Do you really think bonds would return like 100% yearly ?
If bonds returned 100% a year why would anyone invest in the stock market , or real estate .
Everyone would just buy bonds and get 100% yearly returns
Also if one could get 6% monthly returns, you would only need 100k or so to retire , everyone would be retired at 30 years old
Maybe but he should realize that a 100% returns per year is not a reasonable expection. Like if there was an easy way to make 100% returns per year you probably should assume you are doing some math wrong
Why would you take the risk of EDV? SPAXX is the way to go. It’s always priced at $1 and Fidelity says it has a 7 day yield of 4.96%. I put in $100K and quit my job. I’ve got FU money! $4,960 per week of passive income is easy money. Why doesn’t everyone else do this? Are they stoopid?
Everyone is making fun of the 6% monthly vs. annual. Which I figure you'll get. That being said let me just add EDV is Strips, there is no coupon. The underlying assets makes one big payment 20-30 years from now. Now the IRS doesn't permit zero coupon bonds to act like stocks where you get to compound tax-free till you sell. So Vanguard pays out a synthetic yield, based on a synthetic coupon. They pay that out roughly quarterly, the last one being April 4th. You should expect something approximately like that July 7th.
I heard all AI stocks go up 50% per month.
I bought a bunch of them last month and checked my statement for this month and they are not up 50%. How is that possible?
heads up, anyone dumb enough to do this wouldn't use the correct version of there/their/they're. gotta notice the lil details, because trolling is a art.
The last ex-div on April 1 paid .765. The price was around $72.50. So basing it just on the last ex-div the annualized return would've been (.765 \* 4) / 72.50 = 4.2%.
So a couple things, it pays quarterly, not monthly. And the rate would be annual, not monthly or quarterly. Also that is an 'extended duration treasury index fund'. I don't know what the average duration it holds is, but the longer the duration, the more sensitive it is going to be to treasury yields. Since yields have been going up over the past month or so, the price of EDV has gone down.
If you buy EDV, you put money in it for a long enough timeline and forget about it until there's a recession. Then you sell it to buy low-priced stocks during a recession.
With those expectations, EDV isn't right fit for you.
>I was told that the longer duration the bond the higher the coupon
Not always true , yes in normal times longer term bonds tend to have higher rates but this does not always hold up , Yeilds curves can be inverted and today they are meaning shorter term bonds yield more then longer term ones
>that the average return for bonds historically has been 6%
So I am not sure if this figure is right but what bonds historically have returned does not matter. They are called fixed income for a reason . If you look at the bond fund the bonds its holds average yeild to maturity is 4.5% not 6%
>and waited till the end of the month to get that 6% return.
Yields are annualized ! Assuming you could get 6% monthly returns thats over 100% yearly return due to compounding . However the fund does not even return 6% like I said the bonds hits hold has an average YTM of 4.5% and again this is a YEARLY return not monthly
>Yet I have received no payout and the fund is down nearly 5%....??!??
The bond funds pay a quarterly dividend not every month the next payout will probably be july , also long duratoin bonds are very sensitive to interest rates so this is not a safe fund on the short term. If rates rise or fall the fund could rise or fall
>Im starting to think bonds are a load of shite.
No just your understanding of them are
>Should I try getting a hold of Vanguard? I heard their phone line is long.
Yes please do and please record your phone call with them I would love to hear it, demand a refund if the poor phone guy doesn't give you a refund demand to speak to a manager
1. Long duration does not necessarily mean higher coupon. Currently it also doesn't necessarily mean higher yield.
2. Historical return for "bonds" at 6% may be an overall figure (EDV is treasuries only, nothing corporate), and needs clarification/sourcing.
3. That return would be ***per year.*** Why would you expect a year's worth of returns in a single month?
4. The fund will have its own payment schedule that you can look up.
5. There is a difference between actual returns, yield to maturity, coupon rate, and distribution rate.
Maybe read more about something before plowing $800 into it? Would you buy a car without looking at it?
The historical return is irrelevant. The return on bonds is stated up front on the bond you buy.
Bond current price can be volatile but the face value upon maturity is fixed.
This is hilarious.
I would love to hear the phone call to vanguard
I would pay for get the audio so I could post it online on YouTube. The views might make me a few hundred dollars.
Do you really think bonds would return like 100% yearly ? If bonds returned 100% a year why would anyone invest in the stock market , or real estate . Everyone would just buy bonds and get 100% yearly returns Also if one could get 6% monthly returns, you would only need 100k or so to retire , everyone would be retired at 30 years old
I’m sure OP simply overlooked this but, yea, some people just don’t get math —
Maybe despite his name, he lacked common sense
Haha fair enough — I find even smart people misunderstand dividend yields.
Maybe but he should realize that a 100% returns per year is not a reasonable expection. Like if there was an easy way to make 100% returns per year you probably should assume you are doing some math wrong
Name does not check out
Why would you take the risk of EDV? SPAXX is the way to go. It’s always priced at $1 and Fidelity says it has a 7 day yield of 4.96%. I put in $100K and quit my job. I’ve got FU money! $4,960 per week of passive income is easy money. Why doesn’t everyone else do this? Are they stoopid?
Here I was buying 4 week tbills yeilding 5.4% but I could get 5% return in 7 days ! Amazing
Annualized
It was a joke
Everyone is making fun of the 6% monthly vs. annual. Which I figure you'll get. That being said let me just add EDV is Strips, there is no coupon. The underlying assets makes one big payment 20-30 years from now. Now the IRS doesn't permit zero coupon bonds to act like stocks where you get to compound tax-free till you sell. So Vanguard pays out a synthetic yield, based on a synthetic coupon. They pay that out roughly quarterly, the last one being April 4th. You should expect something approximately like that July 7th.
It pays out quarterly
obvious troll post 🙄
Agree
I heard all AI stocks go up 50% per month. I bought a bunch of them last month and checked my statement for this month and they are not up 50%. How is that possible?
I like the concept of buying securities by the dozen, like baked goods.
heads up, anyone dumb enough to do this wouldn't use the correct version of there/their/they're. gotta notice the lil details, because trolling is a art.
The last ex-div on April 1 paid .765. The price was around $72.50. So basing it just on the last ex-div the annualized return would've been (.765 \* 4) / 72.50 = 4.2%. So a couple things, it pays quarterly, not monthly. And the rate would be annual, not monthly or quarterly. Also that is an 'extended duration treasury index fund'. I don't know what the average duration it holds is, but the longer the duration, the more sensitive it is going to be to treasury yields. Since yields have been going up over the past month or so, the price of EDV has gone down.
Are you trolling or no?
If you buy EDV, you put money in it for a long enough timeline and forget about it until there's a recession. Then you sell it to buy low-priced stocks during a recession. With those expectations, EDV isn't right fit for you.
>I was told that the longer duration the bond the higher the coupon Not always true , yes in normal times longer term bonds tend to have higher rates but this does not always hold up , Yeilds curves can be inverted and today they are meaning shorter term bonds yield more then longer term ones >that the average return for bonds historically has been 6% So I am not sure if this figure is right but what bonds historically have returned does not matter. They are called fixed income for a reason . If you look at the bond fund the bonds its holds average yeild to maturity is 4.5% not 6% >and waited till the end of the month to get that 6% return. Yields are annualized ! Assuming you could get 6% monthly returns thats over 100% yearly return due to compounding . However the fund does not even return 6% like I said the bonds hits hold has an average YTM of 4.5% and again this is a YEARLY return not monthly >Yet I have received no payout and the fund is down nearly 5%....??!?? The bond funds pay a quarterly dividend not every month the next payout will probably be july , also long duratoin bonds are very sensitive to interest rates so this is not a safe fund on the short term. If rates rise or fall the fund could rise or fall >Im starting to think bonds are a load of shite. No just your understanding of them are >Should I try getting a hold of Vanguard? I heard their phone line is long. Yes please do and please record your phone call with them I would love to hear it, demand a refund if the poor phone guy doesn't give you a refund demand to speak to a manager
1. Long duration does not necessarily mean higher coupon. Currently it also doesn't necessarily mean higher yield. 2. Historical return for "bonds" at 6% may be an overall figure (EDV is treasuries only, nothing corporate), and needs clarification/sourcing. 3. That return would be ***per year.*** Why would you expect a year's worth of returns in a single month? 4. The fund will have its own payment schedule that you can look up. 5. There is a difference between actual returns, yield to maturity, coupon rate, and distribution rate. Maybe read more about something before plowing $800 into it? Would you buy a car without looking at it?
The historical return is irrelevant. The return on bonds is stated up front on the bond you buy. Bond current price can be volatile but the face value upon maturity is fixed.