Gyroscopic Investing

I went through quite a transition in my bond buying philosophy. Step 1: I wanted to keep it simple and use one of the Vanguard LT Bond and ST bond funds. Did enough reading here and in Craig's book to see it wasn't a good enough choice for the PP. Step 2: Use one of the better funds that hold almost 100% in US treasuries. Was very close to taking that step when I started "seeing the light" of holding the treasuries directly. Step 3: I read the treasury buying tutorial. That puts me over the edge.

So, now that I've taken the step into holding the treasuries myself through the Vanguard Bond Desk, I wanted to ask those with a similar experience: Did I do this right? Heck, it seemed almost too easy once I did it. Here are some screen shots from my VGuard Bond Holdings (account info excluded).

Bond Holdings Overview:



Long Term Treasury:



These I sell in approx 10 years - when they are 20 years to maturity date. Have that correct?

Short Term T-Bills:



These (1 year T-Bills) I let mature, and use the funds to purchase another round of 1 year T-Bills. Have that correct?

I've done some reading but I need a little clarification on how the pricing/maturity of the T-Bill. Each day I see a change up or down in the value of the Long Term Treasury, but not the T-Bill. Why? I'm still a rookie at this, so wanting to make sure I'm doing this right as I will need to make another LTT and T-Bill purchase soon to balance the PP.

Thank you for the help.

Looks right to me.

Congrats on buying your first directly held bonds, PFG. As you now see, it really is that easy.

The reason your long-term Treasuries vary daily in price is because their price is affected by interest rate changes. The longer the time to maturity on the bond, the more sensitive the bond's price is to interest rate changes. (If you're interested in knowing why, see how bond prices are calculated.)

The reason T-bills hardly vary at all in price is because their time to maturity is so short (< 1 year). Their prices do move up and down in response to interest rates, but the movements are tiny compared to those of LTTs.

Looks good, PFG.
I usually use my desktop, but now I'm tempted to learn how to take a screenshot on an ipod touch.

Thanks for the vote of confidence. I sure do love the no fees part of holding your own.

The screen shot thing is great. I actually did all that on my iPhone. Just make sure you have a photo hosting account somewhere (photo bucket, etc) and you are good to go.

dualstow wrote: Looks good, PFG.
I usually use my desktop, but now I'm tempted to learn how to take a screenshot on an ipod touch.

Hit the home and lock buttons at the same time. It saves the screenshot to your camera roll.

Pointedstick wrote:

dualstow wrote: Looks good, PFG.
I usually use my desktop, but now I'm tempted to learn how to take a screenshot on an ipod touch.

Hit the home and lock buttons at the same time. It saves the screenshot to your camera roll.

I'd heard that before but just tried it again-- oh man, I did something wrong. Did I just reset everything? No, just restarted it apparently.
Quietly stepping away from the ipod now.
Back to bonds. ;-)
Edit: Wait! If I do Lock first and then Home instead of the reverse, it works. Thank you!

Hehe, you only need to push them both at the same time. If you press-and-hold them both, you'll eventually put your phone into DFU mode. That's not fun to recover from.

Pointedstick wrote: Hehe, you only need to push them both at the same time. If you press-and-hold them both, you'll eventually put your phone into DFU mode. That's not fun to recover from.

In my case, that would be Dumb F'ing User mode. You know, I felt so on top of things in the 1980's with my Texas Instruments PC and my BASIC programs stored in a spiral notebook and on cassette tape. Since then, it's been all downhill.

For the record, I do think that Vanguard has gotten a lot better about simplifying bond buying. I dare say they have caught up with Fidelity.

dualstow wrote:

Pointedstick wrote: Hehe, you only need to push them both at the same time. If you press-and-hold them both, you'll eventually put your phone into DFU mode. That's not fun to recover from.

In my case, that would be Dumb F'ing User mode. You know, I felt so on top of things in the 1980's with my Texas Instruments PC and my BASIC programs stored in a spiral notebook and on cassette tape. Since then, it's been all downhill.

I think the lifetime utility of an engineer in any digital field--and especially software--is about 10 or 15 years. After that point, other things (family, kids, etc) start to become more important than keeping up with the latest hot technology and your career suffers unless you can make the jump to management or entrepreneurship.

On the other hand, there are a lot of good opportunities to make a ton of money within that window.

Pointedstick wrote:

dualstow wrote: Looks good, PFG.
I usually use my desktop, but now I'm tempted to learn how to take a screenshot on an ipod touch.

Hit the home and lock buttons at the same time. It saves the screenshot to your camera roll.

Thanks, Pointedstick. Works on iPad as well.

Pointedstick wrote: I think the lifetime utility of an engineer in any digital field--and especially software--is about 10 or 15 years. After that point, other things (family, kids, etc) start to become more important than keeping up with the latest hot technology and your career suffers unless you can make the jump to management or entrepreneurship.

What about engineers who don't have the temperament or innate talent for management or entrepreneurship?

Management ability can improve somewhat with practice and guidance, but from what I've seen it's mostly due to talent. Either you're born to be a good manager or you're going to be one of the mediocre (or flat out bad) ones--even after years of managing. Even more so with entrepreneurship, probably.

Tortoise wrote:

Pointedstick wrote: I think the lifetime utility of an engineer in any digital field--and especially software--is about 10 or 15 years. After that point, other things (family, kids, etc) start to become more important than keeping up with the latest hot technology and your career suffers unless you can make the jump to management or entrepreneurship.

What about engineers who don't have the temperament or innate talent for management or entrepreneurship?

Management ability can improve somewhat with practice and guidance, but from what I've seen it's mostly due to talent. Either you're born to be a good manager or you're going to be one of the mediocre (or flat out bad) ones--even after years of managing. Even more so with entrepreneurship, probably.

Sucks to be them, basically. From what I've seen, that's basically how the industry works. A few years ago, my wife temped alongside a chip designer who was a real hotshot in the late 80s. Two decades later, he's doing the same work as a woman half his age without a CS degree.

I'm going to have to file a friendly disagreement on this one. I've worked with some pretty badass older engineers. One thing I really learned from them is KISS. I.e. it's good to know level 9 grand high magic, but it's better to also exercise discretion and only invoke the magic when absolutely necessary. 99% of the time the simplest possible solution is best in the long run.

I am more than happy to be proven wrong, because as a software engineer myself, it would mean that I have a bit more time left in my career. 

Tortoise wrote: Management ability can improve somewhat with practice and guidance, but from what I've seen it's mostly due to talent. Either you're born to be a good manager or you're going to be one of the mediocre (or flat out bad) ones--even after years of managing. Even more so with entrepreneurship, probably.

I got "promoted" to a managerial position very early in my career.  I agree with what you've said.  You can learn some tricks, but for the most part, either you got it, or you don't)

(I don't got it).

Pointedstick wrote: I am more than happy to be proven wrong, because as a software engineer myself, it would mean that I have a bit more time left in my career. 

The pattern I see is that after an engineer gets past entry-level jobs and into a "real" position, they hit a plateau where it's possible to coast for a little while without learning anything new. That becomes a fork in the road; some get complacent, stop learning, try to milk as much out of their existing skill set as possible, and fall into a downward spiral of letting their skills get further and further out of date. Others stay committed to constantly learning new things and taking constructive feedback, and manage to maintain relevant skills while accumulating more and more wisdom. So I have seen plenty of examples of the kind of obsolescence you described, but I don't think that's inevitable for everyone.

Pointedstick wrote: I am more than happy to be proven wrong, because as a software engineer myself, it would mean that I have a bit more time left in my career. 

I don't think you're wrong.  Engineering is a technical field.  It has limited potential.  There's no career track if you don't fight for limited management and executive positions and become lucky enough to win them.  It's not the way to a six-figure income and having a life or not a lot of stress.

I used to think that I wanted to be a manager. But as I got older, tried it a bit, and talked to friends who were promoted I quickly realized its not for me.

For me, engineering is an interesting challenge but with a high burnout rate. The constant sprinting from deadline to deadline just isn't sustainable long-term, and managing the deadlines of others doesn't change that (it just compounds it with even more responsibilities). On the other hand, that burnout also reduces the motivation to stay on top of new tools and technologies. So I recognize that my career potential in engineering has a limited practical window with diminishing returns.

Luckily, that engineering mindset also made me a good planner, and I'm saving towards having the financial freedom to try completely different challenges in entirely new fields.