No. of Recommendations: 1
Price, Yield, Value are all terms we, as investors, need to make peace with.

This is a teaching issue. If someone is starting from the idea of seeking alternatives to rolling over a CD, they are thinking about getting a better yield. So in teaching, we should start with yield, then explain how yield on tradable bonds is determined by price not just coupon and, in the case of funds, that the value of bonds not current yield is crucial to understand.


Yep. This is all really interesting. Seriously.
But the fact remains that I (and probably lots of others) have CDs paying 3 and 4% coming due and our choices are limited.

I know nothing about the purchase of individual bonds and so will not ever be buying them.

My choices are Vanguard's money market (currently paying less than 1/2 of 1%) and Vanguard's taxable bonds (for my IRA) and Vanguard's tax exempt bonds (for my taxable account).

I don't have the luxury of waiting around till some opportune time in the future to buy into these funds at the exact moment of best value. Waiting, I'm losing income. Leaving everything in the money market is ridiculous at less than 1/2 of 1% -- and to plunge into individual stocks is pure insanity with the market in such flux.

The history of Vanguard's GNMA fund is impressive -- I don't think I've seen another fund with such a winning record.

It was encouraging that Wendy said she was holding quite a bit in GNMAs.

The holding period on Vanguard's GNMA fund is interesting, too. It seems rather short to me -- and they are not holding very many bonds if their website research results are to be believed. So it seems to me that if some mortgages are paid off through re-financing, Vanguard will be adding new ones at various rates. If rates go up, Vanguard will add those higher mortgages to the fund as well. Is my thinking totally screwed up on this?

In any event -- I just don't see what other choices I have.
Unless, of course, I want to buy yet more CDs at ridiculously low interest rates (AND tie up my money once again for long periods of time) -- which I do not want to do since I expect the stock market to recover at some point and I want to have those funds available immediately.

I do buy brokered CDs through my brokerage account with Vanguard. (Someone mentioned brokered CDs earlier.)

By keeping everything at Vanguard I simplify my life -- and, believe me, that is worth something. :)

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