Bogleheads

[tgduffy]

I guess I need a lesson in reading yields from Vanguard's web page. When looking at the details of the VSGBX fund I see a reported 'yield' of 1.42%. I then see this history: ytd = 3.04%, 1 yr = 7.11%, 5 yr = 4.64%, etc. So when I am deciding where to keep "liquid" funds how do I compare my Amercian Express savings account paying 1.70%? Why wouldn't I compare it to the ytd or 1 yr yields which are obviosuly better. Why am I being directed to use the 1.42% as a comparison?

[livesoft]

The NAV of a bond fund is not stuck on $1. It varies. Sometimes it goes up and sometimes it goes down. Can you stand for your emergency fund to lose 5%? 10%?

Total return includes the return from the yield and the return from the change in NAV. If you don't mind risk like me, then there is nothing wrong with putting your emergency fund in a short term bond fund. Just be aware that you might lose 10% or so of your fund.

[tgduffy]

Thanks. I'm still trying to reconcile between the 1.42% 'yield' and the ytd 'returns' of 3.04%.

[TJAJ9]

The yield is what the bond fund is currently yielding--just like if a savings account is yielding 1.5%. That's about how much you'd earn in one year on dividends/interest.

The YTD and 1 year returns, for example, are total return which includes NAV price movement plus dividends reinvested.

For what you're talking about, the NAV price has moved up on that bond fund, which is why it's at a YTD of 3.04%. If the NAV price drops, it could easily go down to something like a YTD of -1%, for example, even with the reinvested dividends.

[YDNAL]

[Eureka]