Which VG Short Term Bond???

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Oak&Elm
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Which VG Short Term Bond???

Post by Oak&Elm » Thu Mar 22, 2018 11:12 am

I'm going back and forth on what to do with my fixed income, this money is not part of my emergency fund just more or less extra cash. Currently I have it sitting in PurePoint bank drawing 1.6%. I have narrowed my choices to either the 18 month CD at Live Oak Bank paying 2.4% or just throw it in a short term bond fund at Vanguard. I kinda like the flexibility of a bond fund for re-balancing, I'm just wondering which short term bond fund to pick?

livesoft
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Re: Which VG Short Term Bond???

Post by livesoft » Thu Mar 22, 2018 11:48 am

Vanguard Prime Money Market is paying more than 1.6%, but less than a longer-term CD. You will get the flexibility in VMMXX for re-balancing that you would have in a ST bond fund.

There are something like 9 different short-term bond funds at Vanguard. Did you have a particular one in mind? They each have a different level of risk which can mostly be seen by their SEC yield.
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mega317
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Re: Which VG Short Term Bond???

Post by mega317 » Thu Mar 22, 2018 2:10 pm

How much money, and what's the goal? Typically when people ask this question it's regarding smallish dollar amounts for which choosing between investments yielding 1.6% (risk-free) and ~2.5% (with some risk) is a waste of time. Savings accounts, money market funds, CDs, short-term bond funds, treasuries, and I bonds all have their pros and cons, and are all fine.

When I have extra cash I buy stocks. My fixed income is in tax-deferred accounts.

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goodenyou
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Re: Which VG Short Term Bond???

Post by goodenyou » Thu Mar 22, 2018 2:27 pm

Where's the cash? Taxable or Tax-Privileged? Short Term Tax-Free? Depending on your tax-bracket, it could be more significant. However, the numbers are so low (1.6-2.5%)that it may be inconsequential if it isn't a large amount of money.
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NYCwriter
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Re: Which VG Short Term Bond???

Post by NYCwriter » Thu Mar 22, 2018 2:51 pm

I asked myself this question recently. I hold primarily Intermediate (BIV), VFSTX, and with NY Muni fund in taxable. They are all hurtin' a little right now, but except for VFSTX they are long term so I hold a portion in a MM that I'd normally be adding to bonds and don't worry about it. Seeing yields drop today right after an interest hike tells me I should stop fretting too much and trying to make predictions :)

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Oak&Elm
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Re: Which VG Short Term Bond???

Post by Oak&Elm » Thu Mar 22, 2018 3:24 pm

Thank you for the responses, the VG mm fund will work for now. This is just extra funds that have built up in my taxable account over time with interest off a bunch of muni bonds I inherited a few years ago. I was just trying to figure out if one short term bond fund was preferable over another.

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Re: Which VG Short Term Bond???

Post by mickeyd » Thu Mar 22, 2018 4:18 pm

I agree that the PMMF is a good place to park your cash for now. In the meantime, take some time to learn about ST bond funds and see if they fit your needs. As mentioned before, VG has many bond funds, perhaps one will be perfect for your needs.

Good luck.
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NYCwriter
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Re: Which VG Short Term Bond???

Post by NYCwriter » Thu Mar 22, 2018 9:47 pm

Oak&Elm wrote:
Thu Mar 22, 2018 3:24 pm
Thank you for the responses, the VG mm fund will work for now. This is just extra funds that have built up in my taxable account over time with interest off a bunch of muni bonds I inherited a few years ago. I was just trying to figure out if one short term bond fund was preferable over another.
If I think I'm going to use my dividend or gains (to invest, etc) in the short term, say 3-8 months I just leave it in VG MM or my Capital One mm. If I didn't already have VFSTX for a while I'd be in BSV Short-term bond. For the short-term, I can't see using a bond fund. A 1-yr bank CD gives now you 2.05% if you plan to hold it that long and don't want interest rate risk.

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