VMLUX or CD's

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VMLUX or CD's

Postby hoops777 » Sat Jan 26, 2013 3:47 pm

I am curious about the rate of return of VMLUX vs. CD's and the overall risk factors.Any VMLUX investors out there?
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Re: VMLUX or CD's

Postby Call_Me_Op » Sat Jan 26, 2013 5:29 pm

Depends upon what CD's you want to talk about. CD's are generally safer and can have a competitive return.
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Re: VMLUX or CD's

Postby Karl » Sat Jan 26, 2013 5:44 pm

Seems I'm the only person left who has yet to memorize ticker symbols. I had to look it up to find out it's Limited-Term Tax Exempt. (Side note: Vanguard really should change names as their "Limited Term" is really a ST fund, while "Short-Term" = Ultra-Short.)

I don't own VMLUX, though I've been investing since July in the Short-Term Tax-Exempt which is one step down in duration. I bought that basically because unlike a MM it yields more than zero, though still not much. I looked at ST TE as just barely more risky than a MM since almost half the portfolio matures within 6 months and the majority matures within a year. VMLUX takes that maturity out a tad further, though still quite conservative.

Vanguard fund or CDs would be fine. Take a look at CD yields and figure what you get after tax and compare that to Vanguard. Then go with whatever gives you the most. I think you'll find it all ends up pretty much the same.
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Re: VMLUX or CD's

Postby hoops777 » Sat Jan 26, 2013 5:49 pm

I was looking at the PenFed ira cd which is 1.8 for 3 years and VMLUX for my taxable.PenFed is such a hassle to set up but a decent return.
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Re: VMLUX or CD's

Postby convert949 » Sun Jan 27, 2013 10:31 am

Hi hoops,

I have owned VMLUX for many years. It is a leftover from my high earning days (now retired). I continually think about changing to either a higher yielding short term fund such as Short Term Investment Grade or CD's but for some reason, cannot seem to justify the change as the fund has performed well under all conditions. In other words, if it ain't broke don't fix it :D

On the other hand, I have thought of moving some of my intermediate money into CD's as interest rates are similar and downside risk is less...

Best to all,

Bob
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Re: VMLUX or CD's

Postby Mitchell777 » Sun Jan 27, 2013 5:51 pm

hoops777 wrote:I was looking at the PenFed ira cd which is 1.8 for 3 years and VMLUX for my taxable.PenFed is such a hassle to set up but a decent return.

I have not used Penfed but have been considering it, as I'm moving some of my fixed income to a CD ladder. What are the hassles to set up CD's with them? Thanks
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Re: VMLUX or CD's

Postby wilpat » Sun Jan 27, 2013 5:58 pm

Mitchell777 wrote:
hoops777 wrote:I was looking at the PenFed ira cd which is 1.8 for 3 years and VMLUX for my taxable.PenFed is such a hassle to set up but a decent return.

I have not used Penfed but have been considering it, as I'm moving some of my fixed income to a CD ladder. What are the hassles to set up CD's with them? Thanks


I have setup several PenFed CD's in recent years and it is very simple. (either on-line or by telephone)
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Re: VMLUX or CD's

Postby aaplhpq » Mon Dec 16, 2013 4:24 am

Bumping this thread up. I'm also considering switching from VMLUX to CDs - especially in the light of the 3% PenFed CD.

However, my marginal tax is >50%, and taxes will eat up a lot of the CD returns
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Re: VMLUX or CD's

Postby rkhusky » Mon Dec 16, 2013 11:22 am

aaplhpq wrote:Bumping this thread up. I'm also considering switching from VMLUX to CDs - especially in the light of the 3% PenFed CD.

However, my marginal tax is >50%, and taxes will eat up a lot of the CD returns


It seems like the decision would need to consider the probability that you would need to withdraw the funding in the next couple years. If the probability is low, than the CD's seem to offer the most bang for the buck, given the SEC yield of 0.85% for VMLUX. On the other hand, if the probability is also low for withdrawing the funds for 5+ years, then VG Intermediate TE looks competitive in your case, with a SEC yield of 2.36%. Or even VG Long Term TE (not all that long term with a duration of 7.6 years) with a SEC yield of 3.47%.
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Re: VMLUX or CD's

Postby Sriracha » Mon Dec 16, 2013 11:55 am

If you are thinking about a muni fund, you might want to read through the first half or so of this thread (and linked article) started by Larry Swedroe. viewtopic.php?f=10&t=128125. And be careful to consider the risk of loss of capital when investing in a muni fund vs. the FDIC insured CD. Have a good week.
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