[spinner1001]

Originally Posted by Topspinmo

It’s all scheme.

Bitcoin?

[Robbb]

Originally Posted by Caymus

I think you may have been looking at a chart that does not adjust for interest payments.
Vanguards webpage indicates a cumulative 51.39 % return for the life of the fund.

Vanguard Mutual Fund Profile | Vanguard

Hmm they webpage indicates 2.53% over the life of the fund.

04/03/2007


BND (NAV)
-1.56% -4.58% -2.46% 0.49% -5.52% -0.02% 0.88% 2.53%

[Caymus]

Originally Posted by Robbb

Hmm they webpage indicates 2.53% over the life of the fund.

04/03/2007


BND (NAV)
-1.56% -4.58% -2.46% 0.49% -5.52% -0.02% 0.88% 2.53%

I wrote "Cumulative"

1-yr 3-yr 5-yr 10-yr
Since inception

04/03/2007

BND (Market price) 0.42% -15.62% -0.02% 9.08% 51.39%
BND (NAV) 0.49% -15.66% -0.09% 9.18% 51.43%
Benchmark1 0.53% -15.64% 0.15% 9.67% —

[Barbiet]

I see that some of you are Bogleheads. I am one as well, and I wish there was a Boglehead club, but I don't have the expertise that some of you do. Anyone up to the challenge?

[La lamy]

The commission for funds are generally 1 to 5%. Just that makes me cringe, let alone the low interest bonds have brought in these past years. I have just started back into buying my own CDs, being satisfied with the 5.75% I get for a fixed one year.

[retiredguy123]

Originally Posted by La lamy

The commission for funds are generally 1 to 5%. Just that makes me cringe, let alone the low interest bonds have brought in these past years. I have just started back into buying my own CDs, being satisfied with the 5.75% I get for a fixed one year.

All of the Vanguard mutual funds are "no load" funds, which means that there is no commisssion paid to anyone. The Vanguard Short Term Bond Index Fund is an excellent bond fund that has an expense ratio of 0.07 percent, and a current yield of 5.19 percent. The expense ratio is the cost to operate the fund and the published yield is calculated after applying the expense ratio. So, the cost to the investor is less than one-tenth of one percent of the amount invested, which is extremely low. The fund has no other fees.

[Travelhunter123]

Originally Posted by tophcfa

Hindsight is always 20/20. With any asset class you can find a historical time period that looks unusually good or bad. The last 15 years has been horrendous for bonds. The housing market crash of 2007/8, driven primarily by subprime mortgages, resulted in interest rates close to zero, and the Federal Reserve irresponsibly choose to keep rates artificially low for many years beyond the crisis. That was followed by a rapid increase in rates the last couple of years driven by hyperinflation. A perfect storm for bonds. A bonds return is driven by its yield as well as price changes. When interest rates go up, a bonds price declines and vice versa. When rates are close to zero, a bonds yield leaves little cushion to absorb losses due to price changes. Furthermore, when rates are close to zero, interest rates have little room to decline but lots of room to increase.

The difference between a bond fund and owning a single bond and holding it until maturity are very different. When you buy and hold a bond (assuming it doesn’t default or get called) your return is locked in, you earn the interest for the life of the bond and get your principal back at maturity. A bond fund’s return is very different, the fund never matures. Instead the fund is managed to constantly have a duration (for simplicity, duration is similar to maturity) within a tight range as outlined in the funds prospectus. The fund’s return is measured by total return, which changes daily. The main components of total return are both the funds yield and the underlying price of every bond held by the fund. Every day the funds holdings are “marked to market” based on changes in interest rates and perceived risk (credit and call risk) of the fund’s holdings. In general (credit and call risk aside), a bond fund’s expectation is not good when interest rates are unusually low, and are very good when rates are unusually high.

Lastly, no asset class should be looked at in a vacuum. Every asset class should be viewed in the context of a component of a diversified portfolio. Portfolios should be constructed with both returns and risk considerations. That requires looking at the correlations between various asset classes and the goals and objectives of the portfolio. In that context, bonds can be a valuable addition to a portfolio in the correct circumstances.

Thank you

[Ski Bum]

Originally Posted by Robbb

I was just looking at returns over the past 15 years, If you invested $1,000 in Vanguard Total Bond fund it would be worth app $931, today, after all interest was reinvested. If you invested that same $1,000 in Vanguard VTI, Total market fund, it would be worth $2,090 today.

As pretty much a Boglehead in investing I'm really starting to question the wisdom of investing in any bond fund.

As a fellow bogglehead, I'd like to add one more piece of info. Many mutual funds (take the American Balanced Fund, for example) have bonds, mortgage backed securities, and treasuries inside of them. So no need to buy bonds for diversity.

[huge-pigeons]

Being a hoglehead and applying his principles are the only way to make money in the market: low cost index funds. But this still requires you have to do some thinking to get in the right index funds.
Some people think that bonds are a safe investment, they are not. I think I remember bonds going down an average of 35% during 2007/2008, a little bit better than the 45% downturn in equities. But the recovery for equities is/was drastically better than bonds.
I diversify my holdings over certain sectors or what I see people buying in the market place, never buying any bonds. If I see oil demand going up or global unrest, I’m buying some oil. I like tech, watching meta, Apple, and nvidia
bottoming out last year, I’m buying a tech index fund. Russell 2000 is not doing well, so now is the time to look at small caps. Get in when everybody has jumped ship.
When I was working and checking out the different fund categories to invest in, bonds always gave you the least amount of return, followed by balanced funds (mix of bonds and equities) which only gained on average 1/3 to 1/2 of what a pure equity fund would gain, or you can get much higher returns if you are able to sleep at night with higher risk equities.

[Boffin]

Not bond funds but…

I have been in these for the past 12 months or so:

iShares 0-3 Month Treasury Bond ETF (SGOV)

The Fund seeks to track the investment results of the ICE 0-3 Month US Treasury Securities Index, which is composed of US Treasury bonds with remaining maturities of less than or equal to three months. The Fund invests at least 90% of its assets in the component securities of the Underlying Index.

Janus Henderson AAA CLO ETF (JAAA)

The Fund seeks capital preservation and current income by seeking to deliver floating-rate exposure to high quality AAA-rated collateralized loan obligations (CLOs). The Fund pursues its investment objective by investing at least 90% of its net assets in CLOs of any maturity that are rated AAA.

[MidWestIA]

when stock is going down take a look at these kinda like a bond

jepi
jepq

[jabacon6669]

Originally Posted by Robbb

I was just looking at returns over the past 15 years, If you invested $1,000 in Vanguard Total Bond fund it would be worth app $931, today, after all interest was reinvested. If you invested that same $1,000 in Vanguard VTI, Total market fund, it would be worth $2,090 today.

As pretty much a Boglehead in investing I'm really starting to question the wisdom of investing in any bond fund.

You're exactly right. I don't understand why more people don't invest in high yield dividend stocks. The stocks might fluctuate a long but the dividend makes up for and potential loss. I own 6 stocks that pay anywhere from 5 to 10%, each quarter they get reinvested. I have my account with Charles Schaub. We can buy and sell when ever we want. Move money freely, back and forth to our personal banks checking account.

[Caymus]

Originally Posted by La lamy

The commission for funds are generally 1 to 5%. Just that makes me cringe, let alone the low interest bonds have brought in these past years. I have just started back into buying my own CDs, being satisfied with the 5.75% I get for a fixed one year.

Who charges that much? Banks?

[FredJacobs]

Yes, the share price of the fund may have gone down over 15 years, but that doesn't mean that you lost money. Everytime you reinvest the interest, you purchase more shares. The gain/loss on any fund is the surrender value of the fund less the total investment.

Bonds perform inversely to conventional wisdom. You buy a $100 bond that yields 4%. As interest rates go up. the selling price of your bond goes down. Let's say you want to sell your bond and current interest is 6%. No one will buy your bond for $100 when they can buy a higher yield bond at the same price. So, you have to lower the price of your bond so that it yields 6%. The selling price of your bond is now $66.66. The reverse is true when interest rates go down. Right now, interest rates are high due to inflation.

Bonds usually get "called" when interest rates have fallen well below the original yield. It's like refinancing your mortgage when interest rates go down.

People buy bonds for many reasons. The most popular reason is that a sector of the bond market issues bonds that are not taxed by the IRS or the state. These are bonds issued by any state, city, village, etc. and are very popular in high tax states such as New York, Illinois, California, etc. For example, a $100,000 bond, yielding 6%, issued by either New York City or State, would earn $6,000 that would not be taxed by New York City, New York State or the IRS.

Hope this helps.

[Altawood]

The immediate value of a bond or bond fund, moves inversely with interest rates.