Quote:
Originally Posted by lewdog
I'm torn between understanding that, and wanting the money to be very safe. I realized bond funds are fairly safe, but parking money in there does have a chance to go down.
Here's a 5 star Vanguard short term corporate bond Index. Had I parked money in there 5 years ago, it would have gained only .6% in those 5 years.
And at some point had I needed the money, I could be selling some bonds while they are down. That can't happen in a 1% interest savings account. Bonds to me seem a bit shaky with interest rates sure to rise over the next decade. I'm not sure there's a great play there to park emergency savings unless you guys had something I'm missing?
http://quotes.morningstar.com/chart/...&culture=en-US |
Buying a 1 year bond is different than buying a bond with the intention of selling it. If you hold to maturity, you won't lose value (assuming the issuer doesn't go under or something). A 1 year CD is another similar option.