Bonds, cds, or.....?

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leftcoaster
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Joined: Mon Jul 23, 2007 4:04 pm

Bonds, cds, or.....?

Post by leftcoaster » Sat Aug 01, 2020 11:22 am

Bond yields are basically zip, aside from savings bonds.

CD returns are also low.

Stock dividends are still stocks, with the attendant risk

REITs are also still stocks, and a lot of rent paying businesses, aren’t.

What’s left to de-risk equities? Or just suck it up and hold cash/bonds?

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willthrill81
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Re: Bonds, cds, or.....?

Post by willthrill81 » Sat Aug 01, 2020 12:08 pm

If you're just looking to reduce the volatility of your portfolio, bonds are still a fine choice. But they are unlikely to do more than match inflation over the next decade. You can get a slightly better yield from CDs right now; Magnify Money shows one credit union currently offering a 5 year CD paying 1.97%.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Gadget
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Re: Bonds, cds, or.....?

Post by Gadget » Sat Aug 01, 2020 12:24 pm

EE bonds and I bonds

sycamore
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Re: Bonds, cds, or.....?

Post by sycamore » Sat Aug 01, 2020 12:45 pm

Not many options nowadays. Try to make the most of your fixed income: high-yield savings accounts, bank or brokerage signup bonuses, maximize credit card cash back, etc. Grabbing a few 0.25% or .5% returns here and there can make up for lousy savings account yield.

Or... invest some of your fixed income in your human capital: improve productivity of existing skills, learn new skills, seek new employment opportunities.

Robot Monster
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Re: Bonds, cds, or.....?

Post by Robot Monster » Sat Aug 01, 2020 12:46 pm

Riskier bond funds will give you more yield.

Vanguard Ultra-Short-Term Bond Fund Admiral Shares (VUSFX)
30 day SEC yield 1.08%

Vanguard High-Yield Corporate Fund Investor Shares (VWEHX)
30 day SEC yield 4.42%

Not recommending this route because I do not know your goals not situation. Just putting alternatives out there in case you're not aware of them. The second fund is a junk bond fund...obviously that's very risky so beware. (Perhaps because of this I might not have mentioned them.)
Investors often exhibit a tendency to evaluate the performance of their portfolio over very short horizons (e.g. days) even when their actual investment time horizon is quite long (e.g. decades).

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