New Fixed Income Investment Question

[freebird5825]

There is no VYFXX.

And a lot of those other funds are not fixed-income.

No VYFXX? Hmmmmm
https://personal.vanguard.com/us/funds/snapshot?FundId=0163&FundIntExt=INT

There may be single state equivalents for your state via Vanguard.

For the rest, I would suggest you do some research. Yes, some contain stocks, but I was referencing them in the context of bonds in mutual funds for income.

 

[explanade]

Here, let me Google that for you:
http://www.early-retirement.org/forums/f44/money-on-the-sideline-52446.html#post985749

Thanks, so it looks like the most recent 180 or 365 days of interest.

I guess the table in the link that I posted takes into account this policy.


VYFXX is not coming up in Morningstar or Google for that matter. Odd.

 

[freebird5825]

...VYFXX is not coming up in Morningstar or Google for that matter. Odd.

I know. Very odd. I enter VYFXX as Cash in my M* portfolio for the lack of any other means to represent it.

VYFXX is TE for NYers only.

 

[LOL!]

Please note how bonds of various duration reacted to the actual announcement of QE2 today.
TLT (20-year Treasuries) was up 2.5% in the last 5 days, but is now down 1%, for a loss of 3.5% so far from today's high.

 

[Gone4Good]

Please note how bonds of various duration reacted to the actual announcement of QE2 today.
TLT (20-year Treasuries) was up 2.5% in the last 5 days, but is now down 1%, for a loss of 3.5% so far from today's high.

Longer duration bonds rallied recently after Goldman suggested that the Fed would have to buy all the way out to the 30-yr part of the curve. Instead, it looks like they're staying closer to an average 5 year duration.

Any reaction today has more to do with reality of the program vs. expectations. The big QE2 market impact already happened, most notably with a meaningful increase in inflation expectations, which is exactly what the Fed wants.

 

[bamsphd]

I highly recommend reading this: Individual Bonds vs a Bond Fund - Bogleheads

Nice page, if somewhat pro-Fund. I do not recall encountering the distinction between a rolling and a non-rolling ladder before.

In its terms, my primary bond investment strategy is to use a rolling ladder of TIPS, with the intent to convert it to a non-rolling ladder in the event of a severe economic crisis (such as losing my job). I supplement my ladder with some bond funds for liquidity and diversification.

I must admit, the extremely low real rates on TIPS these days make using CDs with short early withdrawal penalties a bit tempting. However, I really prefer a more passive hold forever, or at least to maturity strategy. If I bought a CD with plans to redeem it early if rates rose, I would have slipped into market timing interest rates. I don't want to start debating should I redeem this week, or wait a week because rates are going up so fast. The risk of driving myself crazy, or shooting myself in the foot financially seems too high.

 

[Gone4Good]

If I bought a CD with plans to redeem it early if rates rose, I would have slipped into market timing interest rates.

I understand the "set and forget" simplicity of a ladder and that may very well be sufficient reason to stick with that strategy. But I wouldn't consider CDs to be a market timing instrument. Their putability and superior yield makes them preferable to similar maturity treasuries regardless of what interest rates do. I'm not buying CDs because I'm betting interest rates go up, or down, or stay the same. My returns will be higher in all three cases, no market timing required.

Of course that analysis compares CDs with vanilla treasuries. TIPS are a whole 'nother kettle of fish.