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Subject:  Re: MMF or Bond Fund? Date:  7/10/2003  11:29 PM
Author:  iamdb Number:  7837 of 36397


I think the Short-Term Bond Index Fund is as liquid as the Prime Money Market Fund. It's return is higher, but it does have a bit of risk should interest rates rise. Given the short-term nature of the bonds that are held, that risk is small but real, a risk I'm willing to take for the higher return. If you reinvest dividends, it further reduces risk, because when interest rates rise, more dividends will be available to buy more shares at their reduced cost. I see this as a version of dollar-cost averaging.

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