Cash vs. Fidelity FIPDX vs FTBFX vs I-Bonds

[12knots]

FIPDX  +6.34% as of 10/31/21
https://fundresearch.fidelity.com/mutual-funds/ratings/31635T104

FTBFX
https://fundresearch.fidelity.com/mutual-funds/summary/31617K881

I-Bonds +7.12%

I'm leaning towards FIPDX as I have much more than 10k I can put in and all of my retirement investments are already with Fidelity. I've had about 30% of my portfolio in cash doing nothing for a while and 10% in FTBFX, but my invested funds have been doing well. I have a mix of traditional IRA, Roth IRA and an annuity.

The negatives :
Loss of ~1% performance
Exp ratio : .05% ~$50 per 10k

The positives :
No penalty for early withdrawal
Keeping everything in one place
Unlimited contribution amount

Is there anything else I should consider?

[Kem]

I’m along for the ride on this one 12knots as I’d love to hear some voicing on Fidelity's TIPs (FIPDX) vs “High” interest Savings account at 0.5%. 


For the mild highjack…
I have a few cash savings ledgers that are infrequently touched – these exist outside of my investment policy statement.  I.e.:
•   Long term house maintenance Fund (for big ticket items)
•   6-9 months living costs Emergency Fund
•   Vacation Fund (1 big family Vacation every 3 years)
•   Auto Repair Fund

I’m not interested in placing any of this into an I-Bond at this time.

[Radagast]

If you are ok with their quirks I bonds are the best choice atm.

FIPDX is TIPS bonds which are traded on the market. It has a duration of 5.5 years. As such, if interest rates go up 2% over the next year, you’ll lose 11%. You would be trading liquidity for instability. And getting a lower yield.

Of course if rates go down 2% FIPDX would gain 11% so it goes both ways.

[BicycleB]

Why not buy ibonds for their advantages, then put the rest in FIPDX?

[MustacheAndaHalf]

FIPDX  +6.34% as of 10/31/21
https://fundresearch.fidelity.com/mutual-funds/ratings/31635T104

FTBFX
https://fundresearch.fidelity.com/mutual-funds/summary/31617K881

I've had about 30% of my portfolio in cash doing nothing for a while

Is this your portfolio in retirement?  If you have 30% cash and 10% bonds, that's more like a 60/40 retirement portfolio.  For someone 20+ years from retirement, you should be pushing 90% into stocks, if you can tolerate it.

An emergency fund should be in cash (6 months is the common recommendation), but the rest should be invested.  If you have lower risk tolerance, you can allocate less equities and work more years to balance it out.

[Radagast]

Why not buy ibonds for their advantages, then put the rest in FIPDX?

Too be honest this is a better answer, but I didn't have time to address all points.

We actually have 4 completely different bond funds in OP.
1. An annuity. Doesn't say inflation adjusted, I assume it isn't? Kinda like a stable value fund except you can't get principal back.
2. I-bonds. An inflation adjusted stable value fund, basically unique.
3. A TIPS (treasury inflation protected securities) bond fund, principal fluctuates based on market conditions.
4. A regular non-inflation-adjusted bond fund whose value fluctuates based on market conditions.

These are all completely different. Although it would make sense to max out the savings bonds because they have easily the best return and especially the best risk adjusted return, after that it would be just as useful to invest in all of them, since we don't know what the future will bring. Or at least, nobody could foreseeably say to definitely use one or avoid another.

If the annuity is not inflation adjusted, I suggest use Ibonds first and TIPS second if you are relying on these for income, nominal bonds only as a dubiously useful add-on.