The Position Makers

many sheeple blindly sock money away in their 401k’s and ira’s without putting much thought into what their hard earned money is purchasing.  when the market is down, they say, they are long term investors.  they spend hours researching what the best $100 blu-ray player they can buy for their money, and almost no time researching what the best investment decisions they can make with their money.

although during my relatively short lifetime, we’ve seen 8+% gains in stocks, 30+% gains in real estate, low 30% tax rates and mild inflation; historically, there have been periods of time when stocks have sideways for more than 10 years, real estate has crashed, deflation has taken hold, and tax rates for the upper bracket have been above 90%.

with that being said, i think we should all be a little more pro active when it comes to managing our next egg.  the last think you want to do is have your retirement plan blow up and end up working at a call center.  the market is unhealthy.  why not ride out this turbulence and preserve your capital

a 6% loss is a big deal, with a 6% loss, it takes a 6.4% gain to recover

it’s great you’re looking to invest in bonds.  i’d park my cash in bonds for the next 6 months.  keep it simple and move your funds to 100% bonds for safety if you don’t want to be an active trade and want to sleep well at night.  you are still adequately diversified because presumably you have savings, and other assets and the bond fund itself is diversified.

regarding which fund to pick, the short, intermediate, and long just mean how long it takes the bond to mature, much like a 5 10 15 or 30 year mortgage.  when the bond stops paying.  a 1 year bond will have a low rate because rates are likely not to go higher vs. a 30 year bond which has it’s yield locked in at ~4%.

i’d also recommend buying a bond ETF versus a mutual fund.  the ETF’s are more liquid, meaning you can trade in and out of them easily, and their expense ratios (the amount it costs to manage the money) usually are less ~0.1-0.2% which is much lower than the 1-2% mutual funds charge to market and manage their funds.

take a look at AGG.  it pays a 5% dividend and is a good way to preserve your capital (money)