topic Re: High yield vs. Bond in Retirement tax questions

High yield vs. Bond

jad56061 — Wed, 11 Feb 2026 09:52:35 GMT

Bonds are SUPER low with interest, some only 1-3% interest. What is the benefit of using bonds vs. a high yield?

Re: High yield vs. Bond

Anonymous_ — Wed, 26 Jun 2024 18:45:41 GMT

High yield what? Your question is not tax-related but:

Bonds are not yielding 1-3% interest currently (see the links below).

https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_bill_rates&field_tdr_date_value=2024

https://treasurydirect.gov/marketable-securities/treasury-bonds/

Re: High yield vs. Bond

jad56061 — Wed, 26 Jun 2024 20:49:57 GMT

Sorry high yield savings account vs. a bond

Re: High yield vs. Bond

Anonymous_ — Wed, 26 Jun 2024 20:55:23 GMT

So, what is your question? Which is better?

The yield on a savings account can change, for one thing.

Re: High yield vs. Bond

jad56061 — Wed, 26 Jun 2024 21:03:24 GMT

What is the benefit of a bond for taxes if the interest rate is so low compared to a high yield savings account which is hovering 4.25% vs. bond that's less than 3%? That's what Im wondering because it seems like you don't earn as much money right now if you put in a bond vs. a high yield savings account, even if the number changes.

Re: High yield vs. Bond

Anonymous_ — Wed, 26 Jun 2024 21:06:40 GMT

Bonds are paying over 4.5% currently. Where did you get 3%?

Re: High yield vs. Bond

jad56061 — Wed, 26 Jun 2024 22:07:44 GMT

In the last 10 years these funds have only earned less than 2%

VBTLX

BND

FXNAX

VBILX

Re: High yield vs. Bond

Anonymous_ — Wed, 26 Jun 2024 22:25:20 GMT

You are now referring to bond funds and even then over a longer time frame.

As interest rates increase, the value of bonds generally decreases (it's an inverse relationship).

All of the funds you mentioned are currently yielding over 3% anyway.

Re: High yield vs. Bond

Anonymous_ — Wed, 26 Jun 2024 22:26:23 GMT

Also, if you go back just a few years, you'd find that your savings account would have yielded well under 1% at that time.

Re: High yield vs. Bond

Opus 17 — Wed, 26 Jun 2024 23:17:45 GMT

There are entire books written about investment strategies. This is not the place. But your comparison is apples to oranges. The average yield of even a high yield savings account over the past 10 years is probably well under 2%, because interest rates and inflation were very low for a long time. You can't compare a 10 year average performance of a bond fund with the current savings account interest rate.

Also, the performance of a bond fund has very little to do with the yield of any specific bond. It also depends on price changes of the bonds, which depends on various market forces.

A bond fund spreads out the risk. A well managed fund will earn more money over time than a savings account. The trick is to find that well managed fund. If 2015-2021 were slow years for bond funds, look for the fund that made 3% instead of 2%.

Re: High yield vs. Bond

Anonymous_ — Wed, 26 Jun 2024 23:26:11 GMT

@Opus 17 wrote:
A well managed fund will earn more money over time than a savings account. The trick is to find that well managed fund.

FYI, the funds that @jad56061 mentioned in his previous post are all index funds.