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Investment in Bond Fund
Posted on 2/9/17 at 10:03 am
Posted on 2/9/17 at 10:03 am
I'm new to this board, but glad I found it. I have about 75K sitting in a money market acct. I was hoping to invest in something safe and saw last night on here about 5 pages down, talk about a safe bond fund paying 5 to 7%. Does anyone have any advice regarding the safety and/or down side to this? I'll hold back enough for an emergency fund, and this is not part of my 401K, etc. Also, should I decide to use the money for some type of purchase, what are the rules/timeframe for getting out of the investment?
6
Posted on 2/9/17 at 10:17 am to wildcat3
If a bond fund is offering 5-7% right now, I wouldn't consider it 'safe'
Posted on 2/9/17 at 10:18 am to wildcat3
quote:
safe bond fund paying 5 to 7%
Does not exist.
quote:
Does anyone have any advice regarding the safety and/or down side to this?
Rising interest rates are bad for traditional bond funds
Posted on 2/9/17 at 11:21 am to wildcat3
I saw the same post. Personally, I'd be very skeptical of a bond fund in a rising rate environment, especially one with that level of payout.
Posted on 2/9/17 at 11:45 am to wildcat3
I was in a similar position as well. Around 150K sitting in a money market getting 1% interest. I researched heavily into bond funds and just put about 75K into 3 different ones. Bonds usually perform inversely to the interest rates, but I found 3 that seem to be flexible and geared toward a steady return in any environment. Here are the 3 I bought:
MWCRX - very solid fund geared toward a rising rate
PONDX - income driven rather than return driven
OSTIX - the most risky of the 3 but I can afford to play a bit
MWCRX - very solid fund geared toward a rising rate
PONDX - income driven rather than return driven
OSTIX - the most risky of the 3 but I can afford to play a bit
Posted on 2/9/17 at 11:45 am to wildcat3
I'd be diversified in my bond holdings right now, no matter who you are. Floating rates, internationals, short term domestics, but also maintaining good cash positions.
Posted on 2/9/17 at 4:02 pm to wildcat3
Openheimer's Rochester AMT-free muni fund is paying 5.6% right now, tax-free, but it does come with interest rate and default risk. If there aren't any wild swings in INT rates, which it doesn't appear the FED will allow it should be a rather low-risk place to park some cash.
Posted on 2/9/17 at 4:33 pm to FunroePete
I use pff as my preferred shares etf. Yield around 5.5% my concern is capital depreciation in a rising interest rate market.
Posted on 2/9/17 at 5:17 pm to FunroePete
Preferreds are a solid way to get the yield you may need for retirement income. If you went down that road, I'd buy individual preferreds to cancel out the risk that comes with holding a fund.
However if you're not investing for yield, I wouldn't bother. There is so little growth. They're probably not suitable for anyone under the age of 50.
However if you're not investing for yield, I wouldn't bother. There is so little growth. They're probably not suitable for anyone under the age of 50.
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