Need somewhere to put $5,000....

[c3troop]

So my wife and I save up each month for a new home purchase. We are thinking about moving in roughly 4-5 years. The house we have now will turn into another rent house. So we are trying to save up to have a large down payment. I have 5,000 right now that I need to stick somewhere because inflation is eating away at it while it gains .06% in the bank. I want a very safe place to put it. I don't care to make a bundle on it, I just want it to be safe and somewhat hold against infaltion. Vanguard has a Total Bond Market Index Fund that looks safe and returns decently. They also have another fund called a LifeStrategy Fund that seems to be safe and nice returns. Anyone have any experience with either of those listed or any other safe places to put the cash? This will be added to at least 1,000 bucks a month until the 5 years is up.

[disneysteve]

Well you can certainly do better than 0.06%. There are plenty of online banks paying more than that. ING is at 0.80%. Ally is at 0.84%. Discover is at 0.85%. Short term CDs (1-2 years) are a little over 1%.

Vanguard Total Bond Market index isn't a bad fund at all. We hold it in my wife's ROTH. The 1, 3, 5 and 10-year average annual returns are 8.18%, 7.33%, 6.25%, and 5.41% respectively which is pretty darn good. Of course, if interest rates start to rise, those returns will be impacted. Still, not a bad place to put some money that you don't need for 5 years.

[c3troop]

Wonderful glad someone has the fund. I guess that will be the one I go with! Thanks Steve

[kv968]

You might also want to look at Vanguard's GNMA Fund:

VFIIX

It offers a slightly higher yield and has had a little less volatility over the years than the total bond fund. However it's not as diversified.

[humandraydel]

Personally, I hesitate to buy bonds right now. There really is nowhere for interest rates to go but up. Granted, everyone has been saying that for a year now (and they've managed to go down!). Just make sure you buy the shortest term bonds possible.

[bjl584]

You may want to start building a CD ladder. You can find 6 month CD's around or a little less than 1%.

[disneysteve]

Personally, I hesitate to buy bonds right now. There really is nowhere for interest rates to go but up.

I agree but I also think it is pretty clear that rates aren't going up until at least sometime in 2013. This Vanguard fund returned over 8% in the 12 months ending 2/29/12. Even if you "only" get 4 or 5% over the next 12-24 months you would still far outpace money markets and CDs. I would just keep a real close watch on the market and pull out when things head downhill.

[WellManicuredMan]

Wow, it has been a while since I've posted here.

Anyway, what do you guys think of PTTRX. I was thinking of moving a large amount of money to this fund that I don't want to risk in the stock market right now.