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Subject:  Dry Powder or Vwitx? Date:  1/14/2012  11:03 AM
Author:  codger41 Number:  33583 of 36218

I have $100K plus in an taxable FIDC insured account paying only a nominal interest rate. This money has been held by me as "dry powder" to be invested should a bear market make selected dividend stocks more attractive. The question is "Where can I park this money while awaiting attractive entry points?".

I am looking at Vanguard Intermediate Term Tax free bond fund (VWITX).
Salient facts are a 9%+ 2011 total return and a positive return most years (2008 was about break even). Bonds in the fund have an average maturity of 5.7 years and the fund is producing a 3.5% tax free yield. Turnover is 15% and management expense a mere .20 . My Federal tax bracket on incremental dollars is 28%.

Vwitx pays dividends monthly. By watching the fund price and dividend closely I feel that I should be able to get out of the investment in a timely manner should things turn south.

I have IRAs with dividend stocks, taxable bond funds and balanced mutual
funds, all tax advantaged (first RMD will be required this tax year).
I think that VWITX is a lower risk investment and a suitable place for
otherwise taxable dollars. Am I missing something here?

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