I wrote several articles about CDs as a good alternative to bond funds a few months back. Diversify Bond Funds with CDs (Feb. 4, 2013) CD vs Bond Fund: A Case Study (Apr. 22, 2013) Why Investors Don’t Realize CDs Are a Better Deal Than Bonds (Apr. 29, 2013) Why Financial Advisors Favor Bond Funds […]
Buy Bond ETFs At Large Discounts To Net Asset Value (NAV)
For reasons I don’t completely understand, bond ETFs, especially ones investing in illiquid bonds such as munis, trade at a premium to the net asset value (NAV) most of the time. That means you will pay more to buy the ETF than the value of the illiquid bonds held by the ETF. Look at these […]
Stable Value Fund vs Bond Fund vs CDs
CDs are better than bond funds these days even though financial advisors rarely recommend CDs. Many 401k or 403b plans include a stable value fund. How do those compare to CDs and regular bond funds? CDs are appealing for several reasons: higher yield, principal stability, and FDIC-insurance. Stable value funds share some of the same […]
Why Financial Advisors Favor Bond Funds Over CDs
CDs are a better deal than bond funds nowadays but investors often don’t realize it. You would think financial advisors would be all over it when they are living and breathing in the investment world day in and day out. However, besides Allan Roth and Larry Swedroe, I haven’t seen many financial advisors recommend CDs […]
Why Investors Don’t Realize CDs Are a Better Deal Than Bonds
The best CDs are a better deal than bond funds but investors don’t realize it. They overvalue simplicity, overpay for liquidity. and they underestimate how easy it is to buy CDs even in IRAs.
CD vs Bond Fund: A Case Study
Although interest rates dropped during the study period, favoring bond funds, buying a CD still came out ahead.
Invest In Long Term Bonds Now?
Back in June 2012, a reader asked in a comment on my post What to Do When Interest Rate Is So Low: What would you think about this Vanguard Bond Fund for the next couple of years of low interest rate – VWESX [Vanguard Long-Term Investment-Grade Fund]? I said I wouldn’t be comfortable with it […]
Diversify Bond Funds with CDs
Bond funds and CDs are not mutually exclusive. Considering investing in both bond funds and CDs.
Pay Down Mortgage vs Investing In Bonds
In a low interest rates world, you should take a serious look at any loans you have. Although a 3.25% 30-year mortgage is often said to be "cheap money" or "almost free money" it’s neither cheap nor nearly free compared to the rate you earn on your bonds. This chart shows the difference between the […]
EE Bonds vs CDs and Bond Funds For Long-Term Investment
It’s often said that one’s ability to delay gratification is an important factor of success in personal finance. When you don’t buy that new whatever until you have enough money to pay for it, you save on interest you would otherwise pay. When you save a portion of your current pay for retirement, you are […]
Tax Efficiency: Relative or Absolute?
Tax efficiency becomes a factor when you have investments in regular taxable accounts (versus a tax advantaged accounts such as a 401k or IRAs). Because you have to pay taxes on interest, dividends, and realized gains, an investment that loses less of its returns to taxes is said to be more tax efficient. Tax efficiency […]
Stocks or Bonds in Roth?
[This is a guest post from Bogleheads investment forum participant Bob’s not my name.] A number of spurious arguments are made for holding riskier assets in your Roth IRA as opposed to a Traditional IRA. Let’s examine them. For simplicity, we’ll refer to risky assets as stocks and less risky assets as bonds, but the […]