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Sirens Make You Shiver Napalm To The Bone

|Includes: ISD, Pioneer Municipal High Income Trust (MHI)

Welp, I've seen a whole bunch of ugliness at work since the last time I wrote one of these. Patients keep getting sicker and more violent. And I'm not too impressed of the effectiveness of tasers on crazy people - they seem to say something along the lines of "shit, that hurt!" and go right back to doing whatever it was that caused them to be tased in the first place.

Anywho:

6/12: Added MHI to the taxable. Two distribution cuts over the last year and a half has moved it to a discount to nav. I owned this one in 2011 and it did quite well during the summer correction. EPS is now greater than the distributions, so hopefully there won't be another cut. Muni-cefs have been hammered recently, so I'm slowly dipping my toes, but am not rushing anything. They may go down in price a good bit more over the next few months.

Mostly I'm adding cash to the account and just waiting. We're going to have some medical bills shortly and the cars are old. Hopefully I won't need to use the money for that stuff and I'll be able to use that money for better deals amongst muni-funds down the road but for now I think it's best to wait.

6/15: Got rid of vbtlx in the 401k and rebalanced 75% into vtsax and 25% into vtsax. This was two weeks before I was scheduled to rebalance, but watching the price of vbtlx drop right through the 300 sma (which it's still doing) was enough. Another consideration is that mutual funds and etfs are subject to redemptions which forces the managers to sell bonds low (instead of holding or backing up the truck). I figured better to look at all the accounts as a whole instead of just the 401k to figure out asset allocation.

And since the taxable account is taxable, it's better to use mostly tax free investments in it like muni cefs fixed income exposure.

6/5: Added ISD to the Roth. I already had bought some in the taxable account (maybe a mistake since I haven't really been considering taxes too much until recently). No tax benefit, so why not own it in the Roth? The nav seems to have currently stabilized, but the market price keeps dropping.

I put $230 each paycheck into the Roth since 5500/24 = 229.16. It's with Vanguard, so I can buy their etfs commission free. Makes for a fairly effective way to dollar cost average. But I'm starting to look at preferreds again. Some of the mreit ones are getting close to prices where I might get interested to start buying, so I think I'm going to start accumulating cash in the account and waiting for opportunity.

Savings bonds:

Not much to say here. A month ago I made the decision to put $200 a paycheck in them (you can probably tell by this point that I'm very uneasy with the rate activity over the last two months). I'm doing this to build a medium to long-term emergency fund.

So, which type? EE bonds have an awesome 0.3% yield - I will get 60 cents for having my $200 tied up for at least a year (and would only get 45 cents if I redeemed it before the five year mark). I-bonds would currently have a negative rate if the floor wasn't at 0%.

Both options kind of suck. I decided on the I-bonds. But more for deflation protection than inflation protection. And the cpi-u gets recalculated in November. The adjustable rate may increase at that point. If it stays negative, I at least don't lose money.

What I figured to do:

I spent a week or so reading everything I could about EE and I bonds. Apparently there used to be a paragraph on the Treasurydirect website that said EE bonds were guaranteed to double in thirty (or was it twenty?) years which came out to a 3.5% interest rate if held to maturity. No matter the current listed interest when you buy one. Not a great return, but okay to me for something that cannot lose value due to market mood.

I have examined and read everything on treasurydirect and that paragraph No Longer Exists. So the rate on the EE savings bond is the interest you get.

What I'm going to do:

$200 per paycheck in i-bonds. This falls well short of the 10000 year limit. They pay zilch at the moment. If/when the composite rate goes up, I will accelerate buying them as best I can. Especially if the fixed rate component is listed as >0%. In a year, if the fixed rate is >0%, I will redeem the old ones that have a current fixed rate of 0% and buy the new ones with the higher rate and keep going that way.

Will I make good money doing this? No. Can I accumulate a somewhat tax-efficient emergency/house down payment/money for a big stock crash back the truck up fund? I think so.

Am I all doom and gloom? Not on stocks - not yet - most of my money is in stock funds. Fixed income? I am very much uneasy. I still want to have fixed income, but I want the benefits of fixed income (reduced volatility) and I don't think a mutual fund or etf is a way to do that. A cef helps, but individual picks in bonds and preferreds are probably best.