Personal Investments • [How Do I Invest My $250k?]

VUSXX (treasury money market) is pretty good. For ETFs, you might look at VGSH (short-term treasury), VTIP (also treasury, with lower nominal yield but includes inflation-protection), and VCSH (short-term corporate, yields more but is lower-quality than treasury, although not including junk bonds, so less downside risk than junk bonds or a stock fund).

For "risk" assets, I suggest an appropriately-dated target-date index fund (which includes "next big thing" stocks like AI or whatever, since it has broad-market exposure).

I looked up VUSX and its current yield is around 5% which I can get from investing in tbills without the ups and downs in performance in VUSX.

I also looked up VGSH and VCSH and in its YTD is borderline.. not good performers. I think its best to just dump the $250K in short term bonds that currently are yielding around 5%.

The correct ticker is VUSXX.

You asked for alternatives, and the ones I mentioned are widely used for the purposes you mentioned. You're right in the sense that these funds underperform the underlying securities by a few basis points or so. Many people prefer that, because it relieves them of the task of buying the individual securities, and the rinse and repeat after they mature. Also, it's unreasonable to expect that a fund holding treasuries will pay you more than the securities they hold, as that means the fund company would have to take a loss.

I'm not saying any choice is "right" or "wrong", only that, considering the buy-and-hold convenience (that some people value and some don't), and the fact that the funds underperform their underlying securities by only a few basis points, saying the above funds are "not good performers" isn't really true.

Different people have different situations and preferences. From your various posts, it sounds like buying treasuries directly is what best suits your situation and preferences, so I'd suggest you stick with that for the fixed-income side. For more yield, you could buy individual corporate bonds, but that carries more risk than treasuries.

Do you think there are trustworthy CDs out there that generate better return than the current 5% tbills presently yield?

For trustworthiness, just make sure the CDs have FDIC insurance for the amount you're putting in. Since I don't buy CDs, I have no idea what they're yielding, a quick search on the internet or on your brokerage website may be useful.

Also let me know what "next big thing" ETFs that you mentioned are worth taking a look.

Perhaps you misunderstood what I wrote, please re-read it. My meaning was that a total market stock fund will definitely contain the "next big thing" stocks merely due to the fact that it contains nearly all stocks in the market. Chasing "hot" sector-specific ETFs normally gets you the "last big thing" and nobody knows what the "next big thing" will be (unless you're inventing it yourself). So buy the total stock market fund (or a target-date index fund, which should include a total stock component) in order to get exposure to whatever it is.

Or, chase the "hot" sector-specific ETFs, and more than likely lose money. That's normal for performance-chasers.

Regarding your additional comments:

I recently looked at VGSH and its NOT performing well. Its YTD is less than 1%. My money would do better with 5% yield in 1 year tbills compared to a short term bond fund, unless I'm mistaken and I'd appreciate that you correct me on that.

The YTD doesn't necessarily tell you how you'll do over a longer period, especially in the case of funds that fluctuate in share price. This was explained well in the opening post of the following thread from nisiprius:

viewtopic.php?t=360575

I'm eyeing VTSAX which looks very attractive to me at the moment. So I assume that VTSAX is the mutual fund while VTI is its counterpart ETF, am I right?

Correct. The way Vanguard does this (and they patented it) is that the two tickers are just two different share classes of one fund (which is a total market stock fund, like I suggested).

Do you know what STRIPS are currently yielding? I cant find any yields on current STRIPS anywhere even in TD. Hope you can point me in the right direction.

I had to look up STRIPS, turns out they're a kind of zero-coupon bond. "Coupon" refers to the yield, and zero means zero. Since there's no yield, you want to look at total return (which, in this case, is the amount you get back at maturity that's in excess of the amount you paid, if I understand it correctly). You could model the eventual return as being an "implied yield", which is basically a math problem, if you want to do the math.

Statistics: Posted by HanSolo — Tue Apr 09, 2024 2:30 am — Replies 97 — Views 7977

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