SCHO
Schwab Short-Term U.S. Treasury ETF
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Treasury bonds are gaining popularity as today is likely the start of the first interest rate cut this year.
What is your strategy for the Bond ETFs in light of the probable upcoming rate cut?
What is your plan for the Bond ETFs with the upcoming probable rate cut?
What is your plan for the Bond ETFs with the upcoming probable rate cut?
As an ETF Boglehead style investor is now a good time to diversify 15-30% into blue chip stocks experiencing decline?
Investing in Money Market Funds vs Short Term Treasury ETFs
Having trouble deciding between short vs long term treasuries
Portfolio strategy for a future down payment on a house
I’m very new to investing where would you recommend is a good place to start reading up on how to make reliable puts and call SCHO Jen strips for attention
17 Investment Principles from Warren Buffett and the late Benjamin Graham
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Outcome #2 is most likely because this administration wants to appear in control. This may be futile, but could give insiders opportunity to find best position. I’m okay with portfolio gains this year. Time to slowly move to RISK OFF. SCHO seems a good hideout for awhile. Weakening dollar seems part of the strategy (though 47 will never say it out loud, or maybe doesn’t get it). VXUS , SCHY will stay awhile.
CDs are fine but I don't like the lock in. Much more ergonomic to by a US treasuries ETF like sgov or VBIL. Or short term gov bond ETF like SCHO if you can stomach slightly longer duration. The ETFs continually have old bonds mature and new bonds rolling in, so the rate is always changing, you're riding the average of short term rates whatever they are. Overall rates should be in the same ballpark as a short term CD. But no early sell penalty.
Idle cash? If your accounts are at SCHWAB, they have several tools to calculate IRR and the like. Surely other companies offer this? If not, switch. Don’t leave your idle cash for more than a week. There are good ETFs to drop it into . SCHO will generate monthly interest. That’s where you park unallocated $
I'm in post-retirement and these are my fave bond ingredients suitable for the living expenses bucket. ||**Low Duration Bond Sleeve**||||**Sleeve Weight**|[**Std.Dev**](http://Std.Dev)|**Coupon**|**Fees**|**Duration**|**Rating**| |:-|:-|:-|:-|:-|:-|:-|:-|:-|:-|:-| |||||||||||| |Ultra Low Duration Treasury Bills 45day (100% AAA)||||SGOV||0.60%|4.18%|0.09%|0.13 yrs|AAA| |Ultra Low Duration Credit 1yr AA- (33% AAA 0% junk)||||PULS||0.83%|4.73%|0.15%|0.27 yrs|AA-| |Low Duration Treasury Notes 2yr (100% AAA)||||SCHO||2.03%|2.95%|0.03%|1.88 yrs|AAA| |Low Duration Govt/Credit 3yr AA (73% AAA 0% junk)||||BSV|72.35%|2.90%|3.34%|0.03%|2.60 yrs|AA| |Low Duration Junk Credit 4yr BB (0% AAA 100% junk)||||HYDW|27.65%|6.21%|5.60%|0.20%|2.80 yrs|BB| |GNMA Govt Mortgages 7yr (100% AAA)||||VMBS||6.85%|3.73%|0.03%|5.27 yrs|AAA| ||||||||||||
SCHD, SCHO, VXUS, O, . I was looking to rebalance some of my accounts and the fire sale has been a blessing from buffet! Spring cleaning!
I think your observations are good. Position in market? Defensive. Preserve your capital. Some years that market is flat, or negative. (Mercy me, so it ain’t so!) That said, there are likely gains to be made in energy sector. However, ya shoulda been there last month. How ‘bout that LNG? Once the dust settles, that is likely to be a good long play. Asia, Europe will need a more secure, stable source of LNG . The Persian Gulf will be quagmire for years to come. The overall market will struggle and unlikely to rally until this stupid gulf war settles down. A month? A decade? Even investors that favor DCA into VOO should keep eyes open. Nothing wrong with cash or cash equivalent like SCHO. Don’t pick a bottom. That’s too hard. Pick a trend. Flat is nice. Up gently is better. For one good stock to accumulate when down. GE.
Mind explaining? How did you loose it all on SCHO? It’s dang treasuries
Treasury Bill ETFs. Stable as fuck, good dividend, doesn't grow much though. My recommendations: BIL VBIL XONE SCHO WEEK USFR UTEN
I just looked at SCHO for funsies and discovered the chaotic underbelly of the markets
You don’t have to pick stocks (and prevailing wisdom has that’s futile anyway). Auto-invest in index funds. Formulate a plan based on how much risk you want (e.g. 70% SCHG, 25% SCHD, 5% SCHO) and periodically check to make sure it’s sticking to the plan. If it’s off, rebalance. As you approach retirement, you’ll want to adjust the plan to be slightly more conservative. (Disclaimer: not a financial advisor, not your financial advisor, but it’s what I’ve done and it’s worked well)
SGOV/SCHO or HYSA depending on rates. Total savings irrelevant to line item realities. If you are doing normal stuff minimal is 3 months clear salary. Emergency fund. Housing savings + minimal 401K match us where everything goes. (10% ain't too terrible 5 + 5 match at this point in your situation) Also, calculate these realities into housing savings and such. Planned mortgage vs current rent. Meaning if you plan a 2K mortgage/taxes/insurance and habe a 1400 rent. If you aren't putting 600 in housing savings, you aren't ready to buy. 1% of home value per year divided by paycheck/month etc. So using avg cost of home 400K, 1%= 4K. 4K ÷ 12 = $334/month. So if these made up numbers fit, you can't afford that house unless you are currently able to put 934/month in. New homeowner, miseries, unplanned realities means you have a high chance of dealing with problems in the first 2-5 years. So realistically the padding for that is another 1%. So another 334/month. Now given you think 9K + a house is possible and you didn't mention income or expenses. Let's do some random COL income guess work: I'm going to put you two at the median household salary as a combined couple: 75K. I'm going to assume you live in an area where you can get a house for 250K. I'm going to assume your current rent is 1800/month. I'm going to assume you can qualify for a no money down, but you aren't super stupid and will at least get 10% down. 25K. So a 30 year mortgage is 1,817/month. If your rental is 1800/month you have essentially zero difference there. Your 2% minimal expenses is 5,000/year or 420/month. Meaning the least you should be putting in your house fund account is 420/month. The 401K money should be in S&P index fund. The house money/emergency fund HYSA or SGOV/SCHO deal. You should realistically be working on maximizing and muster at least 100-200 > the minimal extra expenses during savings. Let's say 620/month. That puts you at 4 years to affordability. Ideally, you can do better than these numbers. Ideally, you can be frugal for 2 years and build up the 25K within that time. Snag the house, and transition you're savings number into the 6 month pre tax emergency fund. The extra mixed with getting the 401K up to at least a combined 15% and putting your 1% to expenses and having enough wiggle to deal with unexpected stuff. 25, so ignoring the 10% part at 75k if you hit 15% by 27 and work to full retirement age (67) you end up with a 5+ million 401k.
"60" is not really information. The questions of paramount importance have a lot to do with how to manage your money at that point: Job? SS expectation level? House paid for? Current salary? Etc. It's all about time-line and need of the money. If she has 10+ years and is doing great, could live on her SS etc... then no reason not to S&P and chill. If a down market could destroy her, SGOV/SCHO is the play. Risk + Risk = ? If there is no risk to having Risk, S&P. If there is Risk in having Risk, safety play.
If you are poor enough to seriously need it, open a brokerage and put it in SGOV/SCHO etc. If you are building on a 10+ years horizon, S&P fund VOO/SCHX etc.. if you're into religious morality, there is funds like CATH or PRAY. Ideally you want at least 3 months salary (clear) in the "bank" (SGOV style) with 1-2 paychecks floating in cash bank. Then you want to put at least 10% in your retirement account. I said "brokerage" and that is where you want your more liquid funds (SCHO/SGOV types). If you have employer 401K with match, then use that, it gives you 100% on your money by default. And even if you are struggling to not be able to 10-15% your retirement, always hit the match max, it is a free 100% return. If you don't have a 401K option, then open an IRA for the retirement long term stuff. How I would break it down if you're low level income broke, and can slice it: 3 months clear money in Brokerage in SGOV style. 1 paycheck extra float in checking/savings. 10% IRA/401K 10% in the brokerage to an alternative SGOV for mental tracking, this is where splitting SGOV/SCHO can come in handy. This 10% is for building up funds for expense savings of car/house innthe future. I say the two 10%s assuming you're broke enough to need that. Ideally if you could do like 25% in the house/car savings and 15% in the retirment, this would be perfection-ish. But might be hard to slice if you're subsistence mostly.
Great breakdown of Treasury bond ETFs! For folks looking to diversify, these options cover different risk profiles. SCHO is solid for conservative investors wanting minimal volatility, while TLT offers more potential upside with higher risk. Definitely appreciate the tax note about federal vs state/local exemptions - that's key info many overlook.
Are you max contributing? Personally, I would stick to SCHO or SGOV etc. Unless/until I had 1 whole year of max out of pocket and set to build. Then honestly, I would just S&P index fun like 50% of new contributions. Part of the plan is having what you need and having any stock risk right now is really sketchy if one bad break could crush your situation. Once you can easily deal with a bad year on safety mode, go tried and true via the S&P index or maybe a total market. When I had 2 years worth, then I'd consider using 50% of new contributions for anything more. I'll assume your max out of pocket with deductible and some non-covered BS hits somewhere between 15-20K? So, just treasury that crap. Other option would be I have seen some broker like 30 day CD things where you can get good interest and turn liquid fast. It's been a while though, so idk if they are still beating treasuries etfs or which brokers do what.
I was just looking at SGOV - $100/share with a $0.36/share yield SCHO - $24/share with a $1/share yield?!
If you open a brokerage account (I use schwab so I know that one). You could say start your absolute long terms in SCHB. And put your shorter term into something like SCHO. Or you can also to the more common VOO/SGOV. And it doesn't charge fees. Assuming 20K is your total net worth, going forward I'd say something like: 10K in SCHB/VOO 10K in SCHO/SGOV Then when you get a job with a 401K, put 10% to it. And put 10% in your SCHO/SGOV variant. (This is your more liquid savings, for like a house etc and 10% is a minimum, you can put more if you can, more is ideal). Eventually, when you are fully living the adult life, you want to float on avg about 10% of your home value in the safer liquid situation, and the rest in the growth funds.
Sure but if you look at something like SCHJ a 1-5 year corp bond fund it currently yields something like 4.70% what is more then a short term treasuries like SCHO what yields about 4% So the short term corporate bonds do yield more and are a bit more risky but they are also subject to state income taxes what might; depending on your income or state bring it down closer further. For example if your state income tax is 5% the yield for the corporate bonds drop to 4.4% Is the extra .4% really worth the "risk", its up for you to decide .
Why $SNAXX over $SCHO ?
I'm 32 as well, and I'm currently 50% VTI, 25% VEA, and 25% SCHO. I try to keep it simple.
I lean towards total developed ex-US (VEA) for my international stocks instead of deciding between Europe and Asian Pacific markets. I also avoid emerging market funds, especially international ones, as they just consistently underperform. Maybe replace that 5% with a short term T-bill fund like SCHO.
I use an ETF despite the fee because I don’t want to manage my collection of Treasuries myself. SCHQ, SCHO, and SCHR.
Yes. For an ETF just do a euro fund, SCHF for instance, it’s a little more volatile than our stuff here but I moved some SCHB and SCHD into it for now. Dude I even sold SCHO treasury bonds to be safe, am I paranoid? A little. Also for the ones I’m actually making money on, do your DD as always, but I’ve made a pretty penny due to Europe’s investment in themselves, moving money from our market and companies into their own. There are others I haven’t bought simply because of price. Here they are. Rolls Royce Indra Sistemas LEONARDO SPA Thyssenkrupp SAAB Also, if you’re interested, Buffet is throwing money into Japanese companies, I’m looking into since they’ve been down for awhile, but his picks have risen since then, you can find an article about it, Mitsubishi is one, though there’s a few under that name so look for the correct listing.
BSV, SCHO, STIP, VCSH, and LQD. See my edit for why but idk anything so, you know, NFA.
My SoFi HYSA started at 4.6% and is down to 4% now, considering moving some into a short term bond fund as well. I'm on Schwab so I'm looking at SCHO and SWSBX, but my time horizon is shorter than yours so it may not be worth it. I think you've got a pretty good mix as is.
SCHB - Schwab US Broad Market SCHO - Schwab Short Term US Treasury SCYB - Schwab US High Yield Bond VEMY - Virtus Emerging Market Bond DNP - A CEF invested in Utilities, Infrastructure and MLPs
https://www.pimco.com/us/en/resources/education/everything-you-need-to-know-about-bonds Yes you can buy a bond index fund in a mutual fund structure or an ETF structure. Bonds (excluding I-bonds) are priced in a market like stocks, and insofar as markets are efficient and you we don't know more than the aggregated market equilibrium, one type of bond won't look better than another type. However, different bond types have different risk profiles and some may be more suitable for you than others. If you are looking for minimal risk, then short term, high rated bonds are better: USFR or SCHO or money market fund. If you want a little more credit risk for a little more yield, short term commercial bonds like JPST or STOT. If you want broad coverage of lots of types of bonds, there are aggregate funds like BKAG. These cover US treasurys and corporate bonds and agency mortgages but you can add more types of bonds with SCHP inflation linked and BNDX foreign. Long term bonds will be more volatile and may diversify your stock portfolio more: TLT or BLV High yield/junk bonds will have even more credit risk premium than investment grade bonds and will be even more correlated to stocks: HYLB
You should consider bonds with a maturity/duration that match how long you will hold the bonds. That is duration. Bond funds have different durations which is important when considering a bonds fund. You can see the duration and yield if you look up the portfolio holdings at morningstar.com. Example: TLT: [https://www.morningstar.com/etfs/xnas/tlt/portfolio](https://www.morningstar.com/etfs/xnas/tlt/portfolio) IEF: [https://www.morningstar.com/etfs/xnas/ief/portfolio](https://www.morningstar.com/etfs/xnas/ief/portfolio) SCHO: [https://www.morningstar.com/etfs/arcx/scho/portfolio](https://www.morningstar.com/etfs/arcx/scho/portfolio) FBND: [https://www.morningstar.com/etfs/arcx/fbnd/portfolio](https://www.morningstar.com/etfs/arcx/fbnd/portfolio) If you need to dip into it you should be using shorter duration funds. Long term funds are more speculative (riskier) unless you plan to hold then for the duration. Example, SCHO has a duration about two years and a yield to maturity of 4.66%. If you held it for two years, putting the dividends back into the fund \*buy more shares with the dividends), after two years the value of your fund holdings (you would have more shares since dividends went back in) would have appreciated over your initial investment by approximately 4.66%, per year (the yield to maturity). It's possible the fund share price could be down in two years as rates fall, but you would have bought more shares along the way be re-investing dividends (which is how you get the yield to maturity).
You could be my brother. Out fathers are even the same age and mine also lost a lot of money in options as his mental acuity declined over the past few years. (Although my father is a widower.) (I'm now also worried about myself should this happen to me -- declining acuity can be a big threat to future financial security.) My Father's main account is with Schwab and he had a lot of cash in the default bank fund that pays 0.145% interest (or something like that). So, make sure any cash is in a Money Market if in Schwab as they don't have a decent "sweep" account. My Fathers has an IRA and Brokerage account. Because he was trading options and was a frequent trader the brokerage has minimal account balance requirements ($25K). You might need to check for that. I recently had to do an IRA distribution to keep it over $25K (an RMD, though). If in an IRA, you often need permission to trade options so look at having that removed from the account. That would probably take his agreement unless you get power of attorney, etc. I have yet to do this. My father also had an account at Interactive Brokers he had forgotten about. Look out for lost accounts. In this case, leaving it alone from 2019 to 2023 made it the best performing account. Taxes were a bit of a mess. 50+ pages in the end of year tax docs with all those option transactions in the (taxable) brokerage account. He was also only doing RMDs from the account he remembered and was under-withholding for fed taxes owed. My basic approach was find missing accounts and consolidate them (for one, that makes the RMD easier to figure out as well as taxes) then moved his cash into duration appropriate bond funds (max 5 year duration) and money market funds. Stocks were in the Interactive Brokers account which was closed and moved to Schwab and re-invested in bond funds. I left his small gold position and since he also is still interested in call options we put some in JEPI (let the pro's handle the details on options). Others include JPIE, MINT, SCHO, and SCHR. He also needed a lot of help making sure property taxes are paid on time, taxes are filed, bills paid and he is not defrauded (really, SunRun at Costco exit path, he does not need a leased solar system at age 83), etc. I've had to understand his cash flow to get an idea of how long until he runs out of money and make sure that is kept in mind for investment decisions.
Alrighty! I was thinking something more along the lines of BIL or SCHO but the >5.05% over 3 months is pretty good.
It looks like you are underperforming the market and gambling with options. You are better off just sticking it on broad based etfs/bonds and forgetting about it. Just put it in 50% something like VTI or VT and 50% SCHO if you want to be conservative. Then rebalance annually. More % stocks and/or more bond duration if you want more risk
The SEC 30day yield was invented for the same reason the Annual Percentage Rate (APR) and Annual Percentage Yield (APY) were invented—to be able to quickly compare disparate products in an apples-to-apples way. The SEC number gets close to the yield you'll experience in real life, but it's incomplete because it tries to build a picture using data from just the last 30 days. The YTM or YTW that's found on the issuer's website (Vanguard for VCIT and Schwab for SCHO) is the best source for the yield number. Morningstar also aims to keep its data current, and the YTM numbers I publish usually come from Morningstar's website. Once you're looking at a security on Morningstar, find the YTM on the Portfolio tab. VCIT happens to be one of my fave bond ingredients for quality corporate debt. (I'm just not invested in it now because I feel the risk/reward of Treasurys is better at the moment.) Morningstar shows VCIT's 30day SEC Yield as 4.87%. But the YTM number for VCIT is 5.10%. Both numbers are forward-looking. Both numbers are also ultimately untruths because they take a frozen snapshot of the portfolio as it looks like now, and imagine that portfolio being allowed to mature. That's never going to happen in a fund unless it's a target-date fund—assets are always getting sold off and replaced. But the YTM does get you super close, and in the case of VCIT, if you hold for its duration of 6 years, you'll experience that roughly 5.10% YTM as a total return—part of the total return will come from monthly coupon payments and the remainder will be experienced as a price increase in the shares of VCIT etf itself (as the average price of its bond inventory rises to par).
Which yield do you look at? I’m seeing the 30 day SEC yield for SCHO as 4.07%. Is this fund much different than VCIT?
Yes, matching your up-to-five-years hold time with a fund's duration is a good idea. Holding a fund for its stated duration will let you experience a total return that's close to whatever that fund is currently showing as its Yield to Maturity. Some ideas from my own portfolio for you: SCHO average credit rating AAA, 100% Treasurys, 2yr constant maturity, YTM 4.66% BSV average credit rating AA+, 70% Treasurys, 3yr constant maturity, YTM 4.41% HYDW average credit rating BB-, No Treasurys All Junk But the Safest Junk, 4yr constant maturity, YTM 6.14% The last one HYDW follows a very interesting index that conservatively chooses issuers of junk on a sector-by-sector basis. For example if the median yield in junk-rated stuff for, say, the energy sector, is 7.00%, then only issuers offering less than that are considered. Then, on a monthly basis, if it's ever detected that an existing holding has been selling off and a threshold is hit, that holding gets culled and replaced with something new.
My Father (83) uses: JEPI JPIE MINT SCHO: Short term treasury SCHR: Intermediate treasury Money Market fund If she is 70, I'd add more equities then the above as JEPI is really the only equity exposure and has limited upside. To keep it simple, could select one of these: [https://investor.vanguard.com/investment-products/mutual-funds/life-strategy-funds](https://investor.vanguard.com/investment-products/mutual-funds/life-strategy-funds)
This. Huge tax advantage. I use a combo of SCHO and SGOV as my savings account
How about a bond barbell? some BLV, yes, but an even bigger helping of 2yr Treasury (SCHO or BSV). mix them in a proportion that achieves the weighted average duration you want.
I was thinking about this, but I think it’s basically the same as investing in a short term treasury bond ETF, like SCHO. but for now, I’m sticking with the cash account, even if rates start to go down, I still want access to my cash so I can keep dollar-cost averaging into the their taxable account. (Which already includes muni bonds). I also feel like once rates start to go down, then nobody will care about short-term bonds, CDs, etc. they will no longer be attractive investments. In my opinion, stick with the basics, 1 emergency fund, 1 taxable account, and 1 retirement account.
What's a cash equivalent fund? I did a little research and bought SCHO and SPTS. Are those the best?
I’m invested in a lot of equities in my other account. The ETF SCHO has an expense ratio of 0.03%. Short term treasuries, but I am now considering MMF.
Short term Treasury Bills are yielding more than longer-term notes and bonds at the moment, so SCHO can do what you want. You can also consider buying the bills/notes/bonds directly if you want a more control of how to balance (1) the yield curve currently being inverted, meaning the shortest-term Treasury offerings have the highest yields versus (2) locking in reasonably high rates for a longer term. If you’re using Schwab they make it pretty easy, but the set-it-and-forget-it of a fund like SCHO might just be exactly what you’re looking for. Your choice of investment here will not impact your taxes. If it was a taxable brokerage account, directly buying treasuries (instead of a treasury ETF or CDs) may be advantageous because treasuries are exempt from state taxes. For a traditional IRA you’ll just count withdrawals as part of taxable income, so the tax consideration is really just how much to withdraw and when. For a Roth IRA, you don’t pay taxes on withdrawals and it’s basically non-taxable income. [There may have been some tax obligation to get it to you](https://www.investopedia.com/terms/i/inherited_ira.asp), but if you’re at the stage of treating it as your own IRA then I assume this is already taken care of.
Thank you, yes I know it won’t affect taxes until after the money is taken out of the IRA, I’m just thinking ahead. So you like short term treasuries over a money market fund? I am researching SCHO, Schwab short term treasuries etf.
if they dont want to assume much/any risk I'd suggest something like XONE/XHLF or SCHO combined with a simple money market fund if they have access to a good one.
VTWNX also holds stocks so it is also designed for some capital gains. Of course, that means risk is higher. So, you should look past the yield unless you are mostly interested in income. (VTWNX was up 12% in 2023 and 10 year average return is around 6%/year). My 83 year old father uses the following for an income stream in a Schwab account (listed least to most risk): 55% SNVXX Money market currently paying 5.04% [https://www.schwabassetmanagement.com/products/snvxx](https://www.schwabassetmanagement.com/products/snvxx) 15% SCHO Schwab Short-Term US Treasury ETF currently paying 4.94% [https://www.morningstar.com/etfs/arcx/scho/quote](https://www.morningstar.com/etfs/arcx/scho/quote) 15% MINT PIMCO Enhanced Short Maturity Active ETF paying 5.34% [https://www.morningstar.com/etfs/arcx/mint/quote](https://www.morningstar.com/etfs/arcx/mint/quote) 15% JEPI JPMorgan Equity Premium Income ETF paying 6.82% [https://www.morningstar.com/etfs/arcx/jepi/quote](https://www.morningstar.com/etfs/arcx/jepi/quote) Some of the funds in SNVXX and SCHO are possibly moving to longer duration bonds (SCHR) in near future. This article has some good info on withdrawal rates for a poprtfolio in retirement: [https://www.morningstar.com/retirement/good-news-safe-withdrawal-rates](https://www.morningstar.com/retirement/good-news-safe-withdrawal-rates) See the chart in that article titled: 30-Year Starting Safe Withdrawal Rate %, by Asset Allocation From that chart, a 0% equities portfolio (all bonds) can safely withdraw 6.7% of the portfolio, per year, for 15 years. So with 220K starting, that is about $14.5K per year. You adjust the 14.5K up by inflation each year. So if inflation is 10% in year two you would be 14.5 + 1.45 = 15.95K (in year two). I use 10% inflation to make the math easy -- hopefully we never see that. But basically it is 14.5K per year keeping the same purchasing power over time. So, that is what they have to work with using 'conventional' strategies as outlined in that article where you want a 90% probability it lasts 15 years. You can also see columns for 10 years and 20 years, etc. if you want to plan for a shorter or longer life spans. Mix in some equities and you can (historically) take out more. But, bonds are doing pretty well now so equities don't add as much as you might think (at least according to that article). Back to VTWNX as an example: It is 40% stock and 60% bonds. According to the chart, for 15 year life, your starting number is 6.8% of the portfolio. Not a big jump (0.1%) over an all bond portfolio yet with more risk. A 10% equities and 90 bonds actually has a higher withdraw rate at 6.9%. (Bonds returns are pretty nice right now.)
If you’re looking for something that will have a guaranteed nominal value (i.e., dollar amount that is not inflation-adjusted) after a certain period, then Treasury bonds are what you’re seeking. A fund like SGOV for total liquidity, a fund like SCHO for two-year bills, and so on. BlackRock also has a suite of ETFs called iBonds where each ETF holds bonds that mature around a certain date. When the date is reached, the fund closes down and returns all cash to investors. This gives them the same properties as an individual bond, but it’s much easier to trade an ETF and to reinvest dividend payments. These funds are also diversified, which matters if you’re buying something that isn’t a Treasury bond. So bonds are good if you have a short- to medium-term goal that you’re investing for with limited risk. Other than that, buy widely diversified stock funds for long-term goals and don’t panic sell. Be aware of taxes and how to use tax-advantaged accounts, add beneficiaries to each account, buy the insurance you need, and chill.
All true. But I was never a believer of inflation and I'd continue to buy TLT all the way down. Im not sure we'll see QE ever again but certainly dont feel U.S. debt or economy could withstand much higher rates without rolling over thus lower rates. Stagflation only real worry. I trade TLT constantly and would never go all in. Also bonds catch bids during a crisis. Many factors in my favor IMO. Now at 3.75% i wouldnt take that chance. But again it was a bet on my part. Of course it could've gone wrong. I also laddered SCHR and SCHO with it so i had short term as well.
Feeling so behind at almost 40…need some advice! First of all, I know I am asking a Reddit forum, but just want some honesty peer to peer "what would you do" advice. Of course I am going to make my own decisions, but some input would certainly be helpful, so please go easy on me! So for the last 7 years, l've had a financial advisor who oversees my account. I was REAL stupid and never really noticed that he hadn't ever called to go over accounts, check in, etc. (add in depression and not thinking of things like this). I thought my account was taken care of and I decided to take a look at my accounts for the first time a few months back my account was down 2k (combined Roth/Trad IRA) in SEVEN years. I expected to be some return and I feel so behind now. This mixed with watching "Teach you to be Rich" had me thinking that I would be doing better not watching all of my returns paying for fees, so I decided I am going to manage my account. I am 39 years young and have about 92k in my traditional and 20k in my Roth. I'm torn about what to do. I don't know if I'm young enough to still invest in growth stocks or if I should start investing in dividend stocks. I'm feeling discouraged since I feel like my advisor dropped the ball. I have a lot of dry powder to buy and feel like we're going to see a larger downhill trend, so part of me is also waiting for that. In my IRA, I currently have about a third invested in VTI, VEU, VOO and SCHD, a third in SCHO (short term bonds - which part of me wants to turn over to cash so I can scoop up more stocks as things go down) and about a third sitting in cash. In my Roth, have about 7200 sitting in cash, 7k in SCHO (same as above, kind of want to move to cash) and the rest in VTI, VEU, SCHD and O. Just by looking at this, do you have any advice or moves YOU would personally make? Here's some things I'm wondering about... - I just moved from Ameritrade to Vanguard. My cash is in Vanguard Federal Market Fund (Settlement) That was automatically moved there from TD. It doesn't appear its making interest. I thought money markets made top tier of savings account interest rates. - Would you hold on to the SCHO or convert to settlement and have some more powder waiting as things drop? - Growth stocks vs dividend stocks with a lot of catch up needed - I am almost 40 so time is not something I have as much of… I don't have anyone to talk to about this kind of stuff, so I thought I'd at least put it out here to get some outside perspective. Thanks everyone!
Curious if anyone who diversifies some percent of their investments into actual Bills Notes Bonds would do the same if the only option were Bond ETFs that matched the duration you're looking for. I learned a hard lesson being in TLT in the first half of 2022 thinking that bonds (actual or ETFs) were the "safe place" when stocks enter bear territory. I asked several forums if it made sense holding LT bond ETF at the time, when JPow was literally telegraphing "rates higher, every FOMC meeting, until we see the numbers we want which will take some pain". Everyone said yeah don't try to time the market. But in this case I didn't have to. The Fed was doing it for us. Finally sold my position, at a loss, but would have been 3x as bad if I held through the down-only period. But I did realize that if I held actual bonds, and the time horizon was on par w my goals, then nothing would have changed the fact I'd get face value + interest at maturity. On the other hand, bond ETFs are like buying bonds that never mature. And are constantly subjected to interest rate risk and inflows/outflows from the fund and can trade like stocks (see TLT Mar 2022 - Sept 2023). Anyway, is everyone here always referring to actual T-bills and notes etc from their broker/Treasury Direct or do some of you consider ETFs like BND, TLT, SCHO, SHY as an equivalent to the bonds they track?
You buy T-bills from Treasury direct, a govt website. It's a simple process. Or you can buy a short term bond etf like USFR or SCHO or JPST (though JPST also holds some A-rated short duration corporate debt and MBS debt). But if you buy from Treasury direct there are no state taxes on gains.
You can buy short term treasury ETFs (VGSH SCHO), some brokers allow you to buy tbills through their platform.
Ah ok. I misunderstood the ETF. I thought they were buying 3 and 10 yr bonds and holding to maturity. What are your thoughts on SCHO Vs SCHR if you plan to hold for 10+ years?
Short term maturity bonds and T-bill such as SCHO, VGSH, and SGOV.
Duration SGOV holds ultra short term treasuries 0-3 monts SCHO for example holds "short term" what is 1-3 years.
You need to look at total return. Bonds pay out considerable distributions. Furthermore, bonds rise and fall with expected inflation (long-duration) and Fed rates (short-duration). In my opinion, you should understand these concepts before investing in bonds. If you don't care to understand these things, and just want to add some diversified passive income to your portfolio, choose a short or intermediate-duration Treasury product (SGOV, SCHO, and/or VGIT). These will rise in a recession when everything else crashes, so you can then take advantage of the dip in stock prices and rebalance away from your bonds towards stocks.
Corporate bonds usually have higher yields but fall in a recession, while treasuries surge with any macro scare. Long-duration bonds are more volatile up and down, which gives more reward if you can time the bottom but more risk. Several reputable companies have ETFs with many choices. Blackrock, Vanguard, Schwab are probably the biggest. BND and AGG are combo products (MBS, corporate, and treasuries of diversified durations). VGIT is a nice intermediate duration Treasury fund. TLT is the highest volume bond fund if you want to trade options or swing with frequency. There are a number of shorter term products which offer greater stability (SGOV is the best for 0-3 month T-bills, SCHO for average 2 year maturity, etc.). If I had to recommend one product to diversify an equity portfolio, I'd say go with VGIT. You want negative correlation when algos crush stocks in a recession, which means Treasury bonds not corporate. And intermediate duration is probably appropriate right now when we are nearish to a yield top. If yields climb higher than expected, so bonds fall, you could always rotate into longer duration at that point which then has more upside potential to blast up out of the dip.
>VMFXX qq, why does SCHO have lower yield than SGOV...seems like it's already riding on short term treasuries.
The weighted average maturity of SCHO is still 2 years, so there is interest rate risk for someone who is planning to use the money in the next year or so.
Why do this instead of just buying an etf like SCHO which tracks 1 to 3 year treasuries and will move it's 30 day sec yield from the current 4.59% to the new fed funds rate of 5% in a few days? Is it solely interest rate risk? I assume the ally no risk CD will actually be a few bps under the fed funds rate, so you would also be loosing more money to ally arbitraging that difference in rates more than the 0.03% etf expense ratio.
I don’t know who downvoted you, but I just upvoted to give you some confidence back :) Take a look at SCHO portfolio page on Schwab. They hold 1-3 yr maturity notes, not 3 month t-bills.
Looking at the title of this post, SCHO will not keep yielding 4.73% much longer.
That's just not worth the hassle when you can much more easily buy a short-term treasuries ETF like SCHO which currently yields 4.73%...
SCHO is an ETF holding treasuries and with value correlated to the value of the underlying treasuries it hold. You are insured for up to 500k due to fraud. Otherwise, your ETF cannot lose value as a resul tof a bankrupcy/shutdown/bank run.
I bought SCHO. I'd like to know the answer too. So far I haven't been worried. Should I be worried? Also what about if one has a safety deposit box at Comerica with various stuff in it? If Comerica closes can I get my safety deposit box stuff? Oy .
USFR, SGOV, BIL You can duration match SCHO with BIL to meet your liability timeline.
Starting to shift most of my port out a bit in treasury duration. Moving out of SGOV by end of month and into SCHO beginning of next month. So moving from 0-3 month into 1-3 year. I think downside is limited now on SCHO to 1-2% max(if we hit 6% rates) while it's returning 4%+. Just gonna sit in SCHO reinvesting dividends until something attractive shows up. This isn't a very WSB play right now, but still don't see many good setups. Still playing a little SPY, TLT, and a few other tickers a bit, but going to continue on my plan of slowly moving out bond duration as rates rise. The goal is to get into TLT/EDV pretty heavy near bond peaks. Also get back into SPY and IWM when I think we are close to next lows. Just not feeling this setup right now
Then what about SCHO, Schwab ST US Treasury ETF, which has an expense ratio of only 0.03%? Wouldn't that be a better option?
The price of a fixed series of future cashflows is inversely related to its yield. Imagine a zero-coupon $100 par bond maturing in 1.9 years (SCHO's effective duration). In order for that to yield 2%, you would price it at 100 / 1.02^1.9 = $96.31. If you lower its price to $92.82, its yield has risen to (100/92.82)^(1/1.9) - 1 = 4%.
SCHO has a yield to maturity of 4.48%. Higher than GOVT because it holds shorter duration treasuries and the yield curve is currently inverted. If OP is looking for even higher than that, they can set up a 6 month T-bill ladder to get 5.09% YTM.
They have no more volatility than the underlying treasures, they just automatically roll them out you would have to anyway if you wanted to remain invested as your expire. The fees on ETFs are pretty low, like SCHO is 0.03%. You may pay much more on fees/spread trying to buy directly, depends on your broker, not to mention time lost tracking your individual treasures.
Would be complicated. You could just put it in a money market or savings account. Unless you are talking hundreds of thousands of dollars is it really worth worrying about getting a few extra tenths of a percent? You could also just buy a short term treasury ETF like SCHO for a little more yield. It can go down but last year, which would be one of the worse years for treasuries, it was only down 4-5%.
2 days in a row now with exceptionally high SCHO volume
Huge volume on SCHO(short term treasury etf) yesterday. Not sure what it means, but seems like an indicator of inflection point.
Any short term treasury ETF should do. They hold of a mix of treasuries and aren't "guaranteed" to recover by a certain date like holding treasuries directly to maturity, but they will recover over time. Even 1-3 year treasury ETFs like SCHO were only down 4-5% last year during one of the fastest hikes in history, but will actually increase in value too if rates fall which may be expected if there is actually a recession coming.
For long term investing more than 5 years, maybe get into VIG, Vanguard Dividend Appreciation ETF. The dividend appreciation will add to the value of stocks when investors are looking for some income along with the price growth of the stocks. If you add new money to it over the years, the years the stock market is down would help you get more shares and better dividend yields per dollar invested. If you are investing short term for a few years, maybe invest in a short bond ETF such as SCHO, Schwab Short-Term US Treasury. The short term bonds are starting to get better yields, and if the economy slows and yields decline, the price per share of bonds will increase.
Not fuckin with this market anymore. Slowly shifting out my bond duration. Started with SGOV -> SCHO -> TLT -> EDV -> TMF. Was in TMF but sold after the run. Currently mostly SCHO and a little TLT(and sellin otm covered calls on TLT). This shit is gonna fall apart within the next 12-18 months or Fed will back off rates. When that happens long bonds gonna make a lot of money I think. Until then you can make 4% waiting. When bonds spike and big profits come, then I'll move back into stocks when hopefully on sale.
You can look into treasury ETFs which are a very easy way to get exposure and are bought just like stocks. Funds like SCHO, SCHR, TLT, etc. Know that they can go down in market value, just like treasuries.
You could also just buy a treasury ETF like SCHO.
> SCHD Why SCHD which has a 0.06% expense ratio and an SEC Yield (30 Day) of 3.22% when SCHO has 0.03% expense ratio and an SEC Yield (30 Day) of 4.50%? To be fair, the expense ratios for both are still utter pennies. I don't see any someone would favor cooperate bonds via the Dow Jones U.S. Dividend 100 Index when it's Treasuries that are closer to the higher rates, and treasuries are even safer than corporate bonds.
Thanks!!! Can you please point me to a description of SEC yield that includes this information? Also, can you please point me at data that describes the discount from PAR value of the SCHO fund?
So the difference between buying a bond fund lets say has an average maturity of 2 years and a 2 year bond is this. Take the ETF SCHO this is a short term bond ETF that holds bonds with maturities from 1-3 years with the average maturity of 2 years. So it may hold some 1 year bonds , some 2 year bonds and some 3 year bonds in simple term but on average the bonds maturity will be 2 years. So SCHO will pretty much act like a 2 year bond. Now what is the difference between buying SCHO and a 2 year bond? Well imagine you buy a 2 year bond, then fast forward 1.5 years. You are no longer holding a 2 year old bond, you are holding a 6 month bond. The bond you hold will not act like a 2 year bond it will act like a 6 month bond. If you buy SCHO, and hold for 1.5 years; well SCHO will still act like a 2 year bond. So I guess that is the biggest difference , if you buy a treasury as you hold it , the duration decreases. If you buy a bond fund the duration pretty much stays the same .
First, you should ensure that you keep awareness of the money you have within a relatively small circle. Don't tell anyone who doesn't need to know. I've summarized what everyone should know about fraud prevention [here](https://github.com/investindex/Guidelines), if you'd like to take a look at that. For investing, I would encourage a focus on three things: (1) be patient and become **informed** before investing any money; (2) stay highly **diversified** and don't chase the high recent returns of certain investments; (3) focus on **total return** instead of passive income. This means that when investing in liquid assets, you don't prioritize income over capital gains, because you can sell the assets at any time. An excessive focus on income tends to needlessly reduce diversification. I would suggest diversifying into the following assets, and I provide some examples of funds you could buy: * Cap-weighted stocks ([VTI](https://investor.vanguard.com/investment-products/etfs/profile/vti), [VXUS](https://investor.vanguard.com/investment-products/etfs/profile/vxus), [VT](https://investor.vanguard.com/investment-products/etfs/profile/vt)) * Small cap value stocks, esp. those filtered for profitability ([AVUV](https://www.avantisinvestors.com/content/avantis/en/investments/avantis-u-s-small-cap-value-etf.html), [AVDV](https://www.avantisinvestors.com/content/avantis/en/investments/avantis-international-small-cap-value-etf.html)) * High-quality, short-term bonds for money you want to keep safe ([SCHO](https://www.schwabassetmanagement.com/products/scho)) * High-quality, long-term bonds ([BLV](https://investor.vanguard.com/investment-products/etfs/profile/blv), [EDV](https://investor.vanguard.com/investment-products/etfs/profile/edv)) * Managed futures ([KMLM](https://kfafunds.com/kmlm/), [DBMF](https://imgpfunds.com/im-dbi-managed-futures-strategy-etf/)) The managed futures are a more sophisticated asset, and you don't need to add those, but I include them because they're a fantastic diversifier. I've explained the risks of all these investments and a lot more about finance [here](https://github.com/investindex/Intro). Not trying to promote anything, but the info is there if you want to read it.
Its depends what she is invested in. Stock/Equity funds are usually not suited for shorter term investments of less than 10 years Even bond funds like BND has an average duration of about 7 years so you can sort of think of that like the time period you would need to hold it to get a guaranteed return . There are shorter term bond funds like SCHO what only have a duration of 2 years so if you hold for 2 years you are unlikely to lose money There are even shorter term funds that have duration of like 4 months , so holding for 4 over 4 months should guarantee some return . So its entirely depends on what she invested in.
Looks good to me, instead of a HYSA I would just invest in some short term bond fund. If 15 years is your timeline something like SCHO will yield much bettert than a HYSA
Yes, this person is discussing some very risky potential trades. Someone seeking low risk could just buy and hold a bond fund with low credit risk and low duration risk. SGOV is a fund with virtually zero risk, SCHO is low-risk, and so on.
So if you actually hold a government treasury you do not receive interest payments monthly ,you buy the bond at a discount, example you buy a $100 bond that matures in 12 months for $98, you pay $98, in 12 months the bond matures and you get $100, you would have to buy a new bond that will probably have a different rate Longer term bonds do pay interest and most you lock in the interest when you buy the bond it does not reset for the life of the bond. Example if you buy a 30 year bond at 4% you get that 4% for the 30 years ; once it matures you can buy a new bond and yes this new bond will have a different rate. Bond ETFs as you said will hold a bunch of different bonds but all there rates can be a bit different , you should be able to see their yeild if you pull it up in your brokerage For example SCHO is a 1-3 year bond fund, all the bonds will probably have slightly different rates.; a 2 year bond will have a different rate vs a 3 year bond. However in this case the average duration in the fund is 2 years. Currently 2 year government bonds yield about 3.06% (as of yesterday) so scho should in theory yield around that, looking at SCHO it now yields 3.01 (as of today) so its very close and there is also a small expense ratio that may make up the difference and who knows it may have moved since yesterday
Do you want an ETF that holds 2 year treasuries? Then SCHO, VGSH, SHY. If you want to speculate on 2 year yields, there are 2-year futures https://www.cmegroup.com/markets/interest-rates/us-treasury/2-year-us-treasury-note.html.
VFINX (or SWPPX if you have a Schwab account), VUSTX (or SCHQ) long term treasuries, VGSH (SCHO), SCHP.
There are lots of target date funds so you'd have to do research on each one to compare the portfolio, the portfolio risk, the expense ratios, etc. I would probably do that with the help of a financial advisor... But if you're uncomfortable with that (fee-based, rather than commission-based, advisors are the way to go), then I would stick to VOO and maybe a bond fund, e.g. DODLX, SCHO or SCHP... and sit on it.
depends on how long you mean by short term. less than a year? just cash. otherwise SCHO is not a bad one, or SCHP for TIPS bonds
SCHO probably. It moves super predictably and slowly. Its 52w range is 49.31-51.33 and a beta of 0.24 You'll probably lose some money on it, but probably about 1% per year you hold it maximum. if you hold it for less than a month you'll not likely lose even a basis point
I hold SCHO, but there are others too. With distributions it seems to average around 1.5% return, so more inline with what savings accounts used to offer, although it is currently down about 1.5% YTD, which is why I split 50/50.
Low and likely to rise interest rates and high and rising inflation are poison for bond funds. VGIT is down -3.73% and SCHO is down -1.37 over the past 12 months. VGIT is yielding 1.15% and SCHO is yielding 0.42%. Meanwhile inflation is over 7% so real yields (nominal yield - inflation rate) are negative. You are taking [interest rate risk](https://www.investopedia.com/terms/i/interestraterisk.asp) just to get a tiny nominal yield and a negative real yield. That doesn't appeal to me. In normal times they say Treasuries are "risk-free return". In today's environment Treasuries are "return-free risk". No thank you. If you insist on owning bonds I would rather own the bonds themselves rather than through a bond fund and hold the bonds to maturity. That way you will get 100% of your principal back plus the pittance of interest. I have 0% in bonds and I'm approaching retirement. I am using dividend-paying stocks as a replacement for bonds in my portfolio. You could do something as simple as sell your bond funds and put the money in SCHD. Unlike VGIT and SCHO it is up +27% over the past 12 months. And the yield is 2.86%, which is still a negative real yield after inflation but not as bad as VGIT and SCHO.
Should I be concerned about having keeping some $$ in an intermediate bond ETF - (VGIT) which plays a role in terms of overall diversification for my moderate portfolio along with various other bond funds, ST and TIPS primarily, some EM debt, some Bank Loan Rate ... It's maybe 2% of total PF.. as well as a larger position 9% in SCHO (ST Treas) - I have an hourly periodic FA and he suggests nothing warrants any major changes at this time - these are long term holds and I am near traditional retirement age with no debt. I try not to second guess his advice or 'time the market' with impulsive knee jerk responses to short term market gyrations but if i should be moving $$ elsewhere for an extended inflationary period in which bond funds are just generally destined to be losing principal - i am inclined to present the idea to him at least ... would welcome any thoughts. Thanks
Thanks! Down about 100k YTD., which feels a little extreme for an allegedly moderate-conservative allocation with valuation hovering around 2.32M at this point, with about 35k in cash. Presumably those in 60/40 or higher equity PF's have taken a worse hit. Good perspectives to help me frame some questions for the advisor. I too question so much in SCHO. IT's safe but a pretty large allocation, and to me might as well be in MINT ultra-ST bond or money mkt. I don't have immediate significant withdrawal plans...just scaling back on work in the next 2 years and figuring on needing 40k a year from the PF once I "fully" retire which perhaps would be in 2-3 years officially. That 10% of the PF I left out is scattered across a lot of smaller positions...in equity, PFFD (Preferred) at about 2.7%, CCD and VCSH another 1%, VNQI/VNQ (Real Estate) about 2.7%, and the rest each fractions of a percent...comprising a diversified mix; Small/Mid-Cap, Healthcare fund GRX...a few individual stock positions. I just left them out for the sake of simplicity. Arguably having so many funds isn't productive for the greater good of the PF but my advisor feels it doesn't hurt so long as the sum total is reasonably diversified overall. I think he'd also be of the opinion that yields may not go much higher which is possible as you point out.
You are not getting a lot of core-bond duration, mainly just the 5% VGIT, which is sometimes the better diversifier in a market crisis. SCHO is kind of a cash replacement which won't move much or yield much, though it should be around 1.5% now. I wouldn't hold that much of it unless you have near term plans for that money. SAMBX, MSD, EDD, and VWOB are on the risky side and equity-correlated in a crisis. That doesn't mean they aren't good picks for the overall portfolio, just that your portfolio's risk level is higher than just the risk of 45% stocks. Of these, floating rate bonds will perform best in a positive-or-neutral-growth, rising-rate environment. I would not recommend adjusting your portfolio for that, both because timing the market is hard and because the ten year just hit 2% which is where it was in 2019 before the shutdowns. It's possible yields won't go much higher. It looks like you left out ~10% of the portfolio.
Good call, SPTS and SCHO seem to fit the bill. Basicaly no movement, only $30 +/- 0.50 in the past ten years
Not really, short term government debt is nearly equivalent to cash ; there are a few ultra short term gov debt ETFs but the yield is probably worse than just sitting on cash . (SGOV and others) There are short term (as opposed to ultra short) that will hold 0-3 years that yield a bit more but not 1% more like 0.3% such as SCHO or VGSH.
sure it says that, but im looking at its holdings on my trusty bloomberg, and its all EUA futures and eurusd fx hedge and 4% in SCHO (us short term treasuries)