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URL:  https://boards.fool.com/angelmay-asks-do-you-think-it-is-unwise-for-me-to-30888395.aspx

Subject:  Re: Community Question Date:  9/25/2013  9:47 PM
Author:  intercst Number:  73318 of 99386

AngelMay asks,

Do you think it is unwise for me to hold bonds in funds such as Wellington and Wellesley Income?

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It doesn't matter where you hold them. If interest rates rise, the value of bonds fall -- and bonds with longer maturities fall further.

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
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