Is VSBSX too risky for 6 months?

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michaeljmroger
Posts: 284
Joined: Fri Sep 21, 2018 10:54 am

Is VSBSX too risky for 6 months?

Post by michaeljmroger » Tue Feb 12, 2019 1:12 am

I have some cash I need to park safely for maximum 6 months. VUSXX is my default choice for that kind of use case but I’m tempted to go with VSBSX instead to benefit from the slightly higher yield. Would it be unreasonably risky given my short-term needs?

SoonerD
Posts: 119
Joined: Tue Jul 21, 2015 8:28 pm

Re: Is VSBSX too risky for 6 months?

Post by SoonerD » Tue Feb 12, 2019 2:11 am

michaeljmroger wrote:
Tue Feb 12, 2019 1:12 am
I have some cash I need to park safely for maximum 6 months. VUSXX is my default choice for that kind of use case but I’m tempted to go with VSBSX instead to benefit from the slightly higher yield. Would it be unreasonably risky given my short-term needs?
you're seeking 19 bps of yield and risking 2-year duration to get it. 19 bps will get you $95.00 per $100,000 invested in 6-months plus or minus any NAV change in VSBSX. A 0.25% (quarter-point)increase in interest rates might cause the NAV to decline by 0.475% or ($475)

if this is money that can not suffer a loss in your 6-month window for you to meet your short-term goal then you've answered your own question.

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