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Vanguard tax exempt municipal bond funds

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Vanguard tax exempt municipal bond funds

Old 11-23-2020, 03:39 PM
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Probably the greatest investment fallacy there is-bonds are “safe” and you get your principal back...in just 3 years with only 2% inflation you have lost 5.88% of the principal value or $5,880 on $100,000. So your principal is only worth $94,120.

Old 11-23-2020, 04:16 PM
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Originally Posted by bjm9818 View Post
Making some very rough assumptions, but I bet you could see 30-45% losses in the fund if rates hit 3-4% higher.
If rates go to 3-4%, what do you think the equity market will do?? 🙄

I have no plans to lose 30-45% of this fund, it’s just parked there to balance my AA.
Old 11-23-2020, 04:35 PM
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Originally Posted by aubv View Post
Probably the greatest investment fallacy there is-bonds are “safe” and you get your principal back...in just 3 years with only 2% inflation you have lost 5.88% of the principal value or $5,880 on $100,000. So your principal is only worth $94,120.
that was my point only buy bonds when they have equity like returns.

Last edited by joe.giuliano; 11-23-2020 at 06:13 PM.
Old 11-24-2020, 05:32 AM
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Diversify and hedge.
Old 11-24-2020, 05:56 AM
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Originally Posted by Sprockets View Post
I use this as well. Paired with a Wells Fargo Short Term Muni fund to reduce overall duration.
Thanks to all. Sprokets. Is this 30day SEC yield (I think it is annualized) significant? Is it an indicator of the near future? Or is it a normally expected variation?

https://investor.vanguard.com/mutual...formance/vwiux
Old 11-24-2020, 06:55 AM
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Originally Posted by LI Sound Grunt View Post
Thanks to all. Sprokets. Is this 30day SEC yield (I think it is annualized) significant? Is it an indicator of the near future? Or is it a normally expected variation?

https://investor.vanguard.com/mutual...formance/vwiux
I cut and pasted this from the link above. It is an estimate of the future yield based on the yield to maturity over the previous 30 days. It's an indication that future distributions will be less that current. It makes sense with the low rates.

I do agree with the above posters regarding the risk in bond funds. In a rising rate environment, longer maturity funds will get hit, but so will a portfolio of individual bonds. If you hold the fund long enough, through multiple cycles, the negatives of bond funds are reduced. I'll also add that buying individual bonds can be expensive for an individual versus a fund. when Vanguard needs $10M of an offering, they will get much better pricing. You don't want to sell a bond fund when rates are high. Vanguard has a pretty good white paper comparing bond funds to a portfolio of individual bonds.

A non-money market fund's SEC yield is based on a formula mandated by the Securities and Exchange Commission (SEC) that calculates a fund's hypothetical annualized income as a percentage of its assets. A security's income, for the purposes of this calculation, is based on the current market yield to maturity (for bonds) or projected dividend yield (for stocks) of the fund's holdings over a trailing 30-day period. This hypothetical income will differ (at times, significantly) from the fund's actual experience; as a result, income distributions from the fund may be higher or lower than implied by the SEC yield.
Old 11-24-2020, 07:23 AM
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How GNL...or?
Old 11-24-2020, 07:24 AM
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NVG is a good tax free return about 5
Old 11-24-2020, 07:34 AM
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Originally Posted by Logan311 View Post
NVG is a good tax free return about 5
I think they use leverage.

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