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sschullo

YTD RETURNs, what a first quarter!

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YTD Return: 4.1% 

I took out money from my bond allocation to meet my 2019 RMD (required minimum distributions, or RMD for us over 70.5) and the equity markets soared this past quarter. Consequently, my stock allocation has crept up to 33% about 3% above my target.  My stock-bond split original target since 2006 is 30% stock / 70% bonds and cash. 

Details of my portfolio:

2019 Q1 Returns.JPG

2019 Q1 fees.JPG

2019 Q1 Allocation Plan.JPG

It's been the highest single quarter returns since 2009. 

Anybody else want to share?

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Hi Steve!

I'd be glad to post mine if I had one that looked as good as yours! (What program do you use, Excel?)

I like how specific you are with your chosen funds and your commentary on the annuity. Is there a specific class of annuity or is it simple called a traditional annuity? I do like the sound of that vehicle to hold cash and is the 3% fixed for certain period of time? Congratulations (I think) on reaching your RMD age! I suppose you will be rebalancing soon.

Thanks for sharing. As usual, I learn so much from you and your posts.

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Since January 1st, I invested 30k additional dollars and earned 85k in market returns. Taken together, that represents a 16% increase. It has been a great quarter and the PE ratio is once again above 30, so I feel nervous. 

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Ed and Nancy,

Yeah, my "boring" portfolio earned over $65,000 since January 1st (nothing boring about that). I took out $22,000 both in RMD and to fund my house remodeling. It was not only stocks but bonds were very helpful too. Look at my international bonds soaring at 3.09%! Wow! And the total bond market index also went up 2.94%. Vanguard's total bond market index is one of the greatest bond investments around. I have had money in it for about 15 years. 

NEVER ever listen to the professionals who have been warning for years that bonds will crash when interest rates go up. Well they went up, and yeah bonds took a hit, but what the financial media never says that if you hold on to the bonds, just like stocks, they will recover too. 

Steve

 

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14 hours ago, MoeMoney said:

Hi Steve!

I'd be glad to post mine if I had one that looked as good as yours! (What program do you use, Excel?)

I like how specific you are with your chosen funds and your commentary on the annuity. Is there a specific class of annuity or is it simple called a traditional annuity? I do like the sound of that vehicle to hold cash and is the 3% fixed for certain period of time?

2

Hi Nancy,

Thanks so much for the kind remarks.

Yes, I use Excel to create the charts. 

Here is more information about TIAA annuities. It gets a little complicated to be eligible to use it. My former school district has TIAA and I used to use TIAA back when I was working. So I had transferred $250,000 of my IRA from Vanguard back to TIAA because Vanguard does not have a similar fixed and guaranteed stable value like fund. If Vanguard had it, I would not have used TIAA. 

The point is that you have to have TIAA available in your school district 403(b) plan and then you are eligible to use it. The interest rate might be higher than 3.0% now. 

https://www.tiaa.org/public/retire/financial-products/annuities/ for more information. 

Steve

BTW Georgiana and I just got back from Morocco and Paris! At the great Sahara! It is sooooooooo beautiful. That's why I live in the desert! And then there is Paris! We had a wonderful 2.5-week trip. I have been around the world, but Morocco and Paris are different but both exotic as hell. Every building in Paris is a classic!

IMG_6991.JPG

IMG_7545.JPG

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47 minutes ago, sschullo said:

NEVER ever listen to the professionals who have been warning for years that bonds will crash when interest rates go up.

Human beings are irrationally fearful and it fascinates me.

I remember reading articles and forum posts explaining that bond prices are inversely related to interest rates and since our interest rates had declined to basically zero, a bond crash was, as a matter of fact, guaranteed and imminent. Sell sell sell! People heard this and feared it the same way they’d fear a stock decline.

Well, rates stayed low throughout most of the Obama presidency and then when we really started raising rates in 2018, the Vanguard Total Bond Fund suffered a stinging 0.08% decline! Of course over that same time period Vanguard Total Stock Market declined 5.17%.

Nobody should worry about their bond fund, unless they’re buying junk bonds.

 

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Beautiful pos! So nice to enjoy traveling as you both do. 

Our district does not have TIAA. Once I get to move money from a 403(b) or 457 it can go into an IRA and I could also use some to buy a similar annuity, if it exists. Is that correct? Alternatively, I could take my pension and buy an annuity upon retirement (which might be really soon, given the situation I wrote about in another thread). If I bought a guaranteed one, like yours, that could represent the bond portion of our collective portfolio. 

My Q1 returns include maxing out my 457 and Q2 will include doing the same for my 403(b). Good thing I front loaded. 

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2 minutes ago, MoeMoney said:

 

Our district does not have TIAA. Once I get to move money from a 403(b) or 457 it can go into an IRA and I could also use some to buy a similar annuity, if it exists. Is that correct?

It is my understanding that since TIAA is not on your district's 403b list, you will not be eligible. But call TIAA. 

Alternatively, I could take my pension and buy an annuity upon retirement (which might be really soon, given the situation I wrote about in another thread). If I bought a guaranteed one, like yours, that could represent the bond portion of our collective portfolio. 

Immediate annuity from Vanguard might be an option for you. But perhaps your current pension plus your hubby's might be enough for  your  guarenteed   lifetime payouts. 

2

 

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I'm trying to understand in what situation opting to buy a guaranteed annuity would work over a pension for life (and the life of a spouse upon death). I think that annuities "die" with the owner. I tend to think it's if one believes their pension is not too secure or if they could get a higher monthly pay out from the annuity compared to their pension while they are alive, and have no desire to let it pay out to any survivor.

I have been so tuned out of annuities for so long though I know they have their place and could be very useful if chosen carefully in the right scenario. Like yours is.

Thanks for your answers, Steve.

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I haven’t researched the ins and outs of annuities, but I just want to second your instinct to be cautious and skeptical.

My general take is that if I give a for profit company my money in exchange for a guaranteed return then they MUST be earning enough to pay me, pay overhead, pay staff, and generate profits. I understand you’re also outsourcing some risk to them, but I’d rather just keep all of that money to myself.

...if we’re talking about 3% guaranteed  returns with no time commitments and fees then it sounds interesting, although a very conservative portfolio can generate that expected return. If we’re talking about fees and time commitments, then it sounds rather bad. 

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Of course we must realize that the great first quarter just brought us back from our losses Q4 2018.  Just keeping things in perspective 😀

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18 hours ago, MNGopher said:

Of course we must realize that the great first quarter just brought us back from our losses Q4 2018.  Just keeping things in perspective 😀

I am glad you brought this up. Keeping a "perspective" is a requirement for long term investing success. 

We have preached and preached for years that after every crash, correction, downturn, or any type of pullback, the market recovers. The book "stocks for the long haul" shows the growth since the early 1800s, over 200 years. We are reminded first hand that this is happening right now. As you said, the markets have recovered much of the losses experienced by 2018 Q4. This is nothing original from me, but from my readings and from Jack Bogle. Buy, hold and rebalance, nothing complicated or original. 

The only thing I trust about investing is that the stock and bond market will grow over many years, stocks more than bonds. Sometimes bonds more grow more than stocks but taken together stock and bonds reflect the world economies and all of the energy of people working together.  

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