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FYI: Low-risk bond funds are a handy thing. If you are putting away money for a near-term expenditure like tuition in a couple of years or a house in three years, low-risk bond funds, along with money markets and certificates of deposit, can serve a valuable purpose. Regards, Ted http://news.morningstar.com/articlenet/article.aspx?id=795074
For VWSTX mentioned in article- current yield 0.94%. Better yield in a FDIC protected high yield savings account such as Synchrony/Ally with no possibility of drawdown!! Current yield 1.05%
Actually the 0.94% is SEC yield, which IMHO is a better indicator of total return. The current yield (as opposed to trailing twelve month) is 0.98%, per Vanguard.
Since this is a tax-exempt fund, for someone in the 25% tax bracket the effective yield (ignoring state income tax distortions) is 1.25% or so. That beats bank rates, but perhaps not so much as to warrant the volatility risk.
Of the funds listed, my favorite would be VMLTX - its significantly higher yield over VWSTX means that in the worst case, you're likely to come out about as well as VWSTX over a year or more. The best comment on the M* article seems to be the first, by Darwinian, who explains some of this.
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Since this is a tax-exempt fund, for someone in the 25% tax bracket the effective yield (ignoring state income tax distortions) is 1.25% or so. That beats bank rates, but perhaps not so much as to warrant the volatility risk.
Of the funds listed, my favorite would be VMLTX - its significantly higher yield over VWSTX means that in the worst case, you're likely to come out about as well as VWSTX over a year or more. The best comment on the M* article seems to be the first, by Darwinian, who explains some of this.