$200K US close to retirement, what to do?
Looking for low-mid risk option to invest for 5-7 years.
Any recommendation?
TIA
Any recommendation?
TIA
Jan 27th, 2018 1:19 pm
Jan 27th, 2018 5:16 pm
Jan 27th, 2018 6:40 pm
Jan 27th, 2018 10:55 pm
Jan 28th, 2018 2:44 am
Jan 28th, 2018 2:48 am
Jan 28th, 2018 2:56 am
Jan 28th, 2018 5:52 pm
In 2017 long term bonds overperform short term ones (despite common believe in contrary), with rising interest , for long run thus could be even more crucial.craftsman wrote: ↑ Of course, in the current rising interest rate environment, most fixed income/bonds will continue to go down as rates rise so if you want to stay in fixed income, I would use very short term securities (ie. T-bills) in order to protect the principle and get some returns. Once rates get higher, you can move over to longer term fixed income as most of the price drops would have ended by then.
Jan 28th, 2018 5:59 pm
Jan 28th, 2018 8:49 pm
2017 was an anomaly in the fact that longer term rates stayed relatively low - probably due to the fact that they are about as low as you can go at least for government bonds. In the past few months, the longer term 10 year rate for Canadian government 10 year bonds have moved upwards (from just over 1% at the end of the September 2016 to the current 2.25%). If you apply basic logic, who in their right mind would buy a 1% bond if you can get a 2.25% bond for the same price? The seller of the 1% bond will need to sell it at a discount for it to be appealing compared to the 2.25% bond. Lower yielding bonds will drop in price as higher yield bonds are available - it's basic economics.
Jan 30th, 2018 8:23 pm
Jan 31st, 2018 2:23 am
Don't think of fees... think of results. Investors these days concentrate too much of 'how expensive it is' and not enough on 'how much am I actually making after all expenses are paid'.Navon01 wrote: ↑ Thanks everyone for all your input.
I’m being persuaded by a TD wealth “advisor” to switch over to them...hmmm
Always invested in MF via the branch, however I’m being told I will do better at TD WM...
MF today are expensive, but I don’t know if that’s a relative term if they go up or down.
Maybe I’ll move 50% over and let them manage it and rest do myself to see which will do better.
Also, in both cases have a 2% mgmt fee.
Still undecided...
Jan 31st, 2018 9:35 am
I'd rather disagree with "don't think of fees... think of results". In current environment, higher fees = lower results. 99.99%. MOST (I'd say ALL) "active" management funds charging 10x fees (1-2%) compared to index funds, just failed even to MATCH returns, not saying to overperform (see Buffet experiment). Thus paying ANY fee on top of underlaying funds just DRAG your returns down, not lift it up. Another question about some smart ass doing tax optimization for you, which COULD increase your REAL, AFTRER TAX returns...but that NOT the case of bank advisor anyway. Even Gart braving about his investment genius, while selling a bit modified CCP for 1% on top, do not provide that.craftsman wrote: ↑ Don't think of fees... think of results. Investors these days concentrate too much of 'how expensive it is' and not enough on 'how much am I actually making after all expenses are paid'.
Since you are with TD and using their MFs, look their e-series of funds which is basically their lower fee versions of their funds. They will giver you a slightly higher return (in the neighbourhood of a few percent) at the end of the day on your current investments.
Jan 31st, 2018 9:44 am
I had half of what you have, but I'd go with 3 funds portfolio, adjusted with your tolerance to the risk. Granting quite short time frame I'd suggest 60% equities 40% bonds. Yes, bonds PRICE could go down with rates increase (however NO one knows how far rates will go), but their total return would be quiet stable imo.
Lesson 3: Even if the Fed is raising rates, it doesn’t mean you should stay in short-term bonds.
As we entered 2017, many investors were sure the Federal Reserve would continue to raise interest rates. That led many gurus to recommend investors limit their bond holdings to the shortest maturities. In late 2016, economist Jeremy Siegel even warned that bonds were “dangerous.”
On March 15, 2017, the Federal Reserve raised interest rates by 0.25 percentage points. It did so again on June 14, 2017, and once more on December 13, 2017.
However, despite the prediction that interest rates would rise having actually come to pass, the Vanguard Long-Term Treasury Index ETF (VGLT) returned 8.6%, outperforming Vanguard’s Intermediate-Term Treasury Index ETF (VGIT), which returned 1.7%, and the Vanguard Short-Term Treasury Index ETF (VGSH), which returned 0.0%.
Jan 31st, 2018 9:47 am
that's just one more example when crystall ball predictions failedcraftsman wrote: ↑ 2017 was an anomaly in the fact that longer term rates stayed relatively low - probably due to the fact that they are about as low as you can go at least for government bonds. In the past few months, the longer term 10 year rate for Canadian government 10 year bonds have moved upwards (from just over 1% at the end of the September 2016 to the current 2.25%). If you apply basic logic, who in their right mind would buy a 1% bond if you can get a 2.25% bond for the same price? The seller of the 1% bond will need to sell it at a discount for it to be appealing compared to the 2.25% bond. Lower yielding bonds will drop in price as higher yield bonds are available - it's basic economics.
Takeout is simple - nobody knows the future. Stay YOUR course.Lesson 3: Even if the Fed is raising rates, it doesn’t mean you should stay in short-term bonds.
As we entered 2017, many investors were sure the Federal Reserve would continue to raise interest rates. That led many gurus to recommend investors limit their bond holdings to the shortest maturities. In late 2016, economist Jeremy Siegel even warned that bonds were “dangerous.”
On March 15, 2017, the Federal Reserve raised interest rates by 0.25 percentage points. It did so again on June 14, 2017, and once more on December 13, 2017.
However, despite the prediction that interest rates would rise having actually come to pass, the Vanguard Long-Term Treasury Index ETF (VGLT) returned 8.6%, outperforming Vanguard’s Intermediate-Term Treasury Index ETF (VGIT), which returned 1.7%, and the Vanguard Short-Term Treasury Index ETF (VGSH), which returned 0.0%.
The fact that rates are likely to rise doesn’t tell you anything about what bond maturity will produce the best return. The reason is quite simple. The markets are forward-looking—they incorporate all available information into current prices. With bonds, that means the yield curve already reflected the expectation of the Fed raising rates. Thus, unless rates rose even faster than expected, there would be no benefit to staying short as long as the yield curve was positively sloped, which it was throughout 2017.
Finally, the evidence shows there are no good forecasters when it comes to interest rates. We can see this each time S&P Dow Jones Indices produces its SPIVA scorecards. The following results are from the midyear 2017 scorecard, the latest available, and cover the 15-year period ending June 2017:
Just 2% of actively managed long-term government bond funds, long-term investment-grade bond funds and high-yield funds beat their respective benchmarks.
For domestic bond funds, the least poor performance was in intermediate- and short-term investment-grade funds, where 76% and 71% of active funds underperformed, respectively.
Active municipal bond funds also fared poorly, with between 84% and 92% of them underperforming.
Emerging market bond funds fared poorly as well, as 67% of them underperformed.
Jan 31st, 2018 5:06 pm
Those 'facts' that you brought up even with Buffet's endorsement doesn't match the actual facts. Even the most passionate passive investor states only 90% of actively managed funds don't beat their benchmark index as proven by a recent study of US mutual funds. That means that 10% of all actively managed funds beat their benchmark (simple math 100% - 90% = 10%) so people have a 1 in 10 chance of their fund beating the underlying benchmark.asa1973 wrote: ↑ I'd rather disagree with "don't think of fees... think of results". In current environment, higher fees = lower results. 99.99%. MOST (I'd say ALL) "active" management funds charging 10x fees (1-2%) compared to index funds, just failed even to MATCH returns, not saying to overperform (see Buffet experiment). Thus paying ANY fee on top of underlaying funds just DRAG your returns down, not lift it up.
I have no idea of what you are trying to say or ask.asa1973 wrote: ↑ Another question about some smart ass doing tax optimization for you, which COULD increase your REAL, AFTRER TAX returns...but that NOT the case of bank advisor anyway. Even Gart braving about his investment genius, while selling a bit modified CCP for 1% on top, do not provide that.
Jan 31st, 2018 5:26 pm
Don't blindly look at the returns from the funds but understand how the bond market works.asa1973 wrote: ↑ that's just one more example when crystall ball predictions failed
http://www.etf.com/sections/index-inves ... nopaging=1
Takeout is simple - nobody knows the future. Stay YOUR course.
Jan 31st, 2018 7:15 pm
Pray!$200K US close to retirement, what to do?