|
Is Vanguard's VFSUX a good place for Emergency Cash and Down Payment on Real Estate?
03-07-2011, 01:27 PM
|
#1
|
Recycles dryer sheets
Join Date: Feb 2010
Posts: 429
|
Is Vanguard's VFSUX a good place for Emergency Cash and Down Payment on Real Estate?
Is Vanguard's Short Term Investment Grade Adm (VFSUX) a good place to put emergency need money and/or down payment for a future primary residence?
I currently have the money in a money market account that is only earning about .75%.
The emergency money account could be needed as soon as tomorrow. Or, I may never need to use it. This money would be used to pay expenses if I was laid off from my job.
The down payment money may need to be used for a down payment on a primary residence anytime between now and the next ten years.
Is VFSUX a good place to put this type of money, in light of how I may need to make use of this money?
I am trying to earn a better return than .75% without exposing the money to unnecessary additional risk.
Thank you for your advice.
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
03-07-2011, 02:14 PM
|
#2
|
|
I have 1/3 of my cash in VFSUX, 1/3 in CD ladders and 1/3 in a bank account that pays 3% interest.
|
|
|
03-07-2011, 02:23 PM
|
#3
|
Recycles dryer sheets
Join Date: Feb 2010
Posts: 429
|
Quote:
Originally Posted by Tiger
I have 1/3 of my cash in VFSUX, 1/3 in CD ladders and 1/3 in a bank account that pays 3% interest.
|
Where can I find a bank account that pays 3% interest?
|
|
|
03-07-2011, 04:26 PM
|
#4
|
Thinks s/he gets paid by the post
Join Date: Jul 2006
Location: Denver
Posts: 3,506
|
Be sure to see its quarterly performance in 2008. I think it lost about 10%, but recovered. You'll need to be able to live with that possibility.
|
|
|
03-07-2011, 05:03 PM
|
#5
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
|
If you can handle the possible changes in share price it would be a good choice. Normal range seems to be betweem $10.40 and $10.80 per share, but it did drop down to $9.60 or so during the depths of the financial crisis.
|
|
|
03-07-2011, 06:12 PM
|
#6
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
|
That's a great chart that should strike fear in to the casual observer because the Y-axis doesn't start at 0 and it charts price -- not total return.
I have held this fund for the entire time charted. It is true that the fund dropped 10% in value even though it might look like 80% to 90% from that chart. Of course, the total return over those years is very good.
If you want to use this fund, I suggest that you set your goal 10% higher than you normally would shoot for. For example, if you need a $50K emergency fund, then have a $55K emergency fund instead.
|
|
|
03-07-2011, 07:58 PM
|
#7
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Posts: 5,381
|
Quote:
Originally Posted by midnighter777
I am trying to earn a better return than .75% without exposing the money to unnecessary additional risk.
|
In addition to the credit risk reflected in the chart above, also remember interest rate risk. There is no guarantee this fund will earn better than 0.75%. With a 1.9% yield, and a 2.2 year duration, you only need short rates to go up 100bp for this fund to lose money.
__________________
Retired early, traveling perpetually.
|
|
|
03-08-2011, 07:42 PM
|
#8
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
|
Quote:
Originally Posted by LOL!
That's a great chart that should strike fear in to the casual observer because the Y-axis doesn't start at 0 and it charts price -- not total return.
<snip>
|
And how many casual observers do we have around here? Not many, methinks.
Besides, I couldn't figure out how to change the graph to start at zero - I actually did try.
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|