So I’ve invested exactly ZERO of the cash I have for The Model Portfolio into stocks as frankly between the last post and now stocks are still highly valued as sadly there has not been a market crash, you know, the one that everyone’s been expecting for oh I don’t know, years now.
If you recall I’ve partitioned the portfolio as follows:
- 60% bonds
- 40% stocks
As for bonds I’ve been busy scanning the bond market including, different brokers, fees, costs, yields, maturities, funds and unit trusts.
Right now I’m not happy paying brokers fees for buying and selling bonds so my research has focused on low or no cost funds that I can place cash into whilst the the stock market continues to bubble away.
National Savings and Investments assure me that my income bonds account will be up and running today so they can begin to pay the princely sum of 1.25%.
Such a yield is lunacy which is why only a fraction of the cash allocated to bonds will actually be invested into these income bonds and once a suitable fund or funds are available for purchase after careful research I’ll be investing into those.
The good thing about National Savings and Investments income bonds are that:
- they are government bonds (risk-free or as good as)
- there are no commission charges to buy or sell the bonds
- income is distributed monthly
I’m spending so much time on bonds because the types of stocks I like to buy are not selling at good prices.
I’ve looked at a few bond funds that invest into high grade corporate debt which is where I’d like the majority of the cash for bonds to go to.
The recent news stories of record $5.1 billion junk bond fund redemptions are a distraction and the scaremongering seems to be around a belief that defaults will rise in 2016 due to the bear markets in commodities such as oil and energy.
The fact is I’ll not consider high yield bonds yet and when I do to make sure that I avoid the oil and energy sectors in particular.
In any event I’ve a few calls to make this week to a few of the funds I’ve picked over this weekend and no doubt will be filling out application forms by the end of the week.
If I like what I see I’ll commit more cash to bonds perhaps increasing the ratio to as much as 70/30 bonds to stocks whilst waiting for bargain stocks to appear which does not look to be anytime soon on a group basis.