We are looking to park our new home downpayment (as it grows) over then next 12-24 months (committed to 20% to escape the mortgage insurance). I have been researching various funds (after reading the fool article on where to put your savings). I cam across VPAIX which is a Vanguard PA Municipal bond fund (we live in PA). I realize that the returns are based on the tax free nature of the fund, but it still seems like a good choice (I know it's not the only one). Can anyone out there share their feelins on this fund with me? Your thoughts on bond funds in general at this time?You've chosen a long-term bond fund for short-term savings (yes, 2 years is "short-term", in the world of bonds). You may wind up taking a sizable loss if interest rates rise again. If you have a particular date in mind, it might be worth it to avoid the uncertainty of a bond fund and invest in individual bonds instead; this way, you have a more certain return of your principal. You should still be able to find tax-free munis, if you really need them.
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