Impressed with Vanguard Bonds

[tripods68]

This time last year, I put 25K of our EF into Vanguard bond funds, thinking the Economy will capitulate. I pulled some $$ away from our typical Savings account that give us nothing in return. I'm happy to say, i'm very impressed with the return & appreciation while reinvesting the dividends. The only regret is not putting the rest of our remaining funds here.

Month Beginning Balance Purchases/Withdrawals Investment Return Ending Balance
Jul-12 $26,550.15 $0.00 $461.45 $27,011.60
Jun-12 $26,531.37 $0.00 $18.78 $26,550.15
May-12 $26,424.30 $0.00 $107.07 $26,531.37
Apr-12 $26,269.06 $0.00 $155.24 $26,424.30
Mar-12 $26,232.70 $0.00 $36.36 $26,269.06
Feb-12 $26,212.44 $50.00 –$29.74 $26,232.70
Jan-12 $26,050.65 $50.00 $111.79 $26,212.44
Dec-11 $25,893.74 $0.00 $156.91 $26,050.65
Nov-11 $25,756.66 $0.00 $137.08 $25,893.74
Oct-11 $25,754.36 $0.00 $2.30 $25,756.66
Sep-11 $25,682.05 $0.00 $72.31 $25,754.36
Aug-11 $25,266.87 $0.00 $415.18 $25,682.05
Jul-11 $0.00 $25,000.00 $266.87 $25,266.87
Total $25,100.00 $1,911.60

[disneysteve]

Bonds have been on a bull run, though that certainly isn't something sustainable. Good for you for catching it at a good time. Just be careful going forward. At some point, rates will start to tick up and bond returns will fall in response.

[tripods68]

You're right Steve. Last year it was the budget messed. The talk of Recession again is fueling my desire to continue investing in bonds for another year. So i'm watching and trending news daily like everyone else. But for now, i'm very happy.

[scubatim84]

Bonds are great to have in any portfolio regardless of how the economy is doing. I definitely wouldn't have too much but it depends on your investment horizon, age, risk tolerance, etc. Vanguard has a leg up on everyone else I think with bond funds because their expense ratio is so low. Bond funds, usually, provide pretty meager returns in exchange for the security so having a low cost is critical to getting a good return. In contrast, my wife's 401k options are through Fidelity and the bond fund available in her plan has an expense ratio of almost 1%. Insanely high if you ask me for buying a bunch of bonds and then sitting on them.

[Max G]

You picked the right bond fund manager (Vanguard) because of their super low expense ratio. That's what pretty much makes or breaks your return on bonds. Also good timing, way to catch a bull market in bonds. Right now, though, the yields are soooo low so I'm in dividend paying stocks mostly at this moment.