[Michael G.]

These people that write on investing must think we were born
in a barn.
Below is a statement I ran across about puting your money in CD's

"A certificate of deposit (CD) account comes with an interest rate around 4%
or higher now, easily outpacing the 3.5% inflation rate."

If inflation is at 3,5% and you're getting 4%, plus owe taxes, where in hell do
they think that's outpacing inflation?

[swooner]

Originally Posted by Michael G.

These people that write on investing must think we were born
in a barn.
Below is a statement I ran across about puting your money in CD's

"A certificate of deposit (CD) account comes with an interest rate around 4%
or higher now, easily outpacing the 3.5% inflation rate."

If inflation is at 3,5% and you're getting 4%, plus owe taxes, where in hell do
they think that's outpacing inflation?

OH. OK then, just leave it in your checking account at .0050%. What barn do you live in?

[retiredguy123]

Personally, I never buy CDs. My fixed income investments are spread among the following Vanguard mutual funds:

Short Term Bond Market Index
Total Bond Market Index
Cash Reserves
High Yield Corporate Bonds (aka Junk Bonds)

Lately, I have been increasing my investments in the High Yield fund because, over the years (30+), it has performed way better than the other 3 funds. Yes, it is riskier, but currently, it has been yielding about 6.4 percent, and I really don't worry about the risk. I would add that about half of my total portfolio is invested in the S&P Stock Index Fund. I know that ETFs have a slightly lower expense ratio than mutual funds, but the Vanguard mutual funds are so cheap that I don't see the need to switch. I would also mention that Vanguard recently started an indexed ETF for high yield corporate bonds, but it does not have a total return track record yet.

[Michael G.]

Originally Posted by swooner

OH. OK then, just leave it in your checking account at .0050%. What barn do you live in?

Surprising there are people out there doing just that.

[Michael G.]

Originally Posted by retiredguy123

Personally, I never buy CDs. My fixed income investments are spread among the following Vanguard mutual funds:

Short Term Bond Market Index
Total Bond Market Index
Cash Reserves
High Yield Corporate Bonds (aka Junk Bonds)

Lately, I have been increasing my investments in the High Yield fund because, over the years (30+), it has performed way better than the other 3 funds. Yes, it is riskier, but currently, it has been yielding about 6.4 percent, and I really don't worry about the risk. I would add that about half of my total portfolio is invested in the S&P Stock Index Fund. I know that ETFs have a slightly lower expense ratio than mutual funds, but the Vanguard mutual funds are so cheap that I don't see the need to switch. I would also mention that Vanguard recently started an indexed ETF for high yield corporate bonds, but it does not have a total return track record yet.

6.4% is today's market is a great return.

[Pugchief]

Originally Posted by Michael G.

6.4% is today's market is a great return.

That's the yield, not the return. If interest rates rise, principal will decline and more than in a similar duration treasury bond fund. Other economic conditions may also cause principal to decline. Return = yield +/- change in value.

[retiredguy123]

Originally Posted by Pugchief

That's the yield, not the return. If interest rates rise, principal will decline and more than in a similar duration treasury bond fund. Other economic conditions may also cause principal to decline. Return = yield +/- change in value.

I understand how bond funds work. But, over the years, I have noticed that the high yield bond fund has performed way better than the other bond funds I have owned. Over the past 10 years, the Vanguard high yield corporate bond fund has delivered a "total return" of 5 percent per year as compared with 1.32 percent for the total bond market index bond fund. I understand that there is a higher risk, but to me, the risk is worth it.

[Pugchief]

Originally Posted by retiredguy123

I understand how bond funds work. But, over the years, I have noticed that the high yield bond fund has performed way better than the other bond funds I have owned. Over the past 10 years, the Vanguard high yield corporate bond fund has delivered a "total return" of 5 percent per year as compared with 1.32 percent for the total bond market index bond fund. I understand that there is a higher risk, but to me, the risk is worth it.

I am aware you understood; I was responding to Michael G who commented solely on yield.

No issues with HY bonds as long as you understand how they work and all the risks / trade-offs.

[Stu from NYC]

Very interesting to ask the guy advising you on buying securities what his background and training is in doing so.

Some have told me they took an online course and thanks he is qualified. Another was a math teacher.

My favorite was the guy with a computer program.