Fixed income: Brokerage CDs, bonds, or stable value fund? (2024)

For your fixed income portion of AA, do you leave it totally bond funds, or split among

Brokerage CDs (ladders)
Bonds (AA3 or higher)
401k stable value fund (around 2%)
Bond funds

mtmingus wrote: ↑Sun Jun 26, 2022 10:51 amFor your fixed income portion of AA, do you leave it totally bond funds, or split among

Brokerage CDs (ladders)
Bonds (AA3 or higher)
401k stable value fund (around 2%)
Bond funds

Forgot the other two:

I bond
MMF (0%)

mtmingus wrote: ↑Sun Jun 26, 2022 11:13 am

mtmingus wrote: ↑Sun Jun 26, 2022 10:51 amFor your fixed income portion of AA, do you leave it totally bond funds, or split among

Brokerage CDs (ladders)
Bonds (AA3 or higher)
401k stable value fund (around 2%)
Bond funds

Forgot the other two:

I bond
MMF (0%)

See Also

CDs vs Bonds: Which Is Better for You?Guide to Fixed Income Investments: What Are Bonds and CDs?Bonds vs CDs - Fixed Income InvestingCDs vs. ETFs: What's the Difference?

My MMF is paying 1.38% -- but I only use if for a sweep account mostly. But it is certainly better than a savings account.

here are some resources for interest rates:

Fidelity page with rates for bonds and CDs

https://fixedincome.fidelity.com/ftgw/fi/FILanding

Bloomberg treasury including TIPS rates
https://www.bloomberg.com/markets/rate ... -bonds/us

TIAA Traditional (with 3%, no restrictions) = 35%
BNDX (Vanguard Total International Index) = 25%
SWSBX (Schwab Short Term Bond index) = 12%
SWAGX (Schwab US Aggregate Bond index) = 25%
Cash (roughly one year expenses). = 3%

Comments, suggestions?

mtmingus wrote: ↑Sun Jun 26, 2022 10:51 amFor your fixed income portion of AA, do you leave it totally bond funds, or split among

Brokerage CDs (ladders)
Bonds (AA3 or higher)
401k stable value fund (around 2%)
Bond funds

In order of decreasing size:
1. 401k Stable Value Fund
2. 401k Bond Index Funds (~intermediate duration)
3. TIPS
4. Cash

I don't use a 'constant mix' asset allocation.
My current fixed income is a mix of Bank account, Money Market mutual fund, Series I Savings Bonds, 401k Stable Value fund.

Now that there are positive real yields I've been considering dabbling in a TIPS index fund (FIPDX) - the idea of TIPS appeals to me, but when real yields were negative they did not, also I've grown weary of Treasury Direct and looking for something that will replace my Series I Savings bonds whenever I get around to start funneling that money into retirement accounts (which is where I will keep the FIPDX Fidelity TIPS Index fund)

mtmingus wrote: ↑Sun Jun 26, 2022 10:51 amFor your fixed income portion of AA, do you leave it totally bond funds, or split among

Brokerage CDs (ladders)
Bonds (AA3 or higher)
401k stable value fund (around 2%)
Bond funds

Most of our fixed income is in I Bonds (first bought them around 15 years ago?). Have used short term or total bond funds at times when I bonds were not enough fixed income. As I have been learning more, I have been becoming more comfortable with the idea of individual bonds. I may consider purchasing those in the future.

I Bonds will continue to remain my largest fixed income holding.

Founding Father

Thankfully sold most bond funds last year.

Our fixed income is in a mix of the following in descending dollar value:

1. Individual Muni Bonds
2. CD's
3. HYSA's
4. Treasuries
5. Bond Funds

401(k) is in a target retirement fund. 457 FI is spread among:

1. Total bond Fund
2. TIPS fund
3. Stable Value
4. Money Market funs

I have a rather large portfolio and like to use a variety of fixed income products. Large allocation to VG Balanced Fund and Wellesley Income Fund (in my IRA), also have VG Inflation Protection Fund, VG Intermediate and Ltd Duration Tax Free Funds, CDs, Money Market Fund and Savings accounts and 2 Short Term Index Funds.

Wow, does that seem too complex? Does it really matter if you have a bit more in a CD than a bond fund?? I end up with about 25% no loss of principal e.g. FDIC products and Money Markets and Savings, 25% short term bond funds and 50% intermediate bonds. I focus on making sure I have enough No loss of principal and short term bond funds to support my wife's withdrawal needs to at least age 90 should I pass first. She will lose her SS (mine is higher) and 1/2 my pension and have to file single instead of joint.

I think with a drop of more than 10% in the Total Bond Fund others might consider at least some diversity in their fixed income --especially in retirement with a loss of human capital.

Currently I use only I-bonds and EE-bonds.

In the past I've also used CDs, VTEB. I might consider a MYGA in the future.

It depends on the rates...

Dandy wrote: ↑Mon Jun 27, 2022 11:46 am
I think with a drop of more than 10% in the Total Bond Fund others might consider at least some diversity in their fixed income --especially in retirement with a loss of human capital.

Well I was lucky to have TIAA traditional as an option, and made a good decision a few years ago to diversify fixed income with it. But not smart enough to otherwise diversify within fixed income, so, yes, the loss in bond funds does make one re-think the fixed income side. I see so much discussion in this forum, especially in this down market, of how to allocate fixed income, and I guess the recent drop in bonds is why, combined with a return of higher inflation. On the other hand, the deltas of the various ways to diversify in fixed income (excepting junk bond type investments) doesn't really move the needle when compared to what happens on the equity side, and, I tend to think that overall asset allocation may be more important. That said, I would do things a bit differently on the fixed income side, if I had the benefit of 20/20 hindsight.