Bonds vs. Money Market vs Savings

[erub]

Looking into three posibilities to park ~5-10K for 1-2 years..
I like Vanguard because I have my Roth IRA with them (total stock market) and have already decided that I will buy some total international fund with 2007's Roth amount..otherwise I have my savings with ING Direct (whom I also like)

Looking at VMMXX (Vanguard Prime Money Market) and VBMFX (Total Bond Market Index Fund)..I know that Money Market typically holds shorter length securities, and that bonds are typically longer..other than that I am pretty clueless

 

[sager66]

High-Yield CD

 

[K1052]

CDs if you know you won't require the money for a while.
High Interest savings (ING, Citi, Emirgant, etc) for liquidity at decent returns
Both are FDIC insured and can't go negative.

Money market accounts are returning less than than high yield CDs and savings right now.

Stay away from stocks and bonds for short term investments.

 

[DaveSimmons]

I agree 100% with K1052. Stock and bond funds are long term investments, not the best choice for just 1-2 years.

 

[erub]

thanks guys. I looked into the CDs, and they just aren't worth it..talking about getting ~$40 for not being able to touch my 5K for a year (top APY is 5.3% (from basically unknown banks), and my ING Savings currently at 4.5%). I'll just keep funding the Roth and keep the rest in ING

 

[PAB]

Originally posted by: erub
Looking into three posibilities to park ~5-10K for 1-2 years..
I like Vanguard because I have my Roth IRA with them (total stock market) and have already decided that I will buy some total international fund with 2007's Roth amount..otherwise I have my savings with ING Direct (whom I also like)

Looking at VMMXX (Vanguard Prime Money Market) and VBMFX (Total Bond Market Index Fund)..I know that Money Market typically holds shorter length securities, and that bonds are typically longer..other than that I am pretty clueless

If you're under 30, theres really NO reason to be looking at money markets or bonds as investments. Bonds/MM are capital preservation moves. If you were interested in making real mone as opposed to barely beating inflation, you might want to invest in aggressive growth/growth.