Quote:
Originally Posted by retiredguy123
I don't consider it a problem for bond funds to not have a maturity or end date. You can buy and sell shares at any time. I use bond index funds for the bond portion of my portfolio. It is split between a short term bond index fund (average maturity of about 3 years) and an intermediate term bond index fund (average maturity of about 8 years).
I don't like CDs because it is much easier to invest in a bond fund, usually with a higher yield. I use "Penfed.org" as a gauge of current interest rates. They are always competitive. Their current CD rates are:
TERM and APY
6 Month, 1.70%
12 Month, 3.15%
15 Month, 3.20%
18 Month, 3.40%
2 Year, 3.50%
3 Year, 3.60%
4 Year, 3.50%
5 Year, 3.60%
I don't know where you can get 3.3% for 6 months or 4.2% for 12 months, unless there is some risk or deposit limit involved. Can you name the company that provides these rates?
|
Fidelity and merrill Lynch (Etrade and a score of others). Sorry, but your information is out of date. You may be quoting BANK Cds, similar to bank savings accounts that tie up your money. They will nearly always be less than corporate CDs bought from brokerage firms.. You can buy T-bills from brokerages or from TreasuryDirect. Regarding BondFunds, yes, you can sell at any time, and get the MARKET price, which fluctuates throughout the day and goes down as rates go up. That is the problem, as I see it, with bond funds. To reiterate, when you buy an individual corporate CD or Tbill, you know exactly when it matures and you know exactly how much you;ll be receiving. There is no market risk. Nearly all bond funds have been exposed to market risk this year.. You may have received some interest, but your principal has deteriorated.