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Author: buzman Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76397  
Subject: Re: Community Question Date: 9/26/2013 10:23 AM
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>>>Even something relatively "safe" like the Vanguard Short-Term Bond Fund (VFSTX) had lost 2% of its asset value before the Fed decided to continue the bond buying program a few weeks ago.

If you really want to be safe, I'd buy individual Treasury securities or FDIC-insured CDs and hold them to maturity. Mutual funds don't have a maturity date, so you're not guaranteed the return of your principal.

intercst<<<

Well of course bond/CD ladders are a way to mitigate interest rate risk.

My crystal ball is in the shop for repairs. I’m not certain rates WILL rise.

FWIW… http://blogs.marketwatch.com/thetell/2013/09/24/treasury-yie...

I do know AM will face a capital gains tax haircut (20%+/-) in any non-qualified account.

In an IRA, going to the secondary market will entail some hidden costs also. Yes, even at Vanguard.

If AM needs to sell before maturity, figure an additional hair-cut.

I like and recommend bond ladders but they carry risk also.

For safety and security, I-bonds are tops. Oops, Zvi Bodie recommends those…sorry.
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