Thursday, October 12, 2017 EST

Recently the topic came up in some discussions around Income Investing with Options and other Income type investments.  In that discussion some friends were discussing "safe" investments for retirement where you could park your cash and now worry about large drawn downs (well they said losing money) and you could watch your investments grow.

We revisited the idea of investing in (one or more Bond Funds). Yes we know the arguments "Invest in Bonds not Funds because Bonds Mature."  That is fine but investing in individual Bonds takes work and you must be diversified.

What people find amazing is that a Bond Fund can actually have Higher Returns over the long run over Stocks (investing in an Index like SPY or a Stock Fund).  How would you like to get Stock Market returns with little downside fluctuation, put your money to work, let it grow, and just go live your life?  For those of us that are more daring we trade options and stocks. This post is about retirement and just letting things ride.

What kind of "Ride" to you want for your investments? Bumpy or Smooth?

Notice the return of the Bond Fund (TGMNX) vs. the stock market (SPY).  What you will notice is that the Bond Fund had a greater return, and none of the downside drops that cause people to panic and sell at the wrong time.

Total Return Bond Fund (TGMNX):

  • Compounded Annual Growth Rate (CAGR): 6.34%
  • Best Year: 19.5%
  • Worst Year:  0.72%
  • Max Drawn Down: -3.33%  (the percent of balance lost / then recovered)

Stock Market (SPY ETF):

  • Compounded Annual Growth Rate (CAGR): 5.02%
  • Best Year: 32.31%
  • Worst Year: - 36.8%
  • Max Draw Down: -50.8%  (the percent of balance lost / then recovered)


Saturday, July 29, 2017 EST

This post looks at allocating money into one mutual fund that focuses on Bonds and Income. This is meant for someone that wants a simple solution (and no fees) to invest your money.

If you are looking at protecting your capital and do not want any risk, CD Ladders are a good idea. If you are willing to take limited yearly risk (and you do not want the risk of stocks or the stock market) you can look at investing in one or more bond mutual funds. 

Overview:  This model can look back many years, but let's look at a 10.5 year period where the initial investment was $20,000 in 2007.  As of July 2017 it would be valued at $31,429 or a return of 4.6% a year.


  • Mutual Fund: Lord Abbett Investment Trust Short Duration (LALDX)
  • Holdings: Corporate and Government Bonds (low duration / years) limited risk
  • How to Buy: Purchase through Fidelity Investments as a No-Load Mutual Fund (no fees to buy or sell)
  • Alternatives: There are many Fidelity Funds (and other funds) that can be purchased. Lord Abbett was chosen because it is Low Duration Bond Fund (meaning it invests in short term bonds which have less interest rate risk).


  • $20,000 Invested
  • $31,429 after 10.5 years
  • Compounded Avg Yearly Return: 4.6%
  • Best Year: +16.96%
  • Worst Year: -1.09%
  • Worst Downside Fluctuation: -7% 

Growth of the Portfolio over 10 years

Yearly Returns

You may look at the chart above and think "Well 18% return in 2009, what would this look like over the longer haul?"

The chart below is results of this fund investing $20,000 in 1994. Here are the results.

  • $20,000 Invested
  • $53,352 after 25 years
  • Compounded Avg Yearly Return: 4.2%
  • Best Year: +16.96%
  • Worst Year: -3.5%
  • Worst Downside Fluctuation: -7% 

If you want to review more details of portfolios with one or more bond funds and compared to the S&P 500 click here for that blog post.

 These model were built using Portfolio Visualizer