BND - Capital Preservation

In these uncertain times, some people might want to consider capital preservation rather than chasing after stocks.  Certainly, if you have already acquired most of your retirement nest egg you will want to protect it.  BND, Vanguard's intermediate-term bond ETF, is the way to go if you want safety and a little interest along the way.  In 2014 BND has not varied much at all from its $82 price tag.  Then, if you go all the way back to the worst part of the 2008-2009 bear market, BND only dipped down to $70 at its worst point, and it immediately zoomed back above $75 per share in no time at all.

This is what I call capital preservation.  BND has a very low expense ratio of .08%, and the fund has over 15,000 holdings.  You also currently get 2.5% interest each year, and you are paid monthly. Intermediate-term bonds are less sensitive to interest rates, too. You have probably heard of the traditional 60/40 stocks/bonds ratio, but I would like to mention another plan.  Take your age and invest that percentage in bonds.  A 20 year old would have 20% bonds while a 60 year old should be 60% in bonds.  You never want to lose most of your money in the stock market especially if you are on the verge of retirement.  Click on the chart below to expand it.