Woodman53
Confused about dryer sheets
I am getting ready to rebalance my portfolio and need to move about $40,000 from stocks to bonds (or some other fixed income vehicle). I am considering using this rule to determine if I should buy the Vanguard Total Bond Fund (VBTLX) or a CD/Tres/MYGA.
Here it the rule;
If the distribution yield of the VBTLX fund (currently it is 3.49% as of 12/1/2023) is greater than available five-year CD/Tres/MYGAs then buy the fund. If not buy a 5-year CD/Tres/MYGA. If distributions and CD/Tres/MYGAs get ridiculously low like they were a couple of years ago I would rethink this rule.
I am trying to keep it simple and not try to guess where interest rates are going. If I was I would just leave it in the Fed MM fund that is paying over 5%. I am far from a bond expert. I have about a million dollars in equities, CDs and MYGA in total right now. This money is all in Traditional and Roth IRAs. My target allocation is 60% stocks (Total Stock Index Fund)/40% bonds. The 40% portion can be CDs/Tres/Bonds/MYGAs. Currently the 40% is in a five-year ladder with four CDs that are paying about 5% each and one MYGAs that is yielding 3%.
So, if I would follow this rule today, then I would buy a 5-year CD/Tres/MYGA with the $40,000. As I say I am not a bond expert and shy away from corp bonds.
What do you think of this rule or how else should I determine what do with this money. I do not need the money as my pension and Social Security cover all my expenses with some excess that is being used to pay taxes on Roth conversions. I would like to keep the 60/40 allocation.
Any help would be greatly appreciated.
Here it the rule;
If the distribution yield of the VBTLX fund (currently it is 3.49% as of 12/1/2023) is greater than available five-year CD/Tres/MYGAs then buy the fund. If not buy a 5-year CD/Tres/MYGA. If distributions and CD/Tres/MYGAs get ridiculously low like they were a couple of years ago I would rethink this rule.
I am trying to keep it simple and not try to guess where interest rates are going. If I was I would just leave it in the Fed MM fund that is paying over 5%. I am far from a bond expert. I have about a million dollars in equities, CDs and MYGA in total right now. This money is all in Traditional and Roth IRAs. My target allocation is 60% stocks (Total Stock Index Fund)/40% bonds. The 40% portion can be CDs/Tres/Bonds/MYGAs. Currently the 40% is in a five-year ladder with four CDs that are paying about 5% each and one MYGAs that is yielding 3%.
So, if I would follow this rule today, then I would buy a 5-year CD/Tres/MYGA with the $40,000. As I say I am not a bond expert and shy away from corp bonds.
What do you think of this rule or how else should I determine what do with this money. I do not need the money as my pension and Social Security cover all my expenses with some excess that is being used to pay taxes on Roth conversions. I would like to keep the 60/40 allocation.
Any help would be greatly appreciated.