Defined Maturity Bond Funds in a Retirement Portfolio

Regular readers know that I have been managing my retirement investments with an increasingly risk-averse attitude, particularly as applied to my equity allocations. On the other hand, I think I need to be more strategic in managing my fixed-income investments. My concern arises from the anticipated increase in interest rates that will probably kick-in sometime next year. After some study, I am considering moving some of my retirement nest egg into one or more defined maturity bond funds or ETFs. If you have never heard of these, join the club. I knew nothing about them until last month.

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First Quarter Retirement Plan Performance Results

My daily personal finance routine continues to include net worth tracking. Call me obsessive but is there a better overall indicator of financial progress toward retirement? Not that I am aware of but I am certainly open to being educated by a reader on this. The results during the first quarter are positive but no doubt less than mediocre compared to many of you. The results are about what I anticipated.

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Can Market Crashes Be Stopped?

We are almost 5 years from the worst of the last market crash. Can we relax and catch our breath now? Is it safe for a baby boomer to once again rely on the market for a secure retirement? Is it possible to design a financial system and market economy that won’t crash? The realists don’t seem to think so. I’m one of them.

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Year End Investment Moves

In the past few weeks I have purchased more I-Bonds using cash in savings and bought more TIPS (Treasury Inflation Protected Securities) using assets inside my 401(k) account. I made these moves to (a) reduce risk and (b) increase the amount of future retirement income that is both guaranteed and inflation-protected.  I will be continuing this strategy in 2014. Today I made some more year-end changes.

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Buying More I Bonds and Easing Out of the Market

Last week I purchased a $10,000 I Bond, which is the yearly maximum allowed by current law. (This is a “per Social Security number limit.) You can exceed this limit by using your federal income tax refund to buy even more I bonds, but this would require me to over-withhold during the year which I do not want to do.  I will make another I-Bond purchase early next year as I ease out of the conventional stock and bond markets.

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2012 Performance Summary

I spent some time this weekend looking back at 2012. The number one statistic I evaluate is our net worth because that is what will be generating our retirement income when the time comes. Investment performance is also important but not as important to me as net worth. For example, our retirement portfolio could increase in value by 20% over the year but if we offset that with more debt or spending that depletes our cash, we really haven’t accomplished much. It’s about accumulation.

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Extending the CD Ladder for Retirement Safety

Once again Congress put a temporary fix on a long term budget problem. The markets reacted positively but with continued uncertainty. Volatility remains and it is still too much for us. We continue to add to our retirement accounts at a significant rate. Therefore, to maintain a positive trend until some reasonable level of market stability is found, we are staying heavy in cash.

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The Federal Reserve and Your Retirement Nest Egg

The Federal Reserve announced a policy change this week that baby boomers should pay close attention to. For the past few years, the Fed has told the public that the interest rates it controls would be maintained at or near 0% until at least 2015. That has now changed because the Fed has instead tied its interest rate policy to the unemployment rate. On Wednesday, the Fed said it would maintain interest rates near zero if  the unemployment rate remained above 6.5 percent, further provided that inflation does not rise above 2.5 percent.

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