BND vs Vanguard MMA?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
kayakjer255
Posts: 9
Joined: Thu May 28, 2020 11:57 am

BND vs Vanguard MMA?

Post by kayakjer255 »

My current IRA account consists 100% in the BND ETF. I am thinking about moving it an an exchange transaction into a VG MMA and , other than the up and down of the NAV of the BND, Im trying to figure out how closely i will be able to match or get close to the yield from the increase in interest rates. I am down 10% YTD in my BND and based on Powell's remarks yesterday , and my very old age, I am considering going to all cash if i can get 3.5-4% taxable going forward vs the marketplace risk of being in both stocks and bonds these days. Notwithstanding the current inflationary climate, I dont really need any return from stocks or bonds , as much as i would like and have enjoyed them over the years. Im just not willing to risk the loss of my remaining funds and it looks like the VG MMAs interest rates are rapidly moving up toward the area of 3-4% unless Im misreading the numbers i am seeing in the VG MMAs.
Any educational or other remarks really appreciated.
livesoft
Posts: 81205
Joined: Thu Mar 01, 2007 8:00 pm

Re: BND vs Vanguard MMA?

Post by livesoft »

Well, if you sell BND to buy a money market, then you would certainly be selling low. Very low. BND has dropped about 1% today which is a really bad day for a bond fund since bond funds rarely drop this much.

I am looking to find some money to buy BND. I will probably use all the quarterly dividends paid soon to buy more shares of BND which is really on sale. And your idea to sell BND belies your comment about not needing any return from stocks or bonds. There is kind of a hint of capitulation here. Thanks!
Wiki This signature message sponsored by sscritic: Learn to fish.
dbr
Posts: 42508
Joined: Sun Mar 04, 2007 9:50 am

Re: BND vs Vanguard MMA?

Post by dbr »

If needing 3.5%-4% for the duration of whatever time period you have is a requirement then moving to money market funds when they hit that range is still very risky. Money market rates could fall again both quickly and soon. The fastest way for bond fund NAV to recover would be for interest rates to fall again. Of course predicting that sort of thing is really difficult.
Topic Author
kayakjer255
Posts: 9
Joined: Thu May 28, 2020 11:57 am

Re: BND vs Vanguard MMA?

Post by kayakjer255 »

I have always reinvested my dividends in BND so adding to this fund in any other way isnt something im considering doing. At my age...closer to 83 than 82 my "timeline" is relatively short with several chronic health problems.
Anyone who doesnt want to see their investments go up , whether needed or not, is probably not being honest with themselves. I guess that at this point in my life i may have lost my tolerance for risk because of how crazy the market and economy is because of more and greater problems than we have had in my memory including the 2007-09 financial crisis.
Based on what Powell said yesterday it is hard to foresee interest rates starting back down anytime in the next year or so, maybe longer. Im just looking for the 3-4% taxable income during that time without losing yet more principal from my BND. Im down 10% ytd and hate to sell the BND but the thought of going down another 5-10% in the coming year or so churns my stomach. By the time our country turns around I may not be around!

Any idea/s for some other form of Bond ETF like short term Bond Funds or Short Term Bond Index Funds i should maybe think about? Just feeling a little overwhelmed at this stage in my life. When your 60/40 portfolio goes South at the same time, I guess all bets are sort of off? Anyway thanks for your help. I do appreciate it.
I heard some investment expert talking about his favorite place for his cash now being 1 year Treasury notes which are paying 4.8%. I have never bought Treasury notes and dont think VG even sells them so i havent looked into that. Maybe i should?
Post Reply