Yes, basically that is what I am saying.Thanks for the replies.I'm not sure I understand NAV appreciation. It makes sense to me once rates drop below 4-5% to exit the MMF position, but it seems long-term FNBGX has performed pretty poorly. Are you saying if you get into bonds after rates start to come down I will miss the big gains?Hi again!Thank you for the quick reply, I reviewed the linked Fidelity document and came up with the following investment strategy. Please let me know your thoughts.
Here is my plan with my cash:
- Transfer 30k into my fidelity account
- Put 6,500 into my Roth IRA for 2023
- Put remaining 23,500 into my indivual account
- Leave 5k in my bank account for expenses
- Leave another 5k in cash for emergency
6,500 Roth Investments:
- Going to invest 100% of 6,500 into SPAXX(Money-market fund offering 5%)
- Once the MMF lowers below 3-4% I plan on moving this to bonds
- I was considering FNBGX(Long-term treasury), what do you think?
23,500 Individual Investments:
- Ill plan on doing 30%(7k in international) or do you recommend more?
- For the 7k(international) I was planning on the following: FZILX(Zero international large cap)0%
- Remaining 16,500(US)
- 10,000 into FZROX(Zero total market)0%
- 5,000 into FNILX(US large cap)0%
- 1,500 in cash for options trading/stocks
Is this plan ok? Should I be more diverse? I dont plan on moving money around often(outside option plays).
Also, I will contribute about 1,500/month moving forward to my IRA and Individual account. I don't plan on keeping more than 5K in bank/5K in cash anymore. Thoughts?
Personally, I wouldn't wait for rates to drop before using long term bonds. When they do drop, the long bonds will benefit from NAV appreciation. Similarly, they will suffer NAV loss if rates climb. I don't see a reason to wait but others may disagree. FNBGX seems like a good long term bond fund. Not everyone agrees with using long bonds to offset equity risk because their duration makes them volatile. Some prefer short duration to minimize volatility.
I don’t look at individual holdings but rather the portfolio as a whole. Long term bonds are to good balance a higher equity allocation.
Intermediate term has a similar if not as dramatic effect. Short will too but less so.
In a typical recession, rates are dropped to stimulate the economy and so bonds with duration seem NAV appreciation and are good to rebalance from.
Ever rising inflation would make them not a good position of course.
If you want returns, a higher equity allocation is better.
Statistics: Posted by typical.investor — Fri Dec 29, 2023 1:07 am — Replies 7 — Views 555