Good point.
Comment on [deleted]
tburkhol@lemmy.world 3 weeks agoThat drop was when the Fed was raising interest rates to stall inflation. Interest rates up, bond values down. But the drop in VTINX was only 20% over all of 2022, where OP is showing 50% in maybe the first quarter.
Incidentally, the sensitivity to interest rates is why I don’t like bond funds. If you buy actual bonds, you get the face value back at maturity, where bond fund are forced to mark them all to current market prices to calculate NAV. IMO, this negates the main “safe” factor in holding bonds.
Poik@pawb.social 3 weeks ago
EFrances@lemmy.eco.br 3 weeks ago
Would you give some examples of bonds that you’re talking about (rather than bond funds)? I’m thinking you mean something from Treasury Direct: Treasury bonds (T-bonds), Treasury Inflation-Protected Securities (TIPS) and/or I bonds.
www.nerdwallet.com/article/…/how-to-buy-bonds
tburkhol@lemmy.world 3 weeks ago
Treasuries are nice because they’re convenient and low buy-in, but their yields are crap, sometimes a little above inflation, sometimes below. TIPS are a decent way to hedge the inflation risk, but (IMO) it’s still really for people who are more worried about losing their savings than living off it. (i.e.: if you have, say, $1e8, you can live pretty comfortably off $1e6, even $1e5 in a lean year, so your rate of return doesn’t really matter)
For me, personally, the limited bond exposure I have is all corporate and mostly junk, bought through my broker in the secondary market, with maturity 10-20 years out. Until fairly recently, junk bonds were the only way to get yields above 4%, and that’s kind of my mental benchmark for gaining relative to inflation. One downside of corporate bonds is they generally have a $10k minimum.