A bond fund is more than a safety net, although that’s one of its most significant benefits. Bonds also help to round out your portfolio, in addition to providing a reliable supply of money for any investments that catch your eye. The only thing to remember is that the growth of a bond depends on the economy. You’ll likely have money regardless, but depending on current economic behaviors and indicators, it may take longer for your bond to blossom. Here are a few options to get you started.
Try an investment in Vanguard Short-Term Investment-Grade Investor
Vanguard’s short-term bond has a market value of around $58.3 billion. With an SEC yield of 3.3 percent and expenses of only 0.2 percent, it has a small risk for default. That’s also due to its makeup. VFSTX invests in government debt, mortgage-backed securities, and a variety of corporate bonds, all of which help to keep it steady. The fund doesn’t earn much, but it’s a stable investment.
Go big with a Pimco Income A investment
For a bond that packs a punch, Pimco Income A is the go-to pick. Thanks to an assortment of bond investments that include everything from mortgages on private residences to bonds on the emerging market, Pimco boasts a $109.9 billion market value. It has a 2.9-year duration, but in spite of that and the variety of its investments, it’s ideal for anyone on a fixed income.
Take a chance on MetWest Unconstrained Bond
Despite its name, the MetWest Unconstrained Bond is not a risk. In this case, “unconstrained bond” just means that the bond managers have no interest in using a benchmark to measure their success. Instead, this bond is all about amazing risk-adjusted returns. It’s a relatively new bond, however, so it’s market value is only $3 billion. However, the SEC yield is an impressive 3.9 percent.
Consider Vanguard Limited-Term Tax-Exempt Investor
Vanguard is a well-known name in bonds. The Vanguard Limited-Term Tax-Exempt Investor is, of course, tax-exempt. It’s also low-risk, which is why it’s a smart choice for retirees. At 2.1 percent, it has a comparably low SEC yield, but you’re not responsible for federal taxes. Plus, the overall market value is $26 billion.
Go with a T. Rowe Price Short-Term Bond
The T. Rowe Price Short-Term Bond has a duration of only 1.8 years, and its 2.9 percent SEC yield is rather small as well. The bond isn’t trying for explosive growth. Its aim is to be risk-free. It’s a safe place for your money. Don’t invest in it to get rich. Invest in this bond to grow it a bit at a steady rate.