No. of Recommendations: 0

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.

Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.