Author Topic: BND  (Read 1213 times)

Zman

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BND
« on: June 29, 2015, 01:14:54 PM »
I would like to consider some BND in my taxable account (right?), if it is a good move but need some help understanding it....

Any body have a good blogpost or reading to link to?
I'm curious about how the price may be affected with a Fed rate hike this fall. Would the price per share rise? Would the Dividend rise(I assume)?
Basically, wouldnt now (pre-rate increase) be the time to buy?

seattlecyclone

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Re: BND
« Reply #1 on: June 29, 2015, 01:34:48 PM »
Per http://www.bogleheads.org/wiki/Principles_of_tax-efficient_fund_placement, bond funds are usually best in a tax-advantaged account, since bond interest in a taxable account is taxed at your full marginal rate.

Now is as good of a time as any to buy. The possibility of rate increases has already been factored into the market price of bonds.

forummm

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Re: BND
« Reply #2 on: June 29, 2015, 01:38:32 PM »
People generally advise putting bond funds in tax-advantaged accounts, not taxable.

If interest rates rise, the share price will fall proportionally to the amount of the rate hike times the duration of the bonds in the portfolio. As a result of this the dividend yield will rise (but with the same/similar amount per share of dividend being provided).