No. of Recommendations: 0
This is just a comment for the future. Vanguard's High Yield Fund (junk) takes a conservative approach and yields over 8 percent now. I wouldn't recommend it now. I think this whole mess we are in is going to take a very long time to settle out as these mortgages reset and the system tries to get better visibility on all these new investment products. It could take years. Hopefully, on the other side, risk premiums will be more appropriate. Vanguard's High Yield fund might be an idea to just put away for awhile and take it out later.

For me the issue is in my 403(b) where my choices (excluding stock funds) are Money Market, TIAA Traditional (supplemental, which has a lower yield than money market), a bond fund that tracks the total bond market, a TIPS fund (not sure if Dan's caution applies), or the junk fund, which I believe takes a similar approach to Vanguard (with a higher expense ratio).

The Bond fund, which I don't like for many reasons, has a lower yield than the money market, and even if interest rates go down for a while, I doubt they will stay down for more than a few months to a year. The junk fund yields more than 300 basis points above the money market. I do expect the money market will lower its yield at some point, if the economy slows down or goes into recession.

So, with the junk fund, we're looking at 3% per year to play with compared to the money market.

I would agree it is probably worth waiting a while to see how things play out (and if money market goes down). But I am definitely not a true believer that the lack of free money for banks and hedge funds will devastate the real economy, and slowing down a bit or a mild recession isn't going to drive a whole lot of moderate junk under.
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