The bond market has been showing its resilience despite the latest stock market correction. Moving forward, investors may want to keep investment-grade options close, with a few from Vanguard to consider.
I see bond ETFs as a bet on interest rates: mild upside if inflation dips, big win if a recession forces Fed cuts, or a loss in stagflation. I lean toward the first two scenarios. I see Trump's tariffs (25% on steel, autos, etc.) aimed at tanking confidence, spark a recession, and push the Fed to pivot. I still prefer TLT over Vanguard Total Bond Market Index Fund ETF Shares for rate plays; it's more volatile, closely follows interest rates and offers more liquid options.
Uncertainty socked the U.S. stock market in February, short-circuiting an early-year rally and saddling fund investors with losses. The post Stock Market Drama Highlights Trump's Game Of Chicken With Economy appeared first on Investor's Business Daily.
There are countless forecasts of future investment returns. Most are focused on the next year and often are based on predictions that the past will continue.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them. When you are at the start of your financial journey, you have to make money without getting much help from compounded returns. However, people who amass large savings can get a lot of help from solid returns. If you have an extra $500,000, you have plenty of options for where to put your money. You can store it in a high-yield savings account to minimize risk and get steady returns. However, you can also put the funds in stocks, crypto, bonds, and other assets. Wondering how much your cash can grow? Here’s what can happen to your money if you allocate $500,000 into assets. Key Points You can make a lot of extra money with $500k. Discover how savings accounts, stocks, bonds, and crypto can move you closer to your goals. Earn up to 3.8% on your money today (and get a cash bonus); click here to see how . (Sponsored) Annualized Returns For this analysis, we will look at high-yield savings accounts, stocks, crypto, and bonds. You can find a high-yield savings account with a 4.00% APY, but the returns for the other assets vary. While some stocks can comfortably outperform the market, others can get left behind. For this analysis, we will look at the annualized returns for the S&P 500, Bitcoin, and the Vanguard total bond market over the past five years. Here’s the types of returns you can get with $500,000. Asset Annualized Return over 5 years Return on $500,000 After 1 Year High-yield savings account 4.00% +$20,000 Stocks 14.31% +$71,550 Bonds -0.52% -$2,600 Crypto 63.5% +$317,500 Bitcoin has been the best asset over the past five years. Its 5-year annualized return of 63.5% significantly outperforms the other assets. High yield savings accounts have done better than bonds during this stretch but lag the S&P 500. The Pros and Cons of a High-Yield Savings Account The main advantage with a high-yield savings account is that these accounts pose no risk. Your funds are safe in these accounts and aren’t subject to any price fluctuations. Furthermore, the interest automatically accumulates. However, a high-yield savings account may underperform inflation, especially since interest is treated as ordinary income. Furthermore, these accounts can underperform most assets during bull markets. The Pros and Cons of the Stock Market The stock market gives investors many options and is highly liquid. These investments can outperform a high-yield savings account, and some of them also provide dividends. However, stocks fluctuate sharply and can result in significant losses if you aren’t careful. The Pros and Cons of Bonds Bonds are similar to high-yield savings accounts. These financial instruments let you collect interest, but you have to hold them until maturity to ensure that you don’t lose money. Granted, it is possible that a bond’s value goes up. You can make more money with corporate bonds, but some bond issuers default, resulting in their investors underperforming the market. Bonds can also significant underperform other assets during bullish market cycles. The Pros and Cons of Crypto Cryptocurrencies can significantly outperform the other assets during bull markets. The limited supply of Bitcoin and rising demand make it appealing for some investors. However, cryptocurrencies are speculative, high-risk investments that can quickly wipe out value. These assets also trade 24/7 which is either an advantage or a disadvantage, depending on how you look at it. Extra volatility may not give you a break over the weekend like you’ll get if you buy stocks. Minimize Risk While Earning Cash You don’t have to take big risks to reach your financial goals, especially if you have already built up to $500,000. A high-yield savings account can be a great resource that advances you toward your long-term goals. Comparing options can help you find a great savings account for your needs, but the SoFi high-yield savings account is a great starting point.The post If You Have $500,000 Saved It Can Start Making You Real Extra Money appeared first on 24/7 Wall St..
Vanguard has listed a new pair of fixed income index ETFs on the Nasdaq today – the Vanguard Ultra-Short Treasury ETF (VGUS) and the Vanguard 0-3 Month Treasury Bill ETF (VBIL). These funds provide exposure to the U.S. Treasury securities with short durations and low volatility, offering tight bid/ask spreads.
Despite the heavy dose of market uncertainty swirling in the capital markets, bonds rose during the month of January. It's an ideal entry point for prospective bond investors looking to attain exposure.
The prospect of rate cuts may be in jeopardy, as inflation appears to be stickier than anticipated. If economic growth does eventually subside and the Fed continues its rate-cutting path, investors will want to build a portfolio that emphasizes income.
In an interview with Salim Ramji, Vanguard's new CEO, he told me, “We have an outstanding active fixed income capability.” I followed up with Vanguard and wasn't surprised that their active bond funds had bested peers since they have much lower fees.
While yields remained a prime feature for bonds in 2024, the Fed's monetary policy easing didn't do favors for price appreciation. However, bond investors could reap those rewards if they focus on the long-term horizon.
After another incredible gain of stock market gains (the S&P 500 could finish 2024 with more than a 25% return!
The stock market has been on a tear over the past couple of years. The S&P 500 is on track to deliver back-to-back years of more than 20% gains, while the tech-heavy Nasdaq-100 index has nearly doubled since the start of 2023.