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Searching For Calm In Bond Markets

Sunday, July 1, 2012 - 9:06 AM
From The New York Times
INVESTORS who’ve been fleeing jittery stocks and hiding out in the fixed-income market face a new quandary: finding something to ballast their bonds, which have experienced their own spike in volatility of late.

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Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708
1. Sunday, July 1, 2012 - 9:45 AM
Naturally, these "professionals" never mention CDs, since institutions and funds don't hold them, and professional money managers can't make a big fee selling them to the retail crowd. But, for the retail investor seeking a duration of zero (which is as low as you can go) and zero credit risk, your garden-variety CD beats the competition hands down. If you want a bond fund for ease of re-balancing, VFSTX (Vanguard's short-term investment-grade bond fund) might be worth a look. SEC yield of 1.64% with current distribution yield north of 2.2%. But the trade-off is some duration (i.e., interest-rate risk) and some credit risk. But it's as close to a 4-yr CD as I can find in a bond fund, with the trade-offs noted.
BozoBozo137 posts since
Feb 14, 2011
Rep Points: 944
2. Sunday, July 1, 2012 - 10:11 AM
Thanks for noting the CD alternative.

Allan Roth has written a few articles about how CDs can provide a better alternative than bonds in today's environment.
Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708
3. Sunday, July 1, 2012 - 11:53 AM
Has anyone found a way to join Security Service FCU if one doesn't live in the 3 states on it's webpage, Texas, Utah, or Colorado?  Is there an organization outsiders can join?  Thanks!
paoli2paoli21,406 posts since
Aug 10, 2011
Rep Points: 6,150
4. Sunday, July 1, 2012 - 1:46 PM
I'll write a post on SSFCU and its CDs this week. It has been a while since my last SSFCU post. Hopefully, its CD rates won't drop as July starts.

In summary, I have not found a way for someone outside of TX, CO or UT to qualify for membership. For a second I thought anyone could join the UTSA Alumni Association, but it appears that won't work.
Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708