Here is a good article from Vanguard titled Risk lurks in the search for current income.
Key Points:
- If someone moves from a money market fund yielding 0.11% into a bond fund yielding 2.52%, he or she would pick up 2.41 percentage points in current yield. On a $10,000 investment, that equates to $241 a year, assuming interest rates remain steady.
But....
- If rates were to increase by, say, 4 percentage points to 6.52%, the impact to a bond fund with an average duration of 4.3 years means the share price would drop by 17.2% (for a total drop in account balance of $1,720 on the $10,000 investment), all else equal.
In my own account and in "Kirk Lindstrom's Investment Letter" portfolios, I am totally out of bonds and bond funds not indexed to inflation. I own and recommend TIPS, TIPS funds, Series-I Bonds, CDs with FDIC and CASH in money funds and other savings accounts. American Express Bank is offering 1.30% and I've seen higher with a bonus at CapitalOne Bank through Costco.
In 2009 Vanguard's TIPS fund, VIPSX, gained 10.8%
In 2009 Vanguard's GNMA fund, VFIIX, gained 5.3%
I dumped my Vanguard GNMA (VFIIX) fund almost 2 yrs ago in my Vanguard ROTH and bought the TIPS fund VIPSX. Total gain as of yesterday for VIPSX was 22.5%!
The REIT index fund at Vanguard, part of my core portfolios recommended for conservative and aggressive investors, is up 22.55% YTD! It gained 29.6% in 2009 but lost 38% in 2008 so it is volatile.
Also make sure you read Vanguard Lowers Admiral Shares Minimum to $10,000
In 2009 Vanguard's TIPS fund, VIPSX, gained 10.8%
In 2009 Vanguard's GNMA fund, VFIIX, gained 5.3%
As of yesterday (10/6/10)
VIPSX is up 9.05% YTD
VFIIX is up 7.08% YTD
I dumped my Vanguard GNMA (VFIIX) fund almost 2 yrs ago in my Vanguard ROTH and bought the TIPS fund VIPSX. Total gain as of yesterday for VIPSX was 22.5%!
The REIT index fund at Vanguard, part of my core portfolios recommended for conservative and aggressive investors, is up 22.55% YTD! It gained 29.6% in 2009 but lost 38% in 2008 so it is volatile.
Also make sure you read Vanguard Lowers Admiral Shares Minimum to $10,000
Key points:
- Vanguard has reduced the minimum amount required to qualify for Admiral™ Shares to $10,000 for most of our broad-market index funds and $50,000 for actively managed funds, down from the previous $100,000 minimum.
- Admiral Shares cost significantly less than traditional fund shares, and their expense ratios are among the lowest in the mutual fund marketplace.
Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 171% (a double plus another 71%!!) vs. the S&P500 UP a tiny 14.5% vs. NASDAQ UP a tiny 8.7% (All through 10/7/10) (More info - FREE Sample Issue)
(Your 1 year, 12 issue subscription will start with next month's issue.)
BRINKER RETURNS to Los Angeles
ReplyDeleteThe OC Register reports:
"Money Talk" with Bob Brinker returns to KABC/790 AM Sunday (Oct. 10) as part of a post-Dodgers change in weekend programming. Brinker will be on 5 to 8 p.m. Sundays.
The new Sunday schedule: 8-11 a.m., "Motorman" Leon Kaplan; 1-5 p.m., NFL Football (New Orleans Saints vs. Arizona Cardinals); 5-8 p.m., Bob Brinker; 8-10 p.m., "Dr. Kipper Health Medical Show" with Peter Tilden; 10 p.m.-midnight, "Red Eye Radio" with Doug McIntyre.
Saturday programming: 3-5 p.m., Leo Terrell; 5-6 p.m. "The Digital Doctor" with Jeff Levy; 6-8 p.m., food expert Merrill Schindler; 9-10 p.m., Peter Dills; 10 p.m.-midnight, "Red Eye Radio" with Marc Germain.
I noticed I highlighted the info wrong... just to be clear, Brinker will be on tape delay on KABC on Sunday nights 5 to 8PM...
ReplyDelete5-8 p.m., Bob Brinker;
followed by Dr Kipper from 8 to 10PM.