Many nearing retirement seem unaware of the IRS “Catch-up“ provisions. Appears current law allows persons over 50 who were unable to fully fund their retirement plan in prior years to make generous catch-up contributions later on in addition to the current yearly limit. I’m unclear whether it pertains to IRAs, but it appears that at least in some cases it does. My experience more than 2 decades ago (with a 403-B) may no longer be representative. But in my case the “catch-up“ came in darned handy in shoring-up earlier insufficient contributions as retirement neared.
Quick search pulled up 3 reads:
https://www.investopedia.com/terms/c/catchupcontribution.asp - Invesropedia / general description
https://www.irs.gov/retirement-plans/401k-plan-catch-up-contribution-eligibility - IRS / 401K
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-catch-up-contributions - IRS / mentions IRAs - but I’m unsure of types and amounts.
PS - I should have read John’s article first: “ The maximum amount you can contribute to a traditional IRA for 2020 is $6,000 if you're younger than age 50. Workers age 50 and older can add an extra $1,000 per year as a "catch-up" contribution, bringing the maximum IRA contribution to $7,000. You must have earnings from work to contribute to an IRA, and you can't put more into the account than you earned.”
Perhaps my added emphasis may be helpful to some. :)
From Simon - “Inflation (Consumer Price Index) was up 2.1% in 2019 as of last November” -
While that sounds trite in the face last year’s near 30% return on the S&P, it really depends on perspective. A 2% rise in cost of living (if you believe the numbers) would look quite different following a 30% decline in equities, especially if bonds languished or fell in value. And even at 2% a year, over 5 years you’re looking at well over a 10% increase in COL. (Remember that inflation compounds in a manner similar to how interest does.)

As I have previously posted, Muni bonds have a strong seasonality factor that has been written about. January is one of the stronger periods of performance historically:
The Four Seasons of Muni Bond Investing
FEBRUARY 14, 2019 BY SAGE ADVISORY
Timing is everything. For a municipal bond investor, annual seasonal trends can provide great entry and exit points, if executed properly. There are four distinct seasonal periods that occur annually due to structural factors inherent in the municipal bond market. If timed correctly, municipal investors can increase their probability of successfully trading these markets and reap the reward of better returns.
The four seasonal periods that affect the municipal market on an annual basis are January Reinvestment, Tax Season, June/July Redemptions, and the Holiday Season Slowdown.
January Reinvestment
Although not the heaviest period of bond maturity and coupon payments, January 1st does experience an elevated level of cash that needs to be reinvested. In addition, the lingering effects of the Holiday Season Slowdown contribute to a limited amount of new issue supply, as well as diminished levels of secondary supply offered by broker/dealers. This strong technical environment tends to last anywhere from a few weeks to well into February, depending on the direction and magnitude of market flows. For investors who can time liquidity needs, January represents one of the most advantageous times of year to raise funds.
Tax Season – late March through April
From late March until the end of April, the municipal bond market tends to see both a reduction in demand as well as a heightened level of selling to fund tax payments. (Selling tax-exempt municipal bonds to fund personal federal and state tax liabilities remains one of life’s great mysteries.) Regardless, tax season provides an attractive entry point for investors, as limited demand and improving new issue supply tend to push valuations to more attractive levels.
June/July Redemptions
The heaviest period of maturing bonds and coupon payments is during these two months and represents anywhere from 40% to 60% of annual redemptions. Typically, municipal issuers come to market during this time, which offsets the demand pressure from reinvestment. Unfortunately, over the past several years, municipalities have been paying down debt and reducing debt issuance, which has created a net negative supply environment. As long as new issuance remains below the long-term averages, municipal bonds will remain supportive during June and July and provide investors an opportune time to rebalance portfolios (such as reducing credit risk).
Holiday Season – late November through year-end
Thanksgiving should indicate a warning sign to investors regarding optimal liquidity and ample supply. During the week of Thanksgiving, the markets may be open; however, the focus of the market is limited. The last week of November and the first two weeks of December represent the final opportunity for investors to efficiently trade before the market essentially shuts down for the year. Junior traders and reduced staff remain the norm during the last two weeks of the year. Market making and risk taking are severely restricted and a noticeable liquidity premium on bonds is apparent. Fortunately, for those investors looking to put cash to work, the ability to purchase bonds from forced market sells offers the opportunity to add exposure at discounted levels.

JpM, according to M* CFRIX and EIFAX are rated as having the highest risk in their categories, with some of the highest SDs. SPFLX is rated by M* as having below average risk and below average return, but the assets that SPFLX holds, pays well over 6% yield, which frequently suggests some of the junkier holdings you can own to get that level of yield. SPFLX had a relatively poor 2019 performance--not sure why but I would guess it is because of some poor choices in very junky holdings. I did not mention any of those BL funds for a "conservative" investor, but they may be very good choices for more of a trader, or an investor who is willing to tolerate very high volatility. EIFAX is a very popular BL choice with great returns, so for more risk oriented investors or good traders, who can tolerate higher volatility, it may be a great choice.

A couple more factoids:
- M* rates it bronze; though I have my doubts about how much intelligence there is in M*'s artificial "intelligence" ratings (done by machine, not analyst)
- Its 165% turnover rate is not a mere artifact of being a bond fund. 90%+ of the cap gains it has distributed in the past four years are short term. On the other hand, it distributed no cap gains in two of those four years (losing years, perhaps?)
The fund did well out of the gate, for its first two years, but has been essentially flat over the past three. My guess is that the star rating will nevertheless go up in a couple of weeks when the fund hits the five year mark. The way M* calculates stars is to compute a weighted average of a fund's three year rating, its five year rating (if available), and its ten year rating (if available). The two good years of the fund aren't getting counted because the fund is just short of five years. In a couple of weeks that will change, and those good years will be included.
To continue the fund description that Lipper quoted from T. Rowe Price:
The fund also uses interest rate futures, interest rate and credit default swaps, and forward currency exchange contracts, primarily to manage interest rate exposure and limit the fund's overall volatility.
If I'm going to buy a nontraditional fund that uses these techniques to manage interest rate risk and volatility, I'll buy one that does it well: FPNIX. It doesn't seek high current income, just the opposite (though it still sports a very similar SEC yield of 2.59% vs. 2.69% for RPIEX). Slow and steady wins the race.
Here's a chart comparing their performance over the lifetime of RPIEX.

HY Munis continue to defy gravity and NHMAX+ORNAX already are up 1+% in just 10 days :-)

I agree that alternative funds have been lagging badly in down cycles, thus I don't see them for drawdown protection. Once you subtract the high fees (typically 2% or more), the results are pretty sad. No wonder those who manage these expensive products are doing very well in their paychecks.
I think in today low yield environment, there is always a demand for better yield products. The recession fear drives these alternative products. I am not surprise of T. Rowe Price is offering this bond fund. Vanguard offers a Market Neutral fund, VMNFX ($50K min and ER 1.80%) , and the 3-years, 5-years returns and 10-years return are -4.71%, -1.32% and 1.08%, respectively.

JpM, I am curious as to the specifics of the funds you sold--how risky/conservative they were with regard to Standard Deviation, Credit rating of the assets they held, etc. I have found that BL OEFs with SDs in the 3+ range, with B credit ratings, and providing Dividends in the 6%+ ranges, will perform very poorly in strong downmarkets like 2018

Re: RPIEX - T. Rowe Price Dynamic Global Bond Fund. Just discovered this one. Price appears to classify it as an it as “alternative” investment. It comprises about 2% of RPGAX - so many of us have some exposure to it.
From Lipper: “The Fund seeks high current income. The Fund invests at least 80% of its net in bonds, and seeks to offer some protection against rising interest rates and provide a low correlation with the equity markets. It invests at least 40% of its net assets in foreign securities including securities of emerging market issuers.” Inception Date: 1/22/15.
M* gives it 1 star. Lipper ranks it 1 (lowest) for total return. Max Funds awards it 19 out of 100.
It appears the fund engages in short selling of bonds to hedge against (anticipated) rising rates. That probably explains a lot, as the Fed and other CBs seem to be doing everything in their power to hold the lid on still very low rates. Many alternative investment funds have struggled and disappointed. But it eludes me how what appears to be a bond fund from such a good house can be off 0.67% over 3 years.
I post only as a possible intellectual exercise for those so inclined. Not seriously considering owning this one.

This month Jan. 2020, I've added a number of bond institutional class OEFs in my main brokerage account. Besides high yield munis, they fall in the multisector or flexible categories. Sold two BL OEFs Fall 2018. As of Friday, the NAV of one of them is 20% lower than my selling price. I am not a bargain hunter and skeptical of interest rate predictions, so I will avoid that niche for the time being.

"BigTom">RCRIX has a small AUM. I wouldn’t be comfortable knowing the top 10 securities make up 49% of the portfolio in floating rate space (75% in junk) but that’s just me..
BigTom, very understandable. The category of Bank Loan/Floating Rate is basically a subsector, of the broader HY Junk Bond category. For an investor, especially a conservative bond oef investor, to be willing to invest in junk bonds, is an important question that each investor should answer. The Bank Loan/Floating rate bond oef, that I would most likely invest in, is MWFRX/MWFLX. It is from a stable of bond oefs, offered by Met West, and it has an established history of being managed very conservatively, at least "conservative" for a sector HY bond category.
RCRIX/RCRFX is from a smaller investment company, but a company that has offered some very good bond oefs, with a very conservative approach to investing. But on a confidence/comfort level, many investors will choose to only invest in a larger fund, from a more well known company.
I offered this topic to just offer a topic of discussion for a category of bond oefs, that has been around for many years. In general Bank Loan/Floating Rate funds, are considered a bit more conservative way of investing in junk bonds, at least from my experience. Of course some Bank Loan/Floating Rate bond oefs can vary greatly in risk, with many having much higher volatility, much worse performance in downmarkets, and focusing on much riskier types of bank loan assets.

RCRIX has a small AUM.
I wouldn’t be comfortable knowing the top 10 securities make up 49% of the portfolio in floating rate space (75% in junk) but that’s just me...

Hi @johnN.
John I want to thank you for your continued effort to post articles for members and viewers to read. Keep it up and you will become ... Linkster, Jr.
Now for my comment about this article. Old_Skeet has two sleeves of dividend paying mutual funds. Both sleeves are found in the growth & income area of my portfolio with one being my domestic equity sleeve and the other one being my global equity sleeve.
My domestic equity sleeve consist of ANCFX, FDSAX, INUTX and SVAAX. This sleeve has a dividend yield of 2.95% with a 1 year total retrun of 17.78% and a 5 year total return of 8.36%. The P/E Ratio for this sleeve is 14.3.
My global equity sleeve consist of CWGIX, DEQAX, DWGAX and EADIX. This sleeve has a dividend yield of 2.17% with a 1 year total return of 22.75% and a 5 year total return of 8.06%. The P/E Ratio for this sleeve is 16.35.
Why two sleeves?
From reivew one is more domestic and the other takes a global perspective including some emerging market exposure. With this, there can be, at times, advantages for one over the other. Currently, the domestic sleeve has the higher divided yield; but, the global equity sleeve has the better 1 year performance while they both share about the same 5 year returns. In addition, these two sleeves add some diverisfication to the overall portfolio and combined they account for about 15% of the portfolio. I'm thinking that the domestic sleeve will be the better performer this year due to it's lower P/E Ratio which allows for some good price expansion. Also, it holds a good amount of energy stocks which I feel have some good upside associated with them.
Once, I build out INUTX I've been thinking of adding VYCAX to the sleeve. In addition, DWGAX is not yet fully built as a sleeve member and is under construction.

Thanks, John.
Inflation (Consumer Price Index) was up 2.1% in 2019 as of last November, so it's not surprising that IRA contributions would remain the same for 2020. Some years (in fact most years) I struggle to find the max to contribute anyway!
IRA contribution limits last increased by $500 for tax year 2019. With inflation so low I wouldn't bank on another increase for 2021. The increase for 2019 was the first since 2013.

https://www.cnbc.com/2020/01/11/wall-street-strategists-recommend-stable-dividend-paying-investments.html
Dividend stocks look attractive with a volatile year that nets measly returns expected ahead
KEY POINTS
Unlike growth stocks, dividend stocks typically don’t offer dramatic price appreciation, but they do provide investors with a steady stream of income.
This type of strategy can bode well for investors in a much riskier year ahead grappling with Middle East unrest and a U.S. presidential election.
Wall Street market analysts largely see much more modest returns in 2020 following a historic run last year. The average year-end target for the S&P 500 comes to 3,345, a measly 2% gain.
A slew of banks including Goldman, UBS and Bank of America started advising clients to shift to dividend-paying stocks and strategies to hedge against rising risks and seek outperformance.

https://finance.yahoo.com/news/much-contribute-traditional-ira-2020-195814096.html
How much you can contribute to traditional or roth ira 2020
Unfortunately for retirement savers, the maximum amount that can be contributed to a traditional IRA in 2020 remains the same as it was in 2019. Let's hope the limit is increased for 2021.
IRA Contribution Limits for 2020
The maximum amount you can contribute to a traditional IRA for 2020 is $6,000 if you're younger than age 50. Workers age 50 and older can add an extra $1,000 per year as a "catch-up" contribution, bringing the maximum IRA contribution to $7,000.

FWIW, Schwab lists PONAX with a net exp ratio of 1.45% It also shows it has a 12b-1 expense of .25%. So I have know idea what you would end up paying. But, I haven't owned it for a few years so don't care.

PONAX exp ratio is 1.45%. This includes 12b-1 fees, management fees, administrative fees, operating costs, and all other asset-based costs incurred by the fund.
It doesn't include transaction costs as a result of trading of the fund's assets but this is very small.
The most important is the fact that performance is after all costs and risk attributes (SD=volatility, Max Draw, Sharpe, Sortino...) are correct too.

This post is about Bank Loan/Floating Rate bond oefs. This category of bond oefs is being mentioned more often for a 2020 investment, after a good 2019 performance. Typically these funds perform very well in rising interest rate and flat rate markets, and so the 2019 market was supportive, and 2020 is projected to be a flat interest rate period. They generally get punished in a falling interest rate environment. This is a sector of HY Bond funds, with the average fund in this category will have a credit rating of B and about 7.5% of its total portfolio in investment grade categories. The average standard deviation in this category is about 2.77, and the risk level in this category is highly correlated with how much yield the fund earns, with the assumption that junkier bonds pay higher yield. With that background, one might wonder if there is any bond oefs in this category, that might appeal to a more conservative investor. I did some searching in this category and I found 3 funds that a conservative investor might be interested in. The following 3 funds are offered for consideration for the conservative investor:
1. RCRIX/RCRFX: This fund has a standard deviation of 1.0, almost 1/3 of the category average, has a portfolio with a credit rating of BB compared to the typical B rating, has 21.4% of its portfolio in investment grade assets compared to the typical 7.5%, and in the strong downmarket of 2018 this fund was in the top 2% percentile of performance.
2. MWFLX/MWFRX: This fund has a standard deviation of 2.18, has a portfolio with a credit rating of BB, has 24.2% of its portfolio in investment grade assets, and in the 2018 downmarket it was in the top 15% percentile of performance.
3. FRSAX/FFRSX: This fund has a standard deviation of 2.34, has a portfolio with credit rating of B, has 24.7% of its portfolio in investment grade assets, and in the 2018 downmarket it was in the top 22% percentile of performance.
I use to invest in this category quite a bit in the past, but exited this category early in 2018. I have thoughts about re-entering this category in the future, when rising interest rates look more likely, but have considered a small investment in 2020 because of a projected flat market. RCRIX and MWFLX are 2 funds I would consider due to their strong performance history in downmarkets,their portfolios having a higher credit rating of BB, and because they have over 20% of their portfolios in investment grade assets.

What Schwab says when placing a test order:
1. This BUY order will be executed 01/13/2020.
2. This buy order does not have a transaction fee.
3. This buy order will be subject to a short term redemption fee if redeemed within 90 days.
4. This fund has a 1 % redemption fee if sold within 60 days.
A wild guess, with nothing to substantiate it, is that perhaps it is not marked as NTF because the fund is not paying Schwab the full fee it charges for NTF/OneSource marketing. But it is still paying Schwab some amount for shelf space, and Schwab for whatever reason is still selling it without charging a transaction fee.

Linked chart might shed some light. Compares returns (both stocks and bonds) among different countries since 1900 (but ends with 2014). Clearly, U.S. stands out as leader when it comes to equities.
https://monevator.com/world-stock-markets-data/
Some things to keep in mind:
- U.S. benefitted over the century from many unique cultural, societal and political advantages (including a strong regulatory, legal, judiciary framework and strong educational stystem).
- It costs more to invest abroad for a variety of reasons - some related to the above.
- The chart may not reflect the impact of currency fluctuation. I’ll take a 0% market return over a 10% market return if the currency of the former appreciated 20% while that of the latter declined.
- The world has changed dramatically over the past century. Namely, industrialization and technological innovation are far more widespread across the globe today than just 50 years ago.
- Assuming outperformance by the U.S. continues for decades more (a big assumption) an investor might still want to dampen year-to-year volatility by spreading out across the globe.

@MikeM - Thanks for the injecture. While I didn’t necessarily intend sarcasm with my “I don’t get it” reference, I agree that U.S. manufactures were lazy and inept at responding to the Japanese manufacturing challenge - particularly the quality issue. I owned a couple new U.S. cars built in the 70s that were both poorly put together and prone to frequent breakdown. In short - nicely stylized junk.
The only issue I might have is that looking at this question in such a simplistic manner leaves out a lot of contributing factors. Japan’s industrial base had been devastated during WW II. So they were ramping up production at brand new state-of-the-art plants, while U.S. plants were more dated. Japanese cars at first were smaller and more fuel efficient - able to profit from the (unexpected) 1970s OPEC Oil Embargo. Prior to that game-changer, fuel in the U.S. had been plentiful and relatively cheap. And, we haven’t even gotten around to the question of labor unions (like the UAW) that sought and received living wages and generous fringe benefits for workers, putting the U.S. at a disadvantage to Japan where labor was cheaper. You’re right. U.S. politicians and auto execs didn’t “get it” at first.
My brief (quoth) remark pertained to one public school educator from an excellent system here in the U.S. who visited Japan in the late 80s (about the time the Nikkiei was peaking). By than Japan was all the rave. Japan could do no wrong. He sought to compare classroom experiences of Japanese students than with those of the system where he worked. He did not observe a significant difference. If anything, he reported that the students he observed in Japan appeared less attentive and more prone to arriving late / leaving early than in the system where he worked. I must caution that was just one person’s limited experience and may not have been representative of Japanese schools at large. Equally likely, the school where he worked wasn’t representive of all American schools.