Yes, I should have added you can earn as much as you want after you reach full-retirement age for SS.
2 Likes
Curious as to how many here sold off investments in April with the drop or how many stuck with buy and hold and didnât panic!
If you sold when did you or do you decide to buy back in.
No selling - and most who work likely keep the same course as 401Ks buy on the day and time they buy vs. timing. Thatâs how most invest.
On the flipside, Iâm still buying munis as often as I canâŠfollowing the advice of Kiplingers. Itâs just too good a time. Theyâre always greatâŠbut theyâre paying extra great!!! I wish I had more money to add to my income!!
2 Likes
I wish I understood bonds better. I have tried and tried and for some reason it is just one thing that does not click with me.
1 Like
Not me, just stayed the course.
3 Likes
You are not alone. Many people donât, but you are smart to recognize your blind spots.
Fixed income investing is much more complicated and nuanced than novice investors often realize.
5 Likes
I didnât sell. I bought.
i increased my percentage of stocks and went really heavy on intl stocks, which have popped off. I am up big since the day after the Liberation Day announcement. If anything, I am considering whether to pull back a little as I think we are headed for a downturn.
ETA: That sounds like timing the market, the pulling back. Maybe it is? Almost my whole life i have overcommitted to stocks and just let them ride, hence the buying and not selling this spring. But my investments are reaching a milestone, and Iâm starting to feel like I want to be a little more conservative in my old age. Still mulling âŠ
2 Likes
Itâs a loan. U loan an entity money but typically (not always) govt supported - a city, state, airport. But some use the govt to finance - I own Syracuse U, Hendrix College, Guilford College and NW Nazarene U bonds. Those last 3 I knowingly took on risk for extra yield but all are investment grade and pay.
But I lend to cities, school districts, airports, states, etc.
Itâs simply a loan but the returns are better than federal due to tax free status, which by the way is preserved in big beautiful.
No tax free and infrastructure projects would collapse and the pols in both parties know this.
Those who talk about risk of prices seesawing are unfairly muddying the waters because when it pays off you get your money back regardless of todayâs price. Yea if inflation is obscene you could trail there.
If you hope to make 6% after tax or more (depending on your bracket, solid minis get you there without 99.5% of the risk.
Buy individual bonds. Not funds. If you have a brokerage account and want help, PM me.
1 Like
This!! The whole accrued interest thing on Treasuries⊠I filed an extension on my taxes this April for the first time b/c I could not dedicate the time required to report the accrued interest correctly. Two & a half months later, I still have not gotten around to it, but I know I have to.
Your brokerage should report your accrued interest on the 1099. And each trade confirmation should note it.
For those who say - what ???
When you buy an existing bond - that on the secondary market, you are buying from another.
Letâs say it pays interest of $200 on January and July 1.
You buy it April 1. You now have to pay the previous owner interest of $100 for the three months the bond has earned but yet to pay.
So if you buy $10k worth of the the bond at 100, you pay $10,100.
But on July 1, you get $200 in interest - thus the $100 you paid the old owner for the three months they owned the bond so you are even. And the $100 you earned for the three months you owned it.
It happens in the first payment period you own the security.
If you hold a treasury (taxable) bond, youâll want to deduct that âaccruedâ payment because while it wasnât your income to begin with even though on July 1, in this case, it was paid to you.
In a tax free scenario, it doesnât matter.
But the 1099s should have all this calculated for you on securities you buy via your brokerage.
I believe the issue I need to account for is when the purchase date and the first interest payment straddle two calendar years. This thread addresses the mechanics.
I did it last year, so I know I can do it, but it requires looking up the original purchase orders to find the accrued interest, and then manually adjusting in TurboTax. Also need to consider how the state addresses the topic.
https://www.bogleheads.org/forum/viewtopic.php?p=6917621#p6917621
1 Like
This is administrative in nature and can be complicated. Itâs not for everyone 
Beyond that when investing in bonds you need to consider credit risk, interest rate and volatility risk, inflation risk, liquidity risk etc. To measure and maximize performance you also need to consider the portfolioâs composition and the expected performance in a variety of dynamic market scenarios.
Successfully investing in bonds isnât as simple as collecting income and getting your principal back because that income can be below prevailing alternative opportunities, and principal values can suffer devaluation (secondary prices) or default.
Particularly when investing in callable bonds investors should be familiar with concepts like option adjusted spreads, duration, and convexity. Those that invest in bonds without a working knowledge and consideration of these concepts are taking on risks they are blind to.
Stated differently, a significant component of proper risk adjusted fixed income investing amounts to a series of math problems. Those that seek to over simplify often miss out on returns, are outpaced by inflation, have bonds called in lower rate environments, suffer unintended tax consequences, or suffer portfolio losses that could have been mitigated with a more thoughtful and thorough approach.
6 Likes
How are you getting a 6% after tax yield?
1 Like
It doesnât have to be. Folks can just tip their toe in the water by purchasing medium term index funds of bond or Treasuries in their pre-tax accounts. For example,
Personally, I use the Treasury index for ballast, not growth, which I make in my equity portion. No longer invest in munis as my tax bracket in retirement doesnât justify it.
Are you licensed to provide financial planning services? I personally do not take financial planning advice from anyone who isnât licensed to provide itâŠbut thatâs my opinion.
And yes, I do read things about financial planningâŠbutâŠ.
Yes you can but there are some downsides beyond management fees. You can get hit with principal losses depending on when you opt to sell.
Your exampleâŠ
As interest rates rose holders were hurt.
I would seek professional and custom advice depending on the size of your portfolio.
Not that you were asking me, but I am actually licensed and hold a series 24 âprincipalsâ license. None the less for my personal investment I use an independent and qualified CFP. I think itâs worth the money to have independent perspectives and have my views challenged by peers with similar degrees of training.
3 Likes
If youâre buying a 4% bond at 90, your current yield is 4.44%. So de Ending on your tax bracket.
You can get investment grade 5% today at $99.50-ish. And coupons in between 4-5% like 4.25, 4.5 etc at prices in between. You can actually get 4% under 90 but used the round #. So 5% is like 7.5% after tax.
I donât worry about prevailing rates and impact on current price because again, you know what you paid, what youâre getting income wise, and what youâll get back at call or maturity.
The idea is to build an income stream so that you are earning money to pay your bills vs a stock which may go up in value but not pay income.
High valuation on a stock, unless you sell, doesnât pay your bills.
Thatâs what esteemed experts, like Kiplingets promote munis and others sources of income generating securities.
But again all have different goals. This part of my portfolio is to pay income.
You could also accomplish the same or better with stocks - for example Pfizer mints money and yields 7%. Annaly Mortgage 15%. But as stocks, price change matters so thatâs the risk part that is avoided with bonds.
I donât claim to be licensed. People are free to choose to do what they want. Lots of people do lots of things. Lots of âlicensedâ people provide bad advice.
Mine is free. As I always read you saying - hersâs my free advice.
that is no different than holding individual bonds and selling them early.
John Bogle and thousands of bogleheads would disagree. The two- (or three)-fund is about as easy and simple as one can get.
1 Like
I am not going to debate you but it is not the same for a variety of reasons as owning single security bonds. Some positive and some not.
1 Like