Gyroscopic Investing

CA PP wrote: Arturo,

the first one on the list has coupon payments of 3.75%.  However its current yield is some .01%. 

So, for a 100EUR bond face value you will have to pay some 101.30EUR these days to buy it.  You will get 3.75% per annum coupon payment at coupon payment date (prorated for the number of days you hold it) and you will receive 100EUR at maturity.  This equals to an equivalent of 0.01% yield. 

As you see, the issue date and coupon has no relevance, except for taxes.  Interest payment has usually a different treatment than capital gain.

Take note: You practically have a negative return if you factor transaction costs and taxes (if taxable account).

Personally, for these reasons, I didnt renew my ladder for EU PP recently.  I keep cash in savings account (1%).

frugal wrote:

CA PP wrote: Arturo,

the first one on the list has coupon payments of 3.75%.  However its current yield is some .01%. 

So, for a 100EUR bond face value you will have to pay some 101.30EUR these days to buy it.  You will get 3.75% per annum coupon payment at coupon payment date (prorated for the number of days you hold it) and you will receive 100EUR at maturity.  This equals to an equivalent of 0.01% yield. 

As you see, the issue date and coupon has no relevance, except for taxes.  Interest payment has usually a different treatment than capital gain.

Take note: You practically have a negative return if you factor transaction costs and taxes (if taxable account).

Personally, for these reasons, I didnt renew my ladder for EU PP recently.  I keep cash in savings account (1%).

CA PP,

can I know which assets (etfs...) composes your EU-PP ?

Arturo lives in Spain which is not a very good country to keep CD - Cash deposits for the 25% savings. What do you suggest?

Thank you.

MachineGhost wrote:

rickb wrote: SHV O.25%
SHY 0.49%
IEI 36.6%
IEF 39.6%
TLH 28.5%
TLT 42.1%

Why isn't BIL in this list?  It is a pure T-Bill 1-3 month fund.  Can't say the same for the above.

I don't believe in the security theatre of using ETFs but if I was, I would just buy PERM.  It's all the same B.S. at the end of the day.  Though I wonder about the actual net expense ratio of a fund of funds.

Tortoise wrote:

BearBones wrote: If there is little or no advantage to the primary auction, why not just buy on the secondary? I'd say, unless you are going for institutional diversification by going to Treasury Direct, forget about the primary auctions.

Some people just like that "new bond smell" from brand new bonds bought at auction

dualstow wrote: In a recent Boglehead forum which was actually supposed to be about gold and silver as a currency hedge, Bill Bernstein posted that "nothing is free except directly or flagship bought treasuries at auction." I wonder why he specified "at auction." 
http://www.bogleheads.org/forum/viewtop ... 0#p2254219

MachineGhost wrote:

dualstow wrote: In a recent Boglehead forum which was actually supposed to be about gold and silver as a currency hedge, Bill Bernstein posted that "nothing is free except directly or flagship bought treasuries at auction." I wonder why he specified "at auction." 
http://www.bogleheads.org/forum/viewtop ... 0#p2254219

I'm pretty sure the Primary Dealers mark them up before they are at auction.