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short term bond money
Old 04-18-2012, 05:31 PM   #1
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short term bond money

I was wondering what most of you have your non stock market money in since money markets are zero.I was thinking SHY or VFISX along with Vang short term corp.Or Vang has short term bond market which is a mix of the 2.CD'S for 5 years yielding well under 2% seem too long to be locked at that rate.Actually US Bank has a CD special now at 2% apy up to 249000 for 59 months...any thoughts on thatThanks
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Old 04-18-2012, 05:41 PM   #2
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My real short term funds (next 6-18 months of spending) is in Discover Bank (~ 1%).

My bond allocation is 74% VFIDX Vanguard Intermediate Corporate, VFIJX Vanguard GNMA fund and 16% VWEAX Vanguard High Yield. In aggregate, these funds have a weighted average duration of 4.8 and a weighted average yield of 3.75%.

I may transition to some shorter duration if it appears interest rate increases are imminent.
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Old 04-18-2012, 05:48 PM   #3
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Thanks...this is a difficult time for new bond money.I hate having it sit in a money mkt.
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Old 04-18-2012, 05:59 PM   #4
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It's in fgmnx and tlt, neither of which I would buy just now.
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Old 04-18-2012, 07:25 PM   #5
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Recently put money into PRWBX short term bond fund in leiu of additional CDs.
Duration 1.62 yrs
One year yield: 2.22%
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Old 04-18-2012, 07:34 PM   #6
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I'm half VBTLX and half VFSUX, but there's no good alternative right now. It's better than a MMF until interest rates increase (2014?). But no question it will be dicey when rates and yields increase and bond fund NAVs drop.

Some advocate more in (high dividend) equities, but that's still increasing risk no matter how you spin it.

Lots of threads on this subject here and other forums, search will give you plenty of opinions.
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Old 04-18-2012, 07:49 PM   #7
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I've dabbled in some lower-grade corporate bonds and some municipal revenue bonds. Haven't put a significant % in either since they carry some risk, but you can find 4% plus returns. I'm tempted by junk bond funds since historically junk bonds have been hurt less than other bonds when rates rise.
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Old 04-18-2012, 09:23 PM   #8
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I don't have a large taxable account, but what I do have is in VwTLX (long term munis). It's liquid and paying about 3-4% right now.
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Old 04-19-2012, 12:24 PM   #9
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Short term muni bond fund...NSMIX.

Not state specific and shorter duration for when rate rise, NAV should be less effected than longer term, but give up some yield. 1.68% tax free
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Old 04-19-2012, 01:49 PM   #10
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The current inflation rate is 2.7%. That is down from last year's 3.5%. Given that MM accounts pay very near 0%, there is a nice loss every year to inflation. Hmmm.. Over two years that looks lke a 5+% loss. So.... How much does the Short Term bond market account have to go down, to make up the over 5% we may lose to inflation over 2 years? Savers don't really have many good choices at the moment for money they do not want to put at much risk.
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Old 04-19-2012, 04:11 PM   #11
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5 yr CD's are better than a lot of the options. Ally bank's penalty for terminating early is the last 60 day's interest.
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Old 04-19-2012, 04:16 PM   #12
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Quote:
Originally Posted by ronocnikral View Post
5 yr CD's are better than a lot of the options. Ally bank's penalty for terminating early is the last 60 day's interest.
Yes, if you are willing to give up liquidity for 5 years. May work out, may not...though you would indeed know exactly what to plan on over the 5 years.
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Old 04-19-2012, 04:32 PM   #13
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Originally Posted by Midpack
Yes, if you are willing to give up liquidity for 5 years. May work out, may not...though you would indeed know exactly what to plan on over the 5 years.
Midpack, correct me of I am wrong. Reading through my bank's "fine print" on CDs, I can put my money in the CD and if I change my mind, the penalty for "liquidating" my money is just the last 60 days interest. At current rates, I calculate that after 4 months you will be at the same point, with the penalty, that you would have been if you just left your money in a MMF or high yield savings. Ymmv.
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Old 04-19-2012, 04:35 PM   #14
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Originally Posted by ronocnikral View Post
Midpack, correct me of I am wrong. Reading through my bank's "fine print" on CDs, I can put my money in the CD and if I change my mind, the penalty for "liquidating" my money is just the last 60 days interest. At current rates, I calculate that after 4 months you will be at the same point, with the penalty, that you would have been if you just left your money in a MMF or high yield savings. Ymmv.
Good point, though from what I've read the terms on CD's can vary considerably. I may be wrong, but is assume the better the interest the more "punitive" the penalties for withdrawing.
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Old 04-19-2012, 04:47 PM   #15
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yes, everyone should read the fine print for themselves. Ally is offering 1.69% APY (I "scored" 2.33% last July). Penfed, with 365 interest forfeiture is offering 2.00% APY, looking at bankrate, the highest I saw in a real quick search is 1.80% APY and I have no idea what the penalty is. Ally may not be the best, but it is far from being the worse. I don't know if you can establish a relationship between the penalty and interest rates.

Of course, I'm comparing to MMF and high yield savings, not to what the highest APY for a 5 year CD is. I've had a hard time finding a CD early withdrawal penalty less than 60 days.
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Old 04-19-2012, 09:15 PM   #16
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Quote:
Originally Posted by ronocnikral
yes, everyone should read the fine print for themselves. Ally is offering 1.69% APY (I "scored" 2.33% last July). Penfed, with 365 interest forfeiture is offering 2.00% APY, looking at bankrate, the highest I saw in a real quick search is 1.80% APY and I have no idea what the penalty is. Ally may not be the best, but it is far from being the worse. I don't know if you can establish a relationship between the penalty and interest rates.

Of course, I'm comparing to MMF and high yield savings, not to what the highest APY for a 5 year CD is. I've had a hard time finding a CD early withdrawal penalty less than 60 days.
So is it the opinion of most that something like Vang sh term corp is a better optionthan a cd for a good chunkof money...about 40 % of my portfolio?
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Old 04-19-2012, 11:56 PM   #17
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I have the really short term money in VFSUX. My other bonds (about 2/3 as much as the VFSUX) are in VBTLX
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Old 04-20-2012, 06:13 AM   #18
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For short-term bonds, I like Thompson Plumb Bond and PIMCO Low Duration. Vanguard's short-term investment grade is also a good one. For municipals, I like Wells Fargo Adv S/T Muni and Fido's short-intermediate muni income.
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Old 04-20-2012, 07:55 AM   #19
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Lots of suggestions here: Life, Investments & Everything: If You Want To Earn 3% Risk Free On Your Cash, Hurry Up

Personally, I think money markes are a fool's game and may well just go away as their business model does not work any more. Bond funds are fine, but I would not use them for the rent money. Asking for principal losses. I think the best place for money you don't need for a year is I bonds, presently offering a 2.7% yield for a year. Problem is that you are limited to 10k per SSN and must wait a year to access funds. Otherwise, a mix of CDs with reasonable surrender penalties and the highest yielding deposit account you can find (1% if you are lucky) are probably the nest options out there.
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