Past time to move some money from stocks to bonds in my Vanguard accounts. Just not sure where to put it. I have some in a short term investment fund. Looks like there’s really no good place to park some excess cash these days, with such abysmal interest rates.
If bonds are part of your plan consider buying the bonds themselves and hold to maturity. As interest rates rise, market value will decline, but you still receive full face value when the bond matures. Most brokers offer an array of new issue bonds to choose from. Choose investment grade bonds. Think about a bond ladder letting a series of bonds mature at regular intervals.
The treasury yield curve should be your guide to which maturities to choose. Yields rise as maturity gets longer. But you probably hope markets will settle down in a few years–giving better yields and better investment opportunities. So not too far out.
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You can also try FDIC insured CDs. Same idea. Your money is safe and insured. Longer maturity gives higher yields.
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f bonds are part of your plan consider buying the bonds themselves and hold to maturity. As interest rates rise, market value will decline, but you still receive full face value when the bond matures. Most brokers offer an array of new issue bonds to choose from. Choose investment grade bonds. Think about a bond ladder letting a series of bonds mature at regular intervals.
The treasury yield curve should be your guide to which maturities to choose. Yields rise as maturity gets longer. But you probably hope markets will settle down in a few years–giving better yields and better investment opportunities. So not too far out.</I
For the long term investor who needs to continually be in bonds, this is just fooling yourself. Yeah, you’ll get the full face value of your bond back, but you will have missed out on higher interest that the new bonds pay. In the end, it’s a wash.
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Agree with all of the above but with the annual addition of I Bonds for money you won’t need for at least a year.
Maximum is $10K/yr per SSN, unavailable for a year after purchase. Withdrawal years 2-5 lead to loss of one quarter’s interest. With that said, currently earning >7% and I expect will go up on semiannual reset in April. Capital gains deferred until bonds cashed or 30 years, whichever comes first.
Laddering $10K/person/yr @ 7+% backed by US Govt is best assured deal going inmho
Available on the Treasury Direct web site (along with plentiful other info). Initial account a bit of a hassle to set up, but seamless thereafter (note: link to a bank account you think you’ll have for a long time)
–sutton
hoping they would raise the $10K limit but that would be too sensible, and would only benefit the little guy
Daryl, are you saying keep your funds in low yielding money markets until rates rise and then buy bonds? You can model that to see when you break even at various rates.
Moving into medium maturity bonds will get better returns now and let you move to better yields or investments later.
Locking in low interest rates in longer bonds seems not to pay. Inflation wipes out your gain.
Please explain.