In the interest of semi-full disclosure, I am currently licensed and working for a 401(k) company, so I'll tend to post more non-investment related stuff, having to do with retirement plans and such, directing people to where they can find more information.

Anyone who says "Wall Street" isn't regulated have never seen how many hoops we have to jump through, and how limited we are in what we can do or say.

I won't recommend specific securities, and I won't even tell someone what they should do with their money, because I can't give advice without knowing someone's full situation. I sure as heck won't be doing commercials for my employer or anything of the nature.

I hope I can answer basic questions in the spirit of being helpful and educating one another, without crossing over into what might be construed as "advice," which is a no-no.

Glad to see ya!

To any others who are reading this - Common Sense Party is THE MAN regarding 401(k) plans.

Over the years, he has posted in many threads answering questions about retirement plans and planning. A great guy and a great, knowledgeable resource.

I couldn't agree more with the "advice" idea. I think it is best for me to stay with simply defining terms and clearing up confusion.

Keeping our 'old' conversation in mind, and thinking about world of reasonable investments now, that the financial world seems to be under siege/in jeopardy/highly challenged, will be in touch after speaking with Dad's 'financial advisor.' Dad is 98 and not able to decide for himself, but has relied on a guy for a number of years, so between the 2 of you, I expect I'll be OK.

TRUCKER! I regulated railroads!

First of all, it's good to see someone interested in the investing forum.

Florida has a tax free LT muni-bond delivering good returns in the Vanguard Group for Florida residents. With all the depressed counties suffering real estate devaluations, do you see much risk in Florida's overall bond payments?

by this statement;

"Florida has a tax free LT muni-bond delivering good returns in the Vanguard Group for Florida residents."

Do you mean that Vanguard Funds has a Florida Muni Bond fund you are interested in? Do you have the 5 letter ticker? I would be interested in looking at it if what you are referring to is indeed a Mutual Fund. If you don't have the ticker, just the proper name of the fund will help.

To my knowledge, Florida GO bonds are still rated very well. I did a cursory search on http://investinginbonds.com/ and it appears that most of the State of Florida bonds are rated AAA and have, for the most part, been bid into premium territory.

Since I lived in Lee County since 2006 through most of the mess of the last few years and Lee County had the distinction of trading with Clark County, NV on an almost weekly basis the title of leading the country in foreclosures, I was interested to see how their bonds are holding up. From the same website, recently traded Lee County bonds of various types look to have a A+ or better rating. So they have been beaten up a bit, but many of them are selling at a premium.

Because of the way the website I linked above lays out, I can not link directly to the info I searched, so here's how to find it;

Open the link and hover your mouse over "Bond Markets & Prices" at the top. When the drop down appears, click on "Municipal Market-at-a-Glance"

When that page opens, click the drop down for "Choose a State" under "Bonds Traded Today" and select Florida (obviously).

You'll get a new window (at least I did using Firefox) with all the bonds traded today listed by maturity date. Click the drop down at the top for "Sort By" and select "Issuer" and hit "re-calculate". That will put them in alphabetical order. State of Florida issues start on page 4. Lee County bonds start on page 12. Take note of the Dade County issues on page 4 as well. Though there are only a handful of issues listed, all are rated "BBB" or not rated. Dade County includes Miami and has also been badly affected by the real estate crash.

It's a vanguard fund VFLTX. I will check the link you have provided. Thanks for the information provided and the discussion. Mutual funds are about the limit of my comprehension of market trading and mostly bond funds since bank interest rates have plummeted. I think everyone is searching for some haven for savings without taking on the risks associated with the stock market. Bond muni funds for states like FL, NY, NJ, and CA also provide tax exempt income for state residents and don't require the longterm commitment that individual bond sales require. I left Bay Co last year, but plan to return the coming year.

since there is no state income tax. Muni bonds from any state provide tax free income to Florida residents.

Here's the Morningstar page on the fund you mentioned;


http://quote.morningstar.com/fund/f.aspx?t=VFLTX&region=USA&culture=en-us
Four stars. Not bad.


Look for and click on "Portfolio".

The fund is almost completely made up of bonds rated "A" or better, with almost 50% holding "AA" ratings. The majority of the bonds held (85%) have a coupon between 4 & 6%

The turnover is 22% which means the manager is replacing 22 % of the portfolio each year - selling off old and buying into new
positions.

The performance for the last 3 years has been quite good - 10.37% per year. The figures for return on this type of report are always "total return" which means all interest, dividends and capital gains, if any, are re-invested.

If one was in need of a Florida specific fund, this one is worth considering, but as I said, if you are a FL resident, it isn't necessary to hold only Fla bonds.

Time for bed.

As I said, I like the muni-funds because you can out of them most any time without longterm commitment to individual bonds. VG are low expense too, making theirs real attractive.

Here's why I say that;

(This by the way, is from an answer to a post asking about bond MF's I answered on the old DU. This is the post from that thread; http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=439&topic_id=2149841&mesg_id=2158409 )


So here's a hypothetical bond fund for clarification;

ABC Mutual Fund company forms the "Steady Freddy Bond Fund". The manager purchases 100 each of 100 different bonds, all with a 5% coupon and all of them purchased at par. He has 10,000 bonds in his portfolio. 10,000 X $1000 means the "Net Asset Value" (NAV) of the fund is $10,000,000 divided by the total number of shares issued. He sells shares to investors like you and me. Lets say there are 1000 investors and each of us buys an equal number of shares. We now own an equal share of those 100 issues and therefore we each own an equal share of those 10,000 bonds. Now lets also assume that these bonds have similar maturities - ten years but they mature in different months so that there is an almost constant stream of interest payments coming in almost every month of the year. If they all have that 5% coupon then it is easy to calculate that there is $500,000 in interest payments coming in every year. This interest money is transferred directly to the shareholders. In the case of Mutual Funds, you are given the option of receiving that money as cash or having it re-invested into the mutual fund and more shares are purchased. Therefore, your initial purchase of 1000 shares grows quickly with each successive interest distribution.

Here's where the problems begin with Bond funds. For the most part, bonds trade "Over The Counter" and are priced each time they trade. Since these trades happen all the time, the market price of a given issue can and will change regularly. Since the share price of a mutual fund is valued essentially like I describe above - the aggregate value of all the issues held by the fund divided by the number of shares issued equals the NAV. This is calculated each business day for every single mutual fund out there. That means the price of your bond fund can go down or it can go up, but since ALL bonds mature at Par and their price doesn't vary that wildly on a day-to-day basis, the share price of a bond fund doesn't fluctuate nearly a much as a pure stock fund or even a blended fund. Most bond funds price between $10 and $20.00/share, typically between $12.00 & $14.00. The thing is, they just don't go up in value as a general rule. They tend to hold a steady share price, varying by only a few cents on a daily basis unless something dramatic happens in the bond market and/or with a specific issue the manager has taken a large position with. The other thing that can change is the yield, as the manager may be selling and buying various bonds in and out of the fund all the time, doing his best to keep it in line with the objective stated in the prospectus. Since he is trading bonds into and out of the fund, he is getting bonds with different coupon rates and therefore different payments. This affects the amount of income being brought in by the fund and as a consequence, the amount paid to the shareholders.

In my hypothetical fund above, the fund is receiving interest payments of $500,000 per year divided by 12 months = roughly $41,667 per month. But what happens if he sells 25 of those 5% coupon issues and buys 25 issues that have a 4.5% coupon? Now the monthly income has fallen and as a consequence, all the shareholders will get less next month than they got this month. In that scenario, 25% of the portfolio now has a 4.5% coupon and 75% of the portfolio has a 5% coupon. It lowers the funds yield a bit. Also, what if those new bonds were bought at a discount to Par? Their price is now going to drop the share price of the fund. This is a bad thing for you if you want to sell your shares now, but a good thing for new buyers, as they are getting a better price than you did for almost the same yield.



I don't mean to tell you something you might be perfectly well aware of, so forgive me if I have. One just wants to make sure that if they plan on holding a bond fund for a relatively short time, they are able to collect enough in interest distributions to overcome any possible fall in share price at the time of a sale of shares. You are correct with regard to Vanguard though. Since they do have very low expenses and most of their funds have no purchase or selling fees, they are cheap to buy into and out of. The downside with Vanguard is that those low fees mean very little advice comes with buying their funds unless you pay for it!

My IRA is coming due Jan. 2012. Vanguard was going to fill out the paperwork and send it to me via email. This never happened. I'm not impressed I must admit.

I'm in a bad spot. I can get 7-year CDs at 2.75%. However, I'll be over 59-1/2 before the 7-year hitch is up (if I am still alive that is).

I am permanent/totally disabled which matters as I can tap the IRA without a penalty.

I've looked long and hard at Vanguard but like you said, they won't give you any advice.

Edward Jones has an office where I live and they are going door-to-door trying to drum up business. Not impressed again.

What a nightmare this economy is. The idea of getting a paltry 2.75% on my life's savings sickens me. Maybe it is the best I can get, I don't know. Given my situation, I am lucky I even have an IRA still.

I looked at managed payout funds with Vanguard (VPDFX). This is a new thing with them with little history behind it and requires $25,000.00 to buy into. Again, not impressed.

*sigh*

Oh what to do ...

In any event, thanks for your kind post Paul and Happy New Year 2012 to you.

If I am not mistaken, they require all their FA's to do that.

In defense of Edward Jones, they are one of the few brick and mortar brokerage houses that are even interested in the smaller account investors these days. That was AG Edwards bread and butter and they pretty much dominated that market before online trading became so prevalent. Now, Wells Fargo Advisors which AG Edwards eventually became, couldn't give two shits about you unless your account is 7 digits, 6 of them being zeros. It's a damned shame.

You may want to give the guy another chance, though. Here's why;

They, like most brokerages with a bond desk, have access to "Brokered CD's". These act essentially just like bonds in that they trade or are tradeable. There is no need to hold them to maturity, for example. You may find that the Jones guy has - say a ten year CD paying a bit more than what you have found elsewhere with perhaps 9 years to maturity. Or a 5 year note with only 3 years to maturity, etc. The thing is, as I mentioned, they trade in a similar fashion to bonds, so an older CD with a high rate, like 5% perhaps, is going to sell for more than its redemption value such that it's yield will be close to a note of similar maturity.



That may sound a bit strange, but the advantage to them is, as I said, your ability to sell them at any time. The commissions on them are very low so you don't lose a whole lot to paying the broker and you might be able to beat what you are finding for CD's elsewhere. Brokered CD's are still FDIC insured as well, so you have that safety factor.

(Edited to add that since they can bought and sold, there is no "penalty" so to speak, for selling before they mature. They aren't being redeemed early by the bank, you would just sell them to another buyer. You could hold them for 6 months, collect an interest payment and dump them. That sort of thing.)

Something to look into, anyway. It won't cost you a dime to have a conversation with the guy.

The other decent sized firm that still seems to be interested in the regular American is Stifel Nicolaus. They are a full service firm as well with a pretty good reputation.

I'm not trying to push you toward a broker by any means, so please don't misunderstand me. But you may find a sympathetic ear and someone who can genuinely help you, even though he may not be able to make his house payments from the commissions you might generate! If you don't get a good vibe from the guy or aren't comfortable, you don't have to do business with him. No broker like that will charge you to have a conversation.

Of course it is important to be aware that NO advisor, be it Vanguard, Fidelity, the fellow from Edward Jones - none of them, work for free. There will be costs involved in managing a portfolio. The key is either making it such that returns are so good, fees don't matter (not easy to do) or being prepared to pay something for either advice or management.

When I started with AG Edwards, the Money Market fund they offered was paying 4.5%! Four and a half on money market! Those were the days! You could buy one year CD's paying 5% all day long. The thing is, there is simply no reward for no or low risk. That is especially true these days. The primary reason CD rates are so low is the same reason the 30 year Treasury is so low - demand. The banks are flush with cash and therefore have no incentive to offer a decent rate for a time deposit. The Dow went from 14,000 to 6600 from late '07 through March of '09 and the money realized from the sales of equities that pushed that fall went into banks. A shitload of normal, everyday folks took money out of the stock market and put it into the bank.

I had not heard of the fund you mentioned so I took a look at it on both Morningstar and the Vanguard website. You're right - inception date of May 2, 2008 means not much of a history. The fund is a so called "Fund of Funds" meaning that for the most part, the holdings of this Mutual Fund are shares of other Mutual Funds, primarily other Vanguard funds. I read a bit of the prospectus and they seem to have structured this to pay out as if it was an annuity just without the insurance aspect.

The yield is pretty good at almost 7% but that translates to just under nine cents per share per month. At $15.72 per share, the $25,000 minimum investment would only pay $141.54 a month or just under $1700 per year.

Here's a link to Vanguards page on the fund;

https://personal.vanguard.com/us/funds/snapshot?FundId=1499&FundIntExt=INT#hist=tab%3A0

Here's Morningstar's page on it;

http://quote.morningstar.com/fund/f.aspx?t=VPDFX

Best of luck and hang in there.

Happy Holidays, Merry Christmas and Happy New year to you as well.

I'll check with the person that came around (it was a she for what it is worth and she seemed right out of school perhaps ...).

It is a lot to consider.

I am looking at some of Vanguard's VWINX as well. It is at a high almost which may or may not be good.

Thanks again & happy holidays ...

They are very different from every other brokerage firm in that they do send their advisors out, door-to-door, especially in their early stage. They get out of training, and then they knock doors, try to make contacts, find people who may have some financial need or may want to talk investments. It's hard, grueling, low-reward work. They struggle like hell for two years or so to build up a clientele, sell them some things, earn a commission, and try to meet their sales quota before Jones fires them.

The negatives about Jones: (1) What you already noticed--usually the ones who knock on your door and will meet with you at your kitchen table are inexperienced and don't have a ton of financial planning knowledge. (2) They work strictly on commission, and since there's a quota hanging over their heads every month, the temptation is there to sell you something you might not need so they can keep their job and pay their mortgage. (3) There's high turnover. It's hard to hit those numbers (I failed), so the adviser you met with today could be gone in six months.

The positives about Jones: More than most financial firms, they really do have a "do-what's-right-for-the-client" culture. There are exceptions, as in any organization. But they tend to stick with mostly conservative investments, fund managers with good, long track records. They don't get into the crazy options and futures trading. They are a partnership, not publicly-traded, so they're very cautious. You did NOT see Jones leveraging their assets 30 to 1 and making big bets on CDO's and derivatives. As mentioned, Jones will meet with the "small" investor; the Merrill Lynch and Smith Barney people usually won't talk to you if you don't have at least $100K to invest. While the individual that knocked on your door may be fairly new, they have a deep bench of mentors and experienced advisers that can help her. You can even look around for a more experienced Jones adviser if you feel more comfortable.

The best advice I can give you is ask lots of questions, always ask if this is the best option for me, what other options are there, etc. Don't sign with anyone unless you feel very comfortable that you can work with this person long-term.

Thank you!

I've actually crossed paths with a guy in town that works for them. He annoyed the hell out of me (had been in the hospital having major surgery and I told him to LEAVE ME ALONE). He kept calling and calling and wouldn't stop.

I damn near had my phone # changed because of him. Finally, he went away after I told him not to call me again (he had no info. on me at all; seemed desperate for a client).

As for me, I don't have $100,000.00 for anyone to invest. Oh well,

Again, thanks for you insights.