what about rock solid intermediate bond funds like PONDX or PTTDX? Both Pimco?
Thoughts?
They'd be excellent options if the Fed does not raise interest rates for a few years.
But if inflation heats up, and the Fed raises interest rates in response, your share price loss will wipe out any interest rate advantage.
Just in case you didn't know, as interest rates rise, bond prices fall. Long term bonds get hit the most; some can lose 25% or more of their share price in one year. Intermediates get hit less, and short-term least of all. In fact, you can actually make money with short-term bonds in a rising interest rate environment if the rises are gentle enough.
Having said all that, I've been too conservative with bonds in the last five years. I'm afraid of inflation (and of Obama), so I've stuck with short-term bonds. In hindsight, that was wrong. Interest rates have dropped, not risen.