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Replacements for bond funds in older people's investments?
Posted on 3/29/11 at 9:13 pm
Posted on 3/29/11 at 9:13 pm
Given the likely interest rate increases to be seen in the future, is it really a "low risk" allocation to have people 60 years or older primarily in bond funds? If you were advising a client this age would you recommend a shift to high yielding dividend stocks, TIPS bonds, or something else? I believe the government has every reason to continue to manipulate the CPI to manage cost of living adjustments for SS recipients so I doubt that TIPS bonds are a great hedge against inflation.
This post was edited on 3/29/11 at 9:23 pm
2
Posted on 3/29/11 at 9:29 pm to GeneralLee
quote:
If you were advising a client this age would you recommend a shift to high yielding dividend stocks, TIPS bonds, or something else?
Just find a shorter duration bond portfolio or invest in floating rate bonds. Most probably the former.
Posted on 3/29/11 at 9:31 pm to TheHiddenFlask
Real estate. It only goes in one direction.
Posted on 3/29/11 at 9:32 pm to kfizzle85
quote:
Real estate. It only goes in one direction.
.......at a time.
Posted on 3/29/11 at 9:38 pm to TheHiddenFlask
quote:
Just find a shorter duration bond portfolio or invest in floating rate bonds. Most probably the former.
Correct.
Posted on 3/29/11 at 9:38 pm to kfizzle85
quote:
Real estate. It only goes in one direction.
Posted on 3/29/11 at 10:21 pm to GeneralLee
Bonds in what sector? Bill Gross recently dumped treasuries(maybe to buy back in at higher rates later)and lots of munis are now problematic. Do you see a specific bond sector that appears safe? Safe enough sell to your parents? Just curious.
Posted on 3/30/11 at 11:21 am to TheHiddenFlask
quote:
Just find a shorter duration bond portfolio
this is what my broker keeps telling me (btw, I have to invest my parents money right at this time).
The longterm muni's pay 4.5% taxfree, AA rated, stay out of the 'bad states' and buy in at 85 to 88 cents on the dollar. No?
Posted on 3/30/11 at 11:29 am to Fat Man
I'm on board with that. I think the majority of the muni craziness is blown way out of proportion.
Posted on 3/30/11 at 4:08 pm to Fat Man
quote:
Just find a shorter duration bond portfolio
This is what we are doing with out clients currently. I agree with the comments about most of the muni hysteria being over done also.
Posted on 3/30/11 at 6:11 pm to TheHiddenFlask
According to Milton Ezrati, Floating Rates will outpace TIPS in a rising rate environment:
Lord Abbett website
I got this from LA's twitter
Lord Abbett website
I got this from LA's twitter
Posted on 3/30/11 at 7:17 pm to TheHiddenFlask
quote:Foreign Bonds / Bond Funds are another option.
Just find a shorter duration bond portfolio or invest in floating rate bonds. Most probably the former.
ROT used to be % of Bonds/Fixed-Income Securities in portfolio = investor's age. That's surely up in the air now.
Posted on 3/30/11 at 7:38 pm to RasinCane
quote:
Do you see a specific bond sector that appears safe?
certain corporate aka "junk" bonds are doing ok. That is what I am in. Treasuries? forget about it. As you stated i was in munis and got out just in time. Many are now falling by the wayside. now, some actual munibonds should be fine but I was in a munibond FUND, i made my money then got out as many are now losing money.
This post was edited on 3/30/11 at 7:44 pm
Posted on 3/30/11 at 10:32 pm to Fat Bastard
Here is a message from Bill Gross of PIMCO. He seems certain that there will be more QE or printing by some other name. He also seems certain that the US will default on it's debts/obligations. If Gross is right about his calls and isn't simply talking his book then I would not be looking to bonds, save variable rate, to keep up with inflation.
If QE is to continue why not go with stocks? Why fight the Fed?
LINK
If QE is to continue why not go with stocks? Why fight the Fed?
LINK
Posted on 3/31/11 at 4:07 am to RasinCane
quote:
would not be looking to bonds, save variable rate, to keep up with inflation.
That is why you go with short duration. The shorter the duration, the more "variable" the rate is on average.
Posted on 3/31/11 at 6:13 am to foshizzle
Short duration bonds? Got any names that you care to share?
Gross and El Erian are very savy investors, imo. I would not discount any moves that they make in bond mkts. These two guys have been sending blinking red signals for a while.
If I owned bonds I would hedge them with commodities or equities, these two asset sectors will continue to soar during periods of QE. In fact, we have seen this very process at work since QE began.
Dollar devaluation will continue to speed up, especially if Ben continues to print. Like I said, why fight the Fed?
It's true that the Fed talkers are making a lot of noise about ending QE. I will believe it when I see it; end of printing will usher in a decline in eqities and commodities. This is simple stuff. The difficult part is timing, as usual.
Since PIMCO has far better info than I do, I watch what they do.
Gross and El Erian are very savy investors, imo. I would not discount any moves that they make in bond mkts. These two guys have been sending blinking red signals for a while.
If I owned bonds I would hedge them with commodities or equities, these two asset sectors will continue to soar during periods of QE. In fact, we have seen this very process at work since QE began.
Dollar devaluation will continue to speed up, especially if Ben continues to print. Like I said, why fight the Fed?
It's true that the Fed talkers are making a lot of noise about ending QE. I will believe it when I see it; end of printing will usher in a decline in eqities and commodities. This is simple stuff. The difficult part is timing, as usual.
Since PIMCO has far better info than I do, I watch what they do.
Posted on 3/31/11 at 9:09 am to RasinCane
quote:
Short duration bonds? Got any names that you care to share?
Not here at work I don't. Just find any short-duration bond index or ETF with a low expense ratio, there are plenty from which to choose. I'm sure PIMCO has several.
Posted on 3/31/11 at 9:15 am to foshizzle
quote:
I think the majority of the muni craziness is blown way out of proportion.
I concur.
Not much supply available right now, which is why they have performed better more recently. Over the LT munis will be fine.
Posted on 3/31/11 at 6:07 pm to LSUBanker
Over the long term we will all be dead. Keynes said so.
Posted on 3/31/11 at 7:21 pm to RasinCane
not enough info really. but, the short term bond fund or bonds themselves be good. i also like mREITS at this time. guess i'd need to know is our primary objective wanting to generate income or preserve capital.
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