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CD Vs Bond Fund: A Case Study

Sunday, November 10, 2013 - 8:00 PM
The Finance Buff compares the returns of Bond Fund bought in 2009 verses
a 7 year CD; the CD wins.  More over he projects:

     "If a very favorable interest rate environment couldn’t push the bond
      fund to win over a CD bought four years ago, a less favorable
      environment won’t be able to do it for the bond fund today either."

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Moderated by Jeremy - Duplicate
5
cumuluscumulus357 posts since
Jan 16, 2010
Rep Points: 1,657
1. Monday, November 11, 2013 - 1:13 AM
Thanks cumulus for the article. You usually don't see anybody in the investment world who really understands the advantages of CDs vis-a-vis bonds.
5
loulou552 posts since
Aug 3, 2010
Rep Points: 3,431
2. Tuesday, November 12, 2013 - 8:42 AM
I would never buy a into a bond fund. I might buy a bond but why do it when your CD is FDIC insured, and I can sleep nights. Yield with a CD may or may not be lower but it is 100% safe for our money. I had a friend who passed away about 10 years ago. He was the most wealthy person in our small town ( he helped a lot of people and small business in our town)  and he purchased only tax exempt bonds that were backed by property taxes. I wonder what he would think now. I have no fear of that happening to bank CD's because if there would be a run on the banks like there was on Sept 11 2008 I believe the treasury would step in. We have several laws that need to be passed to make the banking system much better. (too big to fail, separation of banking deposit money and leveraged accounts, more transparant accounting by banks and allowing for more criminal prosecutions and not just civil prosecutions. It is so hard to prove intent at the top. Saw in the papers last night that several lawsuits have been filed on the ratings agencies. I like that the fines now are starting to show guilt by the institutions and not just paying fines with no admission of guilt. 

http://dealbook.nytimes.com/2013/...-case/?_r= 
3
Ally6770Ally6770930 posts since
Jan 16, 2010
Rep Points: 2,704
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