Anonymous wrote:For a short term, you can ladder 13 weeks treasury Bill for an interest rate of 4.125% and pay no state tax.

I'd think for most people it would just be easier to to a Treasury money market. VUSXX is at 4.19% right now.

But the muni bond idea is growing on me. VWAHX (Vanguard high yield muni fund) is yielding 4.48% right now, that's 5.97% equivalent if in 25% federal bracket.

For a short term, you can ladder 13 weeks treasury Bill for an interest rate of 4.125% and pay no state tax.

Anonymous wrote:

Anonymous wrote:OP, are you talking about a long term strategy/allocation? Cash is great right now, but that will change. Very few people will advocate for holding cash instead of bonds as a long term position. Some might prefer short term bonds over intermediate term bonds. But cash? Nope.

Wrong. If short-term rates go down, bond yields will also go down. There is a lot of data to show that bonds only return 1% more than cash in the long run. And you're still subject to large principal losses, if interest rates go up, from your supposedly safe investment. Bonds are stupid all the time.

If rates go down bond yields will go down but the bonds themselves will appreciate. You don’t get that appreciation with cash.

Ibonds are tax deferred and you never pay state income tax. Many money markets are also state income tax free and are earning as much as HYSA.

If you only have $10-20K to invest, I recommend Ibonds at the moment. The yield is more than 1% over inflation for 30 years. We have been doing it for a number of years and now it is our emergency fund.

Anonymous wrote:Curious what others think as I’m relatively new to investing. Does it still make sense to invest in bonds if I’m already getting 3.6 to 4 percent from a high-yield savings account? I’ve been following a three-fund portfolio for the past few years, BND has yielded less than my HYSA. I’m 47 and not planning to retire for another 15 years. Thanks.

I’m not a particularly sophisticated investor but added tax free muni bonds to my portfolio in lieu of paying off mortgage early.

They pay mid 4% range and interest is tax free, so it’s the equivalent of a 6% annual yield subject to tax.

Since mortgage is 3.5%, I figure a safe way of getting better guaranteed return than paying off mortgage. Bonds will mature around retirement age, at which point we’ll use principal to pay off remaining mortgage balance.

In total they comprise <8% of total portfolio.

Ultra short bond funds mostly do

For longer tenors you will show a loss on your treasuries if you mark to market

Does vanguard let you buy treasuries in amounts under 100,000?

Bond funds don't work the way I wanted them too. Interest rates go up, price falls. Screw that. I like laddering individual treasuries that I hold to maturity then reinvest. No loss of principal. No state income tax.
You can also buy into bank certificates. I hold to maturity.

Vanguard doesn't charge me for these transactions.

Anonymous wrote:

Anonymous wrote:OP, are you talking about a long term strategy/allocation? Cash is great right now, but that will change. Very few people will advocate for holding cash instead of bonds as a long term position. Some might prefer short term bonds over intermediate term bonds. But cash? Nope.

Wrong. If short-term rates go down, bond yields will also go down. There is a lot of data to show that bonds only return 1% more than cash in the long run. And you're still subject to large principal losses, if interest rates go up, from your supposedly safe investment. Bonds are stupid all the time.

I guess what you're saying makes sense when you believe something that isn't true.

Anonymous wrote:OP, are you talking about a long term strategy/allocation? Cash is great right now, but that will change. Very few people will advocate for holding cash instead of bonds as a long term position. Some might prefer short term bonds over intermediate term bonds. But cash? Nope.

Wrong. If short-term rates go down, bond yields will also go down. There is a lot of data to show that bonds only return 1% more than cash in the long run. And you're still subject to large principal losses, if interest rates go up, from your supposedly safe investment. Bonds are stupid all the time.

OP, are you talking about a long term strategy/allocation? Cash is great right now, but that will change. Very few people will advocate for holding cash instead of bonds as a long term position. Some might prefer short term bonds over intermediate term bonds. But cash? Nope.

No. Just stay in cash for whatever money you don't want in stocks. Bogleheads is a great resource, but this is one of the things they get wrong IMO. Bonds are a godawful and godforsaken investment, again IMO.

I have 500 or 600 k in tax preferred municipal bonds. They've done well, but only because they are tax preferred and some are a bit riskier.

Bonds have been terrible for the last 15 years. Hard to recommend. Treasuries are paying close to 5% now. I have very few bonds in my retirement accounts. Less than 5%.

Of course things could change in the future.

Bonds out performed stocks in the late 70’s to early 80’s as well as during the 2000’s. But I tend to think that modern financial systems and investing patterns means those situations are less likely now.

Curious what others think as I’m relatively new to investing. Does it still make sense to invest in bonds if I’m already getting 3.6 to 4 percent from a high-yield savings account? I’ve been following a three-fund portfolio for the past few years, BND has yielded less than my HYSA. I’m 47 and not planning to retire for another 15 years. Thanks.