidence to keep his ego in check. I would hire him as a financial adviser, without question.
I’ve researched investing for 20 yrs and found a few. There’s great similar sources in Canada: Dan Bartolotti, Andrew Hallam and Larry Bates. All have good books. The late John Bogle. Rob is good for US based investment subjects. He will I’m sure admit this. I’m not Jewish but Naftali Horowitz is also very good. No doubt there are more in other countries.
Serious question, what is the advantage of buying a bond “fund”? Why not just buy bonds directly? Of course you have to reinvest them when they mature but that takes like 2 minutes. That way you can always choose the best interest rate. Only advantage I can think of is that someone is reinvesting it for you and you don’t have to worry about it.
What I love about how you tackle subjects is the depth you go into. You don't just answer the main question - you tackle all tertiary and related questions and thoughts around the subject. Makes it a great educational experience. Keep up the good work.
This is the same guy that recommended holding BND thru 20% drop last year, when it was obvious to go to cash when fed said he was going to raise rates. Doesn't understand that you can sell bonds and buy them back after rate increases near completion.
@@aprilhauser3391I understood RB’s opinion to be hinged on the long-term (for me, that’s 20-50 years, nearly a perpetual portfolio). For a short-term (2-5 years) approach, comparison shopping among T-bills, CDs, and MYGAs makes sense to me, I wouldn’t be in BND.
Food for thought: Place a sizable portion of your capital/savings in fixed-income securities like treasury bills, corporate bonds, government securities, debentures and let it grow. It will take you far I promise.
@Ramon Fred I understand the situation isn' t quite the same for every one but it's very important to cut your coat according to your size and find contingent ways to save, then you can find the best options to in v est that money. It's possible for anyone.
@@callumfrank Well if you put it that way it makes a bit of sense. It's realistically achievable. If one finds it hard to do this then they could always get a planner, it will save them a lot of poor decisions. They can setup feasible plans for you to save up, plan well for the future & retirement.
@Ramon Fred No dear, true planners are mainly just advice givers and schematic on paper planning, they don't hold your money for you, it remains with you. All you need to do is follow the strategies they give you.
Most people live paycheck to paycheck so have nothing to in ve st. Even if they do in v est something comes up and they have to take it out anyway. Most people don't have extra money and those that do waste it on something dumb.
Whatever helps you sleep at night - that's the right amount to hold in safe & secure holdings. When you switch from a saver to a spender, Preservation is key.
Past results not being indicative of future results should always be at the forefront of one's mind. Agree with you here. While I still have a long time horizon and a small net worth, I'll be aggressive, but as my net worth grows or I approach/enter retirement I do plan to switch up my growth/preservation strategy. Mark Zoril did one or more podcasts that basically explained that the percentage of your portfolio in risk-on assets is the percentage of your portfolio that you should make peace with having wide swings for. And while this might imply you can't withdraw 4% of your portfolio safely with a certain amount of fixed income, Mark Zoril's own withdraw approach is less "4% rule" and more "only take what you need (and want to an extent)". So if one year you only need/want 2.5% of your portfolio, you don't need to go out of your way to spend the other 1.5%. This again beefs up the probability of success without relying on past performance repeating itself. Rob Berger, PlanVision Podcast, and The Money Guy Show are the holy trinity of free financial content (of the ones to my knowledge at least, there is probably a lot of other S-tier financial content out there that I'm unaware of).
Lately I've been considering buying dividends stocks for retirement, I've set-asides $450K to invest but along the line, I get cold feet, maybe because I'm a rookie and have no idea what I'm doing, please I could really use some guidelines.
Successful people don't become that way overnight. What most people see at a glance is wealth, a great career purpose is the result of hard work and hustle over time. I pray that anyone who reads this will be successful in life.
If you’re planning on investing it all at once I can understand the fear. Generally speaking lump sum investing has out performed dollar cost averaging. That being said current market valuations are really high around the 95th+ percentile. Depending on why you’re investing that amount I would take the plunge. Using an ETF like schd can provide stable income even when market values eventually go down. And as long as dividend cuts don’t become widespread you’re likely to keep that income regardless of asset valuations.
This is such a great analysis and perfect level of explanation. I learn more about finance from listening to Bob than anyone else combined. I really appreciate these videos Bob. Quote of the day from this video: "and the answer to that question is......... nobody knows!"
The financial markets are full of opportunities, but I’ve learned a lot to doubt that over the past few years. The key is knowing where to focus and also having a good mentor. like mrs ann fiocca and bob.
I tried to convince him to get out of BND into CDs in Jan 22. He responded to me same deal about long term investor and talked his listeners into 20% LOSS. When fed says raising rates you sell BND and start buying short term CDs and online savings. Such a shame this guy can't time the OBVIOUS. Take the CD rates then buy BND lump sum when fed STOPS raising.
CASH in Portfolio Visualizer is meaningless. It would need to use highest yielding CDs and online savings accounts across maturity durations found from the search sites such as bankrate etc, and ignore CDs from bank of America at 0.001%
The discussion didn't seem to touch on bond or cd ladder vs bond funds. I am invested in BND and SCHP and those funds have lost about 15% since I invested in them. I'm not sure what to do with this part of my portfolio. Maybe DCA into a CD ladder. It seems like the risk is much higher with a bond fund than individual bonds where you can control the maturity.
I'll save you some time, don't invest in bnd or anything like it when rates are going up. Money market funds and cds are paying 4.5% and higher. Fed is nearing rate increases then move to bnd and similar funds.
Exactly! And if they do switch places, easily move that cash into short term bonds with the best yields! These bond funds as a "buffer" in a portfolio, especially those in Target Date Funds, don't make sense from a smart investment viewpoint.
I hear you, but last year it was very painful watching my stock funds and bond funds go down day after day in unison. My fixed income now 50/50 bonds/CDs. Lower volatility worth it for me.
Ha ha yeah I keep showing the yahoo finance app to my wife on days like today ... look honey, stocks are RED and bonds are GREEN, the way its supposed to be!
Yes. Last year, ... last year, .... and last year. We are referencing the oddest of years as opposed to 30ish years of retirement. Rob nicely pointed this out in the video.
Great video, Rob. Timely too as I just retired and I’m getting ready to rollover my 401k to an IRA which is going to liquidate all 401k funds, giving me a chance to create a fresh stock/bond(cash) allocation.
Outstanding review, Thank you. I'll keep my course of buying a Bond and holding to maturity A Bond fund is a bet on interest rates. I would even go so far as saying buying a Bond Fund is not investing in bonds, but really betting on interest rates, where truly investing in Bonds is to buy a Bond.
Interesting topic(s). I hold about 80% equities and 20% fixed income assets. I went a little over on equities because I have a guaranteed pension and social security will also be risk-free income. For my fixed income assets I currently have it all in 1 year CDs paying over 5.25% and some in I-Bonds we bought last year. I am out of bond funds until we get interest rate increases leveled out. Bonds have not done well the 1+ years and rates may continue to go up until inflation is under control. Bond funds will continue to suffer as the fed raises rates. I felt pretty safe taking 1 year CDs and may get back into bond funds if rates have level out in the next 9 months or so. That could be timing the market, I guess, but I felt good taking a guaranteed 5.25% for a year.
Well great...bonds could do better than cash over time. But stocks will do better. I'm going with a dynamic withdrawal strategy and 10% in cash which I could stretch out over five years in down markets. Running a monte-carlo my 97% success dropped when I added more bonds.
As soon as the Fed starts cutting rates, money market funds will see their interest payments go down. But you will see no growth in NAV. BND will see the NAV rise when the Fed starts cutting.
Hi Rob, what do you think of a 60/40 portfolio where the 60 is in an S&P 500 Index Fund and the 40 is in short term t-bill ladder that's over 5% and has no state or local tax? When t-bill interest rates go low again they can be sold and the money move to a Total US Bond Index Fund.
Typically, when a stock or bond fund does poorly over the past 10 years or so, investors flee to the more recent winners. But then that is when the loser funds turn around and the winner funds start to fail. Then the cycle repeats. As Rob shows, an analysis is the way to avoid getting trapped in this losing cycle.
@@gg80108 I know Rob blocks me top level because I warned him to get out of BND into CDs/High Yield Savings (off Titanic into life boat until see if sinks) early '22 when fed started raising rates. So don't know if you will see this (he reads everything before it becomes visible at the top level unless he banned you). But now hikes should be coming slower what do you think of $ cost averaging from CDs back into BND?
The average man lives to 85. i'm 76 and I'm more concerned about Cash Vs CD's. Cds for 1 year is 5.30% and a 5 year CD is 5.40% . Do a cash vs CD's see that T Bonds aren't great for elderly people if they want to enjoy the last years verses giving it to the children. By the way my 2 kids in there late 20's are doing better than we could ever do they don't need our money.
I'm retiring in a year with roughly half in various cash equivalents that I am projecting will last me at least 10 years. The remainder is in equities. If the equities go up, I will peel off the proceeds into the cash accounts. If not, I will live off the cash bucket until they do. Bonds are dead because the US debt is too large for them to be considered a safe investment by smart investors.
Gurevich If you used a low penalty rolling 3-5 year CD ladder it would have outperformed a cash fund and the bond funds. Cash funds through brokerage houses are poor alternatives
Also how reliable is a bond fund if you have major purchases (car, home remodel, etc) in the next 5 years? Got to have the cash reserve or your stuck financing
Sorry, Rob, totally disagree with directly comparing cash vs bonds. Bonds carry huge risk of loss in rising interest rate environments (as we see now) - think your portfolio analyzer showed 17.5% max decline - that said, for perhaps the first time in 40 years, I think bonds may be a decent investment as we will likely see interest rates decline, and hence bond values rise. That said, the reason for owning bonds is - supposedly - to smooth portfolio variation and downside risk in bear markets - as the last few years have shown, it's been exactly the reverse - bonds have dragged down portfolios and added risk (yet charlatans continued to recommend bonds despite the all-but certain rise in rates). As such, for short-term, I stick to laddered CDs, and almost everything else is index S&P index funds, mostly VOO. I do bottom pick a few high-quality individual stocks at times of max pessimism.
@@jayneorum3676 Only if you must sell. Can always hold to maturity. Becomes a risk-reward decision. Sell, take loss and reinvest at higher rates? Or hold to maturity and take inflation hit.
Bob: as a general guide, as we enter retirement (mid 60’s) and beyond: -What portion (%) of my ASSETS should be INVESTED (stocks, bonds, real estate, etc) and what portion should be in CASH or near cash (MM) accounts? -How would this ratio change every 1, 5 or 10 years? -Parallel to that how should I allocate my INVESTMENTS between Bond and Equity/Real Estate (exclusive of home)? -How would the portion of my INVESTMENTS in DIVIDEND PAYING EQUITIES change in the EQUITY portion of my INVESTMENTS? Thank you, A new Subscriber.
You never should chase yields. But in this market it makes sense to take advantage of Treasuries, CDs. MYGAs and even money markets. Stock kind of suck right now. Don't go all in, there is nothing wrong with a sure thing right now.. But don't overthink it.
I'm intending to hold 35% bonds when i hit retirement age. I just started my glide path from 0%. Right now I'm laddering 3-12 month t-bills. I don't see any reason to purchase longer term bonds until the inversion fixes itself. same with buyinf BND
I am just retired at 65 and have a fairly good understanding of the economics of bonds, equities, and cash. Much of the theory discussed seems to be like shooting a bullet. Pull the trigger and the portfolio is locked in as far as aiming it. Pull the trigger and whatever will be, will be. At this stage of my retirement I am still interested in managing the portfolio, more like flying an airplane with corrections along the way. My thinking on cash and bonds is hold enough to survive a stock market swing such as we have just experienced. I am thinking 3 to 5 years of living costs. Any thoughts on looking at the portfolio from this angle? Of course as I approach 80 years old I probably don't want to be worrying about managing the portfolio and will revert to "Bullet" mode shoot and forget. :)
My question would be as follows. That person who is retired, why dont they try to lock up what they can at 5% or a little less for the next 5 yrs and look at a bond fund once that ends and they cant get more than the bond fund?
I agree with this. Today’s imbalance in short term rates favors this. I like to lock in even shorter term via laddering 6 mos to 18 mos CDs. Tomorrow will be a new day
New sub here; appreciate the clarity of your explanations and insights. I personally have been holding on to waaay too much stagnant cash. But now is the time to make up for lost ground and I’ve deployed that cash hoard mostly into Tbills. I monitor Treasury Direct’s rollout of new auctions every week. If the Fed hikes, it’ll increase my huge ladder of yields and at the first whiff of holding steady or possibly easing, I’ll buy longer term bonds.
Those 1-yr, 3-yr, 5-yr, 10-yr returns for bond funds are TOTAL Returns with interest reinvested, right? So even with interest, VBTLX, for example, still has only averaged 1.25% annual returns over10 years. So, a retired income investor who needs to withdraw 4% annually will see his balance plummet quickly. And in the case of using bond funds as a ballast, I'd prefer a money market fund, at least in this 2024 environment.
So as of Dec 2023 holding 2.5yrs cash, 40% US stocks and 30% bonds in my IRA. When the stocks drop I will buy more equities... goal will be about 50% stocks 30+ bonds and about 15-20% cash... what do you think??
How about put the money in high yield savings until the interest rate goes down then move it elsewhere? Zero risk and ultimate flexibility to withdraw whenever you want. Seems like regional banks are gonna have to keep the high yield interest rates for awhile due to a few closures and bad press.
Hi Rob--Hope I'm not suffering from recency bias: BND (our only bond fund and 90% of fixed assets) has let us down twice. Last year of course and in the midst of COVID. During March 2020 reached rebalancing bands simultaneously with bond implosion. Rebalanced anyway but not fun. These facts seem to argue for fixed assets which won't implode at exactly the most inopportune time--the Buffett formulation for holding cash. Still holding on to BND in hopes of better times ahead. At 76 we will not make wholesale changes but am evaluating whether or not to migrate to more cash by the time we hit 80. Can't make that much difference to terminal wealth and would provide for more certainty under almost any circumstance. All the best
When you talk about the 4% rule how do you factor in your total Social Security payments throughout retirement are those just added onto the 4% or your total need for the year is to start with Social Security and then add whatever percentage of your portfolio do you need to reach that amount? I always hear buddy talk about 4% but I never hear Social Security factored in. Thank you
I prefer to buy individual bonds instead of bond funds. I buy them with every intention to hold to maturity so I know when I’ll get my principle back and when and how much I receive in dividends. You can’t do that with a bond fund and you have to pay fees for being in the bond fund. I also have some TIPS and Ibonds for inflation protection. Right now I have both mostly treasuries but also some corporate and agency bonds. My mixture is 50/50 stocks to bonds with most stocks in index ETF’s and mutual funds. Does that sound okay?
Instead of looking at the % allocation in stocks/bonds/cash you should have in retirement, would it better to consider it as the number of years of living expenses you should hold cash and bonds? What it seems like 1-2 years of cash but what range would you suggest in years for bonds?
If 12 years is your time horizon why are you investing in bonds. Put it in stocks. Bonds only job is to make a little bit of interest on cash. It makes no sense to invest money in bonds for 10+ years.
Thanks for the video. Should retirees have some money in higher yielding bonds like Vanguard Corporate Bond index, Vanguard High Yield fund and Vanguard Emerging Markets Bond index funds. Total Bond index fund is 67% Treasury/U.S goverment. I remember in one of the video, John Bogle said you should be in bond fund with 67% corporate bond. What is the risk and reward trade-off. Thanks in advance.
I have a somewhat different question. Since over the last 25-50 years we've seen heavy selling of 60-40 retirement planning and insiders, investment banks creating their systems to skim profits off the top of the herd, are we seeing and going to see in the future, bonds losing their high beta, not providing the kind of ballast to our portfolios? Is it now more prudent to shorten our exposure to time risk, where the price risk is heaviest, and perhaps re-orient from 20% bonds to 10% bonds, 10% cash (just an example), so that when the market has a downturn we can use cash to take advantage, as opposed to seeing those bonds going down at the same time. These are just my suspicions, that the erosion of beta isn't random, it's the pros learning how to shear the sheep.
I advise you to seek professional advice because building a strong financial portfolio is more challenging. Your long-term objectives and budgetary preferences can be catered to in the ideas you get after that.
What about bond funds that have a income option strategy like tltw or aggh...fills the bucket for bond allocation while paying you higher income. Tltw yeilds like 18% and aggh is like 10% I am retired and iblike the income they provide
Good video Rob. Could you talk about the possibility of making money on bonds if inflation and rates come down. If fed rate come down won’t the value on bonds go up? Thx
What do you think of buying treasuries and then leveraging them to sell put options for income? I did it before with equities, but started getting margin calls in 2022 as the market fell. With treasuries I make 5+% plus no margin calls.
I appreciate your video. I hold vwenx as my primary retirement fund. It is essentially 65% equity and 35% bonds. Do you think it would be better to hold an etf like schd for the equity portion and add bnd as the bond portion in lieu of holding all in vwenx? I hold a large portion in a taxable account. Let me know your thoughts. Thanks.
I think absolutely a good idea. SCHD is up about 90% in 5 years vs SPY 58%...Looked at SCHD's holdings and now I get it...13% AAPL, MSFT, NVDA.. I still like your idea!
So instead of a pure bond fund, I hold about 28% of my portfolio in VWIAX. This is also my 3-8 year bucket, with up to 3 years in cash and short term T-Bills, and the 8+ year bucket or about 63% in equities. Any opinion in using VWIAX in this manner instead of BND?
Hello Bob, my daughter is 21 years old and I would like to help her with her investing. We are thinking 70% in S&P 500 index fund, 20% international market index fund, 10% in US bond index. My question is that does she really need to invest in bond market at young age? Or invest all in stock? Thank you so much,
Why not MYGA (Multi-Year Guaranteed Annuities) which are basically CDs issued by Insurance Companies? MYGA's are offering upper 4% for up to 10 years. Benefits are: no fees, secure, guaranteed interest rate, tax deferred, can be set up to take out the interest each year if desired and then you get the principle back when the contract comes to term.
Insurance companies. Watch out! I am sure there is a catch there. What do you think they do with the money? Invest in the market and make alot more than what they pay you.
@@robertweisberg5570 Please do some research before making statements which feed only on fear There is not any "catch" ~ I have a number of MYGAs and they work just fine / just like a CD from a bank ~ but one also gets to defer tax on the interest until it is taken, unlike a CD from a bank which you pay annually As for what the Ins Co does with the money, they simply take your money, pool it with others' monies and buys bonds which they hold to maturity ~ this way they get the interest + the coupon back. Because "you" (the investor) have agreed not to withdraw the money from the account for the period of the contract, they can guarantee the return / interest. And yes, the Ins Co. takes a bit of the interest "off the top" for their work managing these ~ it's not any different than you paying an advisor for their services / advice / management. Again, MYGAs are like CD's from banks, simply longer term and higher rates because the money is locked up for longer and Ins Cos do not require the same liquidity banks do. MYGAs are also unlike bond funds (like BND) which are sold on a share basis and can move up and down value wise. As for the market, this thread is regarding other options to use than bond funds for that "stable" portion of your portfolio ~ of course bonds crashed last year... I will note, my MYGAs kept right on accruing the guaranteed interest per the contract I simply recommend MYGAs to replace a portion of your bond or CD monies
Rob, one question; why would anybody at 60, 65 or 70 with couple of millions in retirement funds? A risk? Any volatility like we experience in 2008 or 2002? Isn't it foolish is time to park money in safer instruments like treasuries at times like we have today. I've heard advice by many experts who said that anybody close or at retirement age should park there investments in treasures for next two years. And I agree. At time when you are 65, plus it doesn't really matter if my retirement performance is lower by 5% or even 10%? The 98% drop would be catastrophic indeed and we have a couple of those even in our history. You
So in theory if I had $5MM I could just park it in treasuries and live happily, but I find 50/50 stock/bind very acceptable in risk/return considering I might live another 40 years.
Those guys are trying to time the markets, claiming that you should be 100% in treaduries. How in the world do they know where the market it. With all the turmoil this year and more to come the market is up 9%.
dear mr rob , i want to invest 30 year treasury bond or tips bond and im a foreign investor , im not us citizen and i dont visit in us . using online brokers for investing if i buy 30 year bond and hold. any income tax or something for US IRS asking or wanting to me ?
Even if bond yields are increasing while stock prices are decreasing, the markets are still skeptical whether the Federal Reserve will stick to its goal to raise interest rates until inflation is under control. While I'm still debating whether to sell my $401k worth of equities, what is the best way to profit from the present down market?
I advise you to seek professional advice because building a strong financial portfolio is more challenging. Your long-term objectives and budgetary preferences can be catered to in the ideas you get after that.
you are completely right, Advisors have information and paths that are not disclosed to the public.. I profited £560k in 2022 under the tutelage of my Fiduciary-counselor. Am I selling? Absolutely not.. I am going to sit back and observe how this all plays out.
New subscriber. Don't Bond Funds change their yield on a monthly basis? You stated the BND will pay 4% for as long as you hold it. I don't think that's true. Also, is it better to own actual bonds vs. bond funds? Why do you own bond funds vs actual bonds? Thanks. By the way, I just subscribed to NewRetirement and going thru the classes right now.
I'm a little confused about why you hold 1 yr in cash. Hopefully you can help. If I have 1 yr in cash when am I using it? If I pull out of cash for monthly expenses, am I continually selling Bonds to replenish cash, and if so, why not just have Short Term bond funds and sell that monthly for expenses? Thank you.
Also, if you have bonds in a retirement account, you will only pay tax on what you withdraw versus having to pay tax on interest every year in a savings account whether you need the cash or not.
Rob Berger is the best financial source I know of. Not just on TH-cam, but anywhere. He’s extremely impressive in his data-based approach, and he explains things clearly. I also note he has the intellect and confidence to keep his ego in check. I would hire him as a financial adviser, without question.
I’ve researched investing for 20 yrs and found a few. There’s great similar sources in Canada: Dan Bartolotti, Andrew Hallam and Larry Bates. All have good books. The late John Bogle. Rob is good for US based investment subjects. He will I’m sure admit this. I’m not Jewish but Naftali Horowitz is also very good. No doubt there are more in other countries.
I've been laddering 6 month t-bills. I'd much rather do that than invest in bond funds.
This at least for the forseeable future
Jim: You could also buy corporate bonds and hold them to maturity.
No bond funds for me either.
We’ve been doing the 6 month T-bills too. We’re in CA so it makes a difference that we don’t pay state taxes. We also like the liquidity.
Bond Funds are great if you like to gamble on interest rates. I'll buy and hold to maturity all day rather than bet on macroeconomics.
Serious question, what is the advantage of buying a bond “fund”? Why not just buy bonds directly? Of course you have to reinvest them when they mature but that takes like 2 minutes. That way you can always choose the best interest rate. Only advantage I can think of is that someone is reinvesting it for you and you don’t have to worry about it.
You are spot on. People don't realize the risk of not holding stocks in their portfolio due to inflation.
What I love about how you tackle subjects is the depth you go into. You don't just answer the main question - you tackle all tertiary and related questions and thoughts around the subject. Makes it a great educational experience. Keep up the good work.
You answered A LOT of our questions as we are preparing for my husband to retire in a year! Thank you!!!!!
This is the same guy that recommended holding BND thru 20% drop last year, when it was obvious to go to cash when fed said he was going to raise rates. Doesn't understand that you can sell bonds and buy them back after rate increases near completion.
@@aprilhauser3391I understood RB’s opinion to be hinged on the long-term (for me, that’s 20-50 years, nearly a perpetual portfolio). For a short-term (2-5 years) approach, comparison shopping among T-bills, CDs, and MYGAs makes sense to me, I wouldn’t be in BND.
Food for thought: Place a sizable portion of your capital/savings in fixed-income securities like treasury bills, corporate bonds, government securities, debentures and let it grow. It will take you far I promise.
@Ramon Fred I understand the situation isn' t quite the same for every one but it's very important to cut your coat according to your size and find contingent ways to save, then you can find the best options to in v est that money. It's possible for anyone.
@@callumfrank Well if you put it that way it makes a bit of sense. It's realistically achievable. If one finds it hard to do this then they could always get a planner, it will save them a lot of poor decisions. They can setup feasible plans for you to save up, plan well for the future & retirement.
@Ramon Fred No dear, true planners are mainly just advice givers and schematic on paper planning, they don't hold your money for you, it remains with you. All you need to do is follow the strategies they give you.
He has an outstanding resumè. One of the best fiduciaries I’ve ever been fortunate to work with.
Most people live paycheck to paycheck so have nothing to in ve st. Even if they do in v est something comes up and they have to take it out anyway. Most people don't have extra money and those that do waste it on something dumb.
Thank "God" for TH-cam and highly articulate, informative nerds like Rob Berger! :-)
Whatever helps you sleep at night - that's the right amount to hold in safe & secure holdings. When you switch from a saver to a spender, Preservation is key.
Past results not being indicative of future results should always be at the forefront of one's mind. Agree with you here. While I still have a long time horizon and a small net worth, I'll be aggressive, but as my net worth grows or I approach/enter retirement I do plan to switch up my growth/preservation strategy.
Mark Zoril did one or more podcasts that basically explained that the percentage of your portfolio in risk-on assets is the percentage of your portfolio that you should make peace with having wide swings for.
And while this might imply you can't withdraw 4% of your portfolio safely with a certain amount of fixed income, Mark Zoril's own withdraw approach is less "4% rule" and more "only take what you need (and want to an extent)". So if one year you only need/want 2.5% of your portfolio, you don't need to go out of your way to spend the other 1.5%. This again beefs up the probability of success without relying on past performance repeating itself.
Rob Berger, PlanVision Podcast, and The Money Guy Show are the holy trinity of free financial content (of the ones to my knowledge at least, there is probably a lot of other S-tier financial content out there that I'm unaware of).
another factor to consider is when the yield curve returns to normal BND could rise to its historic value around $80/sh. that's another 10% gain. 💪
I really appreciate the quality and the insight and the clarity of your work. It is very valuable and I thank you so much!
Lately I've been considering buying dividends stocks for retirement, I've set-asides $450K to invest but along the line, I get cold feet, maybe because I'm a rookie and have no idea what I'm doing, please I could really use some guidelines.
Successful people don't become that way overnight. What most people see at a glance is wealth, a great career purpose is the result of hard work and hustle over time. I pray that anyone who reads this will be successful in life.
Dividend stocks are not risk free. Be careful. Why not just diversify?
If you’re planning on investing it all at once I can understand the fear. Generally speaking lump sum investing has out performed dollar cost averaging. That being said current market valuations are really high around the 95th+ percentile. Depending on why you’re investing that amount I would take the plunge. Using an ETF like schd can provide stable income even when market values eventually go down. And as long as dividend cuts don’t become widespread you’re likely to keep that income regardless of asset valuations.
This is such a great analysis and perfect level of explanation. I learn more about finance from listening to Bob than anyone else combined. I really appreciate these videos Bob. Quote of the day from this video: "and the answer to that question is......... nobody knows!"
The financial markets are full of opportunities, but I’ve learned a lot to doubt that over the past few years. The key is knowing where to focus and also having a good mentor. like mrs ann fiocca and bob.
I guess you’ve never heard of Josh at Heritage Wealth?
I've seen many of Josh's videos. I'm not a fan.@@ZCAR355
I tried to convince him to get out of BND into CDs in Jan 22. He responded to me same deal about long term investor and talked his listeners into 20% LOSS. When fed says raising rates you sell BND and start buying short term CDs and online savings. Such a shame this guy can't time the OBVIOUS. Take the CD rates then buy BND lump sum when fed STOPS raising.
Thank you for addressing my question. Mike
CASH in Portfolio Visualizer is meaningless. It would need to use highest yielding CDs and online savings accounts across maturity durations found from the search sites such as bankrate etc, and ignore CDs from bank of America at 0.001%
The discussion didn't seem to touch on bond or cd ladder vs bond funds. I am invested in BND and SCHP and those funds have lost about 15% since I invested in them. I'm not sure what to do with this part of my portfolio. Maybe DCA into a CD ladder. It seems like the risk is much higher with a bond fund than individual bonds where you can control the maturity.
I'll save you some time, don't invest in bnd or anything like it when rates are going up. Money market funds and cds are paying 4.5% and higher. Fed is nearing rate increases then move to bnd and similar funds.
Exactly! And if they do switch places, easily move that cash into short term bonds with the best yields! These bond funds as a "buffer" in a portfolio, especially those in Target Date Funds, don't make sense from a smart investment viewpoint.
I hear you, but last year it was very painful watching my stock funds and bond funds go down day after day in unison. My fixed income now 50/50 bonds/CDs. Lower volatility worth it for me.
Ha ha yeah I keep showing the yahoo finance app to my wife on days like today ... look honey, stocks are RED and bonds are GREEN, the way its supposed to be!
Yes. Last year, ... last year, .... and last year. We are referencing the oddest of years as opposed to 30ish years of retirement. Rob nicely pointed this out in the video.
Great video, Rob. Timely too as I just retired and I’m getting ready to rollover my 401k to an IRA which is going to liquidate all 401k funds, giving me a chance to create a fresh stock/bond(cash) allocation.
Outstanding review, Thank you. I'll keep my course of buying a Bond and holding to maturity A Bond fund is a bet on interest rates. I would even go so far as saying buying a Bond Fund is not investing in bonds, but really betting on interest rates, where truly investing in Bonds is to buy a Bond.
Interesting topic(s). I hold about 80% equities and 20% fixed income assets. I went a little over on equities because I have a guaranteed pension and social security will also be risk-free income. For my fixed income assets I currently have it all in 1 year CDs paying over 5.25% and some in I-Bonds we bought last year. I am out of bond funds until we get interest rate increases leveled out. Bonds have not done well the 1+ years and rates may continue to go up until inflation is under control. Bond funds will continue to suffer as the fed raises rates. I felt pretty safe taking 1 year CDs and may get back into bond funds if rates have level out in the next 9 months or so. That could be timing the market, I guess, but I felt good taking a guaranteed 5.25% for a year.
I took the same path, and so far so good…
Can I sell my bonds within my IRA without tax consequences?
Thanks Rob, I'm going to watch this again and take notes!
Well great...bonds could do better than cash over time. But stocks will do better. I'm going with a dynamic withdrawal strategy and 10% in cash which I could stretch out over five years in down markets. Running a monte-carlo my 97% success dropped when I added more bonds.
As soon as the Fed starts cutting rates, money market funds will see their interest payments go down. But you will see no growth in NAV. BND will see the NAV rise when the Fed starts cutting.
With default near a sure thing I've sold off a lot and now hold 35% cash. Being retired capital preservation is important to me.
Bonds vs Cash was exactly what we debated this last weekend thanks for the info Rob
Enjoy watching your videos and full of great info for me already retired at 54. Was trying to find your info on t-bills? Do you have one?
Hi Rob, what do you think of a 60/40 portfolio where the 60 is in an S&P 500 Index Fund and the 40 is in short term t-bill ladder that's over 5% and has no state or local tax? When t-bill interest rates go low again they can be sold and the money move to a Total US Bond Index Fund.
Typically, when a stock or bond fund does poorly over the past 10 years or so, investors flee to the more recent winners. But then that is when the loser funds turn around and the winner funds start to fail. Then the cycle repeats. As Rob shows, an analysis is the way to avoid getting trapped in this losing cycle.
Hindsite is 20&20. Rates still rising stay short term.
@@gg80108 I know Rob blocks me top level because I warned him to get out of BND into CDs/High Yield Savings (off Titanic into life boat until see if sinks) early '22 when fed started raising rates. So don't know if you will see this (he reads everything before it becomes visible at the top level unless he banned you).
But now hikes should be coming slower what do you think of $ cost averaging from CDs back into BND?
You’re 100% correct on this
The average man lives to 85. i'm 76 and I'm more concerned about Cash Vs CD's. Cds for 1 year is 5.30% and a 5 year CD is 5.40% . Do a cash vs CD's see that T Bonds aren't great for elderly people if they want to enjoy the last years verses giving it to the children. By the way my 2 kids in there late 20's are doing better than we could ever do they don't need our money.
I'm retiring in a year with roughly half in various cash equivalents that I am projecting will last me at least 10 years. The remainder is in equities. If the equities go up, I will peel off the proceeds into the cash accounts. If not, I will live off the cash bucket until they do. Bonds are dead because the US debt is too large for them to be considered a safe investment by smart investors.
Hi Rob, around 9:07 you say rough calculation of time fund will yield current SEC is 2x duration - 1. What is this based on?
Yes, ... Rob ... please finish where you were headed with this please.
Ditto! That's all I got to say. 😂
Gurevich
If you used a low penalty rolling 3-5 year CD ladder it would have outperformed a cash fund and the bond funds. Cash funds through brokerage houses are poor alternatives
Also how reliable is a bond fund if you have major purchases (car, home remodel, etc) in the next 5 years? Got to have the cash reserve or your stuck financing
Sorry, Rob, totally disagree with directly comparing cash vs bonds. Bonds carry huge risk of loss in rising interest rate environments (as we see now) - think your portfolio analyzer showed 17.5% max decline - that said, for perhaps the first time in 40 years, I think bonds may be a decent investment as we will likely see interest rates decline, and hence bond values rise. That said, the reason for owning bonds is - supposedly - to smooth portfolio variation and downside risk in bear markets - as the last few years have shown, it's been exactly the reverse - bonds have dragged down portfolios and added risk (yet charlatans continued to recommend bonds despite the all-but certain rise in rates). As such, for short-term, I stick to laddered CDs, and almost everything else is index S&P index funds, mostly VOO. I do bottom pick a few high-quality individual stocks at times of max pessimism.
what do you do with bond funds now, sell at a loss?
@@jayneorum3676 Only if you must sell. Can always hold to maturity. Becomes a risk-reward decision. Sell, take loss and reinvest at higher rates? Or hold to maturity and take inflation hit.
Bob: as a general guide, as we enter retirement (mid 60’s) and beyond:
-What portion (%) of my ASSETS should be INVESTED (stocks, bonds, real estate, etc) and what portion should be in CASH or near cash (MM) accounts?
-How would this ratio change every 1, 5 or 10 years?
-Parallel to that how should I allocate my INVESTMENTS between Bond and Equity/Real Estate (exclusive of home)?
-How would the portion of my INVESTMENTS in DIVIDEND PAYING EQUITIES change in the EQUITY portion of my INVESTMENTS?
Thank you,
A new Subscriber.
Personal finance is personal. So general guidelines won't be very helpful. Keep studying for your best guess. Or, hire an FA.
So we're talking about Bonds in a taxable account vs Cash in a high yield savings account?
You never should chase yields. But in this market it makes sense to take advantage of Treasuries, CDs. MYGAs and even money markets.
Stock kind of suck right now. Don't go all in, there is nothing wrong with a sure thing right now..
But don't overthink it.
MYGAs are too long term right not. You want 3-6 month. Interest rates will still go up.
Your half correct
I'm intending to hold 35% bonds when i hit retirement age. I just started my glide path from 0%. Right now I'm laddering 3-12 month t-bills. I don't see any reason to purchase longer term bonds until the inversion fixes itself. same with buyinf BND
I am just retired at 65 and have a fairly good understanding of the economics of bonds, equities, and cash. Much of the theory discussed seems to be like shooting a bullet. Pull the trigger and the portfolio is locked in as far as aiming it. Pull the trigger and whatever will be, will be.
At this stage of my retirement I am still interested in managing the portfolio, more like flying an airplane with corrections along the way.
My thinking on cash and bonds is hold enough to survive a stock market swing such as we have just experienced. I am thinking 3 to 5 years of living costs. Any thoughts on looking at the portfolio from this angle? Of course as I approach 80 years old I probably don't want to be worrying about managing the portfolio and will revert to "Bullet" mode shoot and forget. :)
Tell us what ya finally did!
My question would be as follows. That person who is retired, why dont they try to lock up what they can at 5% or a little less for the next 5 yrs and look at a bond fund once that ends and they cant get more than the bond fund?
I agree with this. Today’s imbalance in short term rates favors this. I like to lock in even shorter term via laddering 6 mos to 18 mos CDs. Tomorrow will be a new day
Agree totally...why not take advantage of these rates and lock in 3-5 yr cds??
Thank you thank you thank you Rob for enlightening me as common sensically as usual
Prefer short term t-bills. You have control over your investment.
New sub here; appreciate the clarity of your explanations and insights.
I personally have been holding on to waaay too much stagnant cash. But now is the time to make up for lost ground and I’ve deployed that cash hoard mostly into Tbills. I monitor Treasury Direct’s rollout of new auctions every week. If the Fed hikes, it’ll increase my huge ladder of yields and at the first whiff of holding steady or possibly easing, I’ll buy longer term bonds.
Those 1-yr, 3-yr, 5-yr, 10-yr returns for bond funds are TOTAL Returns with interest reinvested, right? So even with interest, VBTLX, for example, still has only averaged 1.25% annual returns over10 years. So, a retired income investor who needs to withdraw 4% annually will see his balance plummet quickly. And in the case of using bond funds as a ballast, I'd prefer a money market fund, at least in this 2024 environment.
So as of Dec 2023 holding 2.5yrs cash, 40% US stocks and 30% bonds in my IRA. When the stocks drop I will buy more equities... goal will be about 50% stocks 30+ bonds and about 15-20% cash... what do you think??
How about put the money in high yield savings until the interest rate goes down then move it elsewhere? Zero risk and ultimate flexibility to withdraw whenever you want. Seems like regional banks are gonna have to keep the high yield interest rates for awhile due to a few closures and bad press.
Short term 3 month Brokered CDs and Tbills better then savings and you don't need another account. Get a Schwab or Fidelity account. They got it all
I truly value your analysis. And nice i can validate my assumptions .
BIV has outperformed BND since Jan 2008 - 3.63 CAGR vs 2.67..
Hi Rob--Hope I'm not suffering from recency bias: BND (our only bond fund and 90% of fixed assets) has let us down twice. Last year of course and in the midst of COVID. During March 2020 reached rebalancing bands simultaneously with bond implosion. Rebalanced anyway but not fun. These facts seem to argue for fixed assets which won't implode at exactly the most inopportune time--the Buffett formulation for holding cash. Still holding on to BND in hopes of better times ahead. At 76 we will not make wholesale changes but am evaluating whether or not to migrate to more cash by the time we hit 80. Can't make that much difference to terminal wealth and would provide for more certainty under almost any circumstance. All the best
When you talk about the 4% rule how do you factor in your total Social Security payments throughout retirement are those just added onto the 4% or your total need for the year is to start with Social Security and then add whatever percentage of your portfolio do you need to reach that amount? I always hear buddy talk about 4% but I never hear Social Security factored in. Thank you
4% rule is not for income not coming from market income. Take 4% and live better or be conservative and take out 3%.
Are you using bond and t bills terms interchangeably? Are you calling cash the same as a CD? Cause it is throwing me off when listening to the video
Bonds are for portfolio stability not income! Same as stocks no one can time the bond market consistently.
Thanks, Rob. Great video, man!
I prefer to buy individual bonds instead of bond funds. I buy them with every intention to hold to maturity so I know when I’ll get my principle back and when and how much I receive in dividends. You can’t do that with a bond fund and you have to pay fees for being in the bond fund. I also have some TIPS and Ibonds for inflation protection. Right now I have both mostly treasuries but also some corporate and agency bonds. My mixture is 50/50 stocks to bonds with most stocks in index ETF’s and mutual funds. Does that sound okay?
Instead of looking at the % allocation in stocks/bonds/cash you should have in retirement, would it better to consider it as the number of years of living expenses you should hold cash and bonds? What it seems like 1-2 years of cash but what range would you suggest in years for bonds?
If 12 years is your time horizon why are you investing in bonds. Put it in stocks. Bonds only job is to make a little bit of interest on cash. It makes no sense to invest money in bonds for 10+ years.
Excellent Rob... Thanks!
Great material as usual. You mentioned high grade bonds and TIPS. Can we use muni in this, at least for
a portion of the portfolio?
Thank you! Learned so much from this video😊
Thanks for the video. Should retirees have some money in higher yielding bonds like Vanguard Corporate Bond index, Vanguard High Yield fund and Vanguard Emerging Markets Bond index funds. Total Bond index fund is 67% Treasury/U.S goverment. I remember in one of the video, John Bogle said you should be in bond fund with 67% corporate bond. What is the risk and reward trade-off. Thanks in advance.
I have a somewhat different question. Since over the last 25-50 years we've seen heavy selling of 60-40 retirement planning and insiders, investment banks creating their systems to skim profits off the top of the herd, are we seeing and going to see in the future, bonds losing their high beta, not providing the kind of ballast to our portfolios?
Is it now more prudent to shorten our exposure to time risk, where the price risk is heaviest, and perhaps re-orient from 20% bonds to 10% bonds, 10% cash (just an example), so that when the market has a downturn we can use cash to take advantage, as opposed to seeing those bonds going down at the same time.
These are just my suspicions, that the erosion of beta isn't random, it's the pros learning how to shear the sheep.
I advise you to seek professional advice because building a strong financial portfolio is more challenging. Your long-term objectives and budgetary preferences can be catered to in the ideas you get after that.
Rob - Maybe you said already but is Vanguard Inflation-Protected Securities Fund a good example of how to get the TIPS exposure you're suggesting?
Hi Rob! Great video as always. Question: I have Fidelity, which fund do you recommend to buy TIPS in Fidelity? Thank you!
Rob, you don't mention or factor in RISK between cash and bonds.... shame on u. Only kidding, You're a great asset to us.
Do you recommend individual bonds if yes how do you find them?
Or only vanguard total bond?
What about bond funds that have a income option strategy like tltw or aggh...fills the bucket for bond allocation while paying you higher income. Tltw yeilds like 18% and aggh is like 10%
I am retired and iblike the income they provide
Thank you Rob. Good one
Good video Rob. Could you talk about the possibility of making money on bonds if inflation and rates come down. If fed rate come down won’t the value on bonds go up? Thx
Hate bonds, can't stand that investment vehicle. It's dumb and confusing!
I like Bonds, I hate Bond Funds/etf
I think people should also consider buying babybonds with a 6% plus yield as a monthly income.
Bonds aren't Bond Funds. I've found them to be quite different.
Anyone ever thought of Managed Futures instead of bonds. DBMF/KMLM/CTA are ones I've heard of. MF are negatively correlated with stocks and bonds.
What do you think of buying treasuries and then leveraging them to sell put options for income? I did it before with equities, but started getting margin calls in 2022 as the market fell. With treasuries I make 5+% plus no margin calls.
I appreciate your video. I hold vwenx as my primary retirement fund. It is essentially 65% equity and 35% bonds. Do you think it would be better to hold an etf like schd for the equity portion and add bnd as the bond portion in lieu of holding all in vwenx? I hold a large portion in a taxable account. Let me know your thoughts. Thanks.
I think absolutely a good idea. SCHD is up about 90% in 5 years vs SPY 58%...Looked at SCHD's holdings and now I get it...13% AAPL, MSFT, NVDA.. I still like your idea!
Great Video!
How can I see history of SEC yield for any given bond fund?
So instead of a pure bond fund, I hold about 28% of my portfolio in VWIAX. This is also my 3-8 year bucket, with up to 3 years in cash and short term T-Bills, and the 8+ year bucket or about 63% in equities. Any opinion in using VWIAX in this manner instead of BND?
Hello Bob, my daughter is 21 years old and I would like to help her with her investing. We are thinking 70% in S&P 500 index fund, 20% international market index fund, 10% in US bond index. My question is that does she really need to invest in bond market at young age? Or invest all in stock? Thank you so much,
Put bond in portfolio at near retirement is good?
If interest rates were low and bonds still did poorly, when rates go up shouldnt bonds fall again or are they done fallling?
Why not MYGA (Multi-Year Guaranteed Annuities) which are basically CDs issued by Insurance Companies?
MYGA's are offering upper 4% for up to 10 years.
Benefits are: no fees, secure, guaranteed interest rate, tax deferred, can be set up to take out the interest each year if desired and then you get the principle back when the contract comes to term.
Insurance companies. Watch out! I am sure there is a catch there. What do you think they do with the money? Invest in the market and make alot more than what they pay you.
@@robertweisberg5570 Please do some research before making statements which feed only on fear
There is not any "catch" ~ I have a number of MYGAs and they work just fine / just like a CD from a bank
~ but one also gets to defer tax on the interest until it is taken, unlike a CD from a bank which you pay annually
As for what the Ins Co does with the money, they simply take your money, pool it with others' monies and buys bonds which they hold to maturity
~ this way they get the interest + the coupon back.
Because "you" (the investor) have agreed not to withdraw the money from the account for the period of the contract, they can guarantee the return / interest.
And yes, the Ins Co. takes a bit of the interest "off the top" for their work managing these
~ it's not any different than you paying an advisor for their services / advice / management.
Again, MYGAs are like CD's from banks, simply longer term and higher rates because the money is locked up for longer and Ins Cos do not require the same liquidity banks do.
MYGAs are also unlike bond funds (like BND) which are sold on a share basis and can move up and down value wise.
As for the market, this thread is regarding other options to use than bond funds for that "stable" portion of your portfolio
~ of course bonds crashed last year... I will note, my MYGAs kept right on accruing the guaranteed interest per the contract
I simply recommend MYGAs to replace a portion of your bond or CD monies
@@robertweisberg5570 losers always lose
@@robertweisberg5570 how is that different from banks who invest or loan out the money and profit via the spread?
How to buy TIPS? Would it be the Vanguard Short-term Inflation Protected Securities ETF?
Thanks!
I miss the old portfolio visualizer
Very helpful and clear
Rob, one question; why would anybody at 60, 65 or 70 with couple of millions in retirement funds? A risk? Any volatility like we experience in 2008 or 2002? Isn't it foolish is time to park money in safer instruments like treasuries at times like we have today. I've heard advice by many experts who said that anybody close or at retirement age should park there investments in treasures for next two years. And I agree. At time when you are 65, plus it doesn't really matter if my retirement performance is lower by 5% or even 10%? The 98% drop would be catastrophic indeed and we have a couple of those even in our history. You
You have to out pace inflation. That's the biggest risk your money.
So in theory if I had $5MM I could just park it in treasuries and live happily, but I find 50/50 stock/bind very acceptable in risk/return considering I might live another 40 years.
Those guys are trying to time the markets, claiming that you should be 100% in treaduries. How in the world do they know where the market it. With all the turmoil this year and more to come the market is up 9%.
Just the money market in vanguard is over 5 percent
dear mr rob , i want to invest 30 year treasury bond or tips bond and im a foreign investor , im not us citizen and i dont visit in us . using online brokers for investing if i buy 30 year bond and hold. any income tax or something for US IRS asking or wanting to me ?
Even if bond yields are increasing while stock prices are decreasing, the markets are still skeptical whether the Federal Reserve will stick to its goal to raise interest rates until inflation is under control. While I'm still debating whether to sell my $401k worth of equities, what is the best way to profit from the present down market?
I advise you to seek professional advice because building a strong financial portfolio is more challenging. Your long-term objectives and budgetary preferences can be catered to in the ideas you get after that.
you are completely right, Advisors have information and paths that are not disclosed to the public.. I profited £560k in 2022 under the tutelage of my Fiduciary-counselor. Am I selling? Absolutely not.. I am going to sit back and observe how this all plays out.
That's impressive! I could really use the expertise of this manager for my dwindling portfolio. Who’s the professional
Her name is “Selena-Nicole cefaloni can't divulge much. Most likely, the internet should have her basic info, you can research if you like
I have googled her and she has impressive credentials; I reached out to her since I need all the assistance I can get. I just scheduled a caII.
Does Ron have a video about his favorite bonds?
@Rob Berger what does portfolio visualizer base the return rate on cash? T-bills, CDs, Savings Accounts, other?
New subscriber. Don't Bond Funds change their yield on a monthly basis? You stated the BND will pay 4% for as long as you hold it. I don't think that's true. Also, is it better to own actual bonds vs. bond funds? Why do you own bond funds vs actual bonds? Thanks. By the way, I just subscribed to NewRetirement and going thru the classes right now.
When your brain turns to mush you don't have to manage a bond fund.
Gotta like The Ohio State footballs! Thank you for the information.
I'm a little confused about why you hold 1 yr in cash. Hopefully you can help. If I have 1 yr in cash when am I using it? If I pull out of cash for monthly expenses, am I continually selling Bonds to replenish cash, and if so, why not just have Short Term bond funds and sell that monthly for expenses? Thank you.
You are absolutely correct, sir.
Why “vs”? I use both
If I could give this stars, it would be a 5 star rating.
So I've been in cash investments for the past 3years. Should I wait until BND starts yielding the same or more to make the swap??
Also, if you have bonds in a retirement account, you will only pay tax on what you withdraw versus having to pay tax on interest every year in a savings account whether you need the cash or not.
You can buy CDs in your IRA and do the same if you want
So a question, are you holding Bond Funds or actual Bonds?
Do you offer personal financial advice?