CD or Fund
I think I know the answer to this question, but it is just a gut instinct and I'd like to be able to figure it out with real data. We have a 10k CD with a 2.9% coupon for 24 months. We are 6 months into it and have reinvested interest, so if we cash it in now with brokerage fees and the bid (10,014 today), we would end up with $10,150.60. If we keep it to maturity we will have $10,580.
The yield on the Wellesley fund is 3.29%. I have all the percentages for various time frames, the lowest of which is the 5 year at 4.93%. I feel it would be better to cash the CD in now and put the money in this fund, but I am basing that on a gut instinct and I really don't know how to explain it to myself or my husband (important - it's his CD).
Vanguard explains "yield" as :
A snapshot of interest and dividend income from your holding. The yield, expressed as a percentage of the fund's net asset value, is based on income earned over a specified period and is annualized, or projected, for the coming year.
How can I compare a CD yield, which is fixed, with this yield which changes? Is it just a chance one takes? Is it because we expect the shares of the fund to go up over time and the CD to stay the same? I know 10k is a small amount, but I want to understand this for all of our other Vanguard funds.