Bond fund vs money market fund in retirement accounts

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mahgeetah01
Posts: 36
Joined: Fri Aug 31, 2018 11:50 am

Bond fund vs money market fund in retirement accounts

Post by mahgeetah01 »

I currently hold VBTLX (Vanguard Total Bond Market Index Fund Admiral Shares) in my retirement accounts, which has a 30 day SEC yield of 4.1%. On the other hand, VMRXX (Vanguard Cash Reserves Federal Money Market Fund Admiral Shares) has a 30 day SEC yield of 5.05%.

What are the benefits of continuing to hold VBTLX versus VMRXX? Or should I look to transition to VMRXX at least in the short term?
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inittowinit
Posts: 212
Joined: Thu Jul 05, 2012 6:37 pm

Re: Bond fund vs money market fund in retirement accounts

Post by inittowinit »

Their durations are completely different. Money market rates can change on a dime. Bond rates are more…durable.
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ruralavalon
Posts: 26297
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: Bond fund vs money market fund in retirement accounts

Post by ruralavalon »

mahgeetah01 wrote: Sun May 28, 2023 12:30 pm I currently hold VBTLX (Vanguard Total Bond Market Index Fund Admiral Shares) in my retirement accounts, which has a 30 day SEC yield of 4.1%. On the other hand, VMRXX (Vanguard Cash Reserves Federal Money Market Fund Admiral Shares) has a 30 day SEC yield of 5.05%.

What are the benefits of continuing to hold VBTLX versus VMRXX? Or should I look to transition to VMRXX at least in the short term?
For long-term investing in retirement accounts an intermediate effective duration like 6.56 years Vanguard Total Bond Market Index Fund (VBTLX) will likely produce a higher total return.

Don't make changes based on the short-term.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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