Bond Funds

[summer2007]

I have a lot of my money in money market right now. I got scared off putting any more into stocks for the time being at least.

But I'm getting a little tired of the 2% I'm earning in money market and was thinking of putting it into some bond funds I wanted to see what people thought.

I know in the past there have been stretches where the bond funds earned next to nothing for a year or so because the share price fell so fast.

I'm just looking to get a little higher interest than 2% as safely as I can..and I'm open to all suggestions as well.

I was looking at Vanguard's GNMA and Long Term Treasury and Intermediate Treasury.

Thanks

Jim

 

[mathjak107]

i wouldnt do long term treasurys at this point unless you were bullet proofing a portfolio with equal amounts of gold and stocks. long term treasuries and intermediate have been rising lately and buying them as just a speculation may leave you with capital loses down the road unless you hold them real long term


if you buy long term treasuries with gold and stocks then your not really speculating as to an outcome , your just covering all the bases, waiting for the trend of one of them to give them a run up and re-balance yearly. buying only 1 catagory is really betting on just one outcome

 

[brewer12345]

What is your goal for this money? Will you need access to it any time soon, or is this long term capital that you won't need to tough for a long time?

 

[Rambler]

I kinda think stocks are a bargain right now, but some LT bonds are not bad either, depending on your reason for investing in them. Ditto Brewer: Are you looking to build income into your portfolio or shelter in the storm? Do you know what your longer term target AA is and by when you want to achieve it? Now is probably a good time to get into both stocks and bonds, in your near to mid term AA, if you are cash/MM heavy.

Personally I'm buying into both stocks (targeting moderate divvie payers) and CA mid to LT munis (fed, state and AMT free bonds). I'm buying the bonds, not the funds (I read somewhere that active management of muni funds can trigger cap gains and losses, and cap gains tax, and my reason for buying bonds is income rather than cap gains, so I would rather buy and hold the bonds rather than invest in a fund).

R

 

[jIMOh]

My single bond fund is RPSIX. It is a fund of fund which concentrates on generating income. It yields 4.2%+ with moderate fluctuation of principal.

It invests in numerous bond funds and one dividend income fund (fund is 15% equity, 85% bonds). It has long term bonds, short term, money markets, REITs, domestic bonds, foreign bonds, government bonds and corporate bonds.

 

[summer2007]

Thanks everyone

The money I have that is in money market it just money that I have on hand in case anything comes up. It's not needed unless there is something going unexpectedly wrong.

I feel like I have too much just sitting around at 2% interest right now.

Jim

 

[chinaco]

I would use bonds for long-term diversification. Set an allocation that is appropriate for your goal and rebalance periodically.

IMHO - I would keep emergency money in cash (mm or equivalent). At least 6 mos of expenses.

Recently, I had too much that had built up in cash... I deployed some of it to bonds to help meet my allocation target in bonds... but kept some in the MM... just in case.

Also, remember for the short-term... bond funds will shift around in value as forward looking interest rates are speculated upon by the market.

 

[Lsbcal]

Personally I like short term investment grade bonds now partly because they yield about 2% more then short term treasuries and historically this spread has been a good entry point. I'm adding to my holdings in Vanguard short term investment grade fund (VFSTX or admiral equivalent). You can find one recent discussion of this at: Bogleheads :: View topic - Clearing Up Misconceptions on ST Corporate Bonds

 

[oma]

If I had only transferred stock mutual funds to bond or mmf several months ago.

Today transferred $12k from mmf to tax free bond fund (Vanguard short term tax free) - hoping to have found a bargain price during this correction/capitulation.

 

[Gotadimple]

Thanks everyone

The money I have that is in money market it just money that I have on hand in case anything comes up. It's not needed unless there is something going unexpectedly wrong.

I feel like I have too much just sitting around at 2% interest right now.

Jim

Jim, if you want to increase your income without much risk, you may want to set up a CD ladder. 1 year CD's are yielding about 4%, 3 years about 4.5%, and 5 years over 5%. So depending on the $ amount you could easily take some of your MMF $ and create an interest yield of 4% or more.

-- Rita

 

[freebird5825]

VWAHX and VNYTX (fully TE for NYers only) are 2 favorites. up until recently, the NAV was very stable. this too shall pass..

 

[summer2007]

Thanks gotadimple and freebird5825.

I did actually buy some Cd's and just like you were saying the year and a half one is at 4% and the 2 year at 4.25% and the 4-5 month one (secondary issue) is at like 3.1%

I bought the intermediate term investment grade bond fund from vanguard over the summer and it's already down about $250-$300 on my original investment of $3000.

Jim