I have ~ 10k in my non IRA ( FDRXX ) only for emergency.

Is it a good idea to move it into bond funds like FTBFX or FGOVX ?

I do not want to lose the principal .How much more risky Bonds Funnds

are than Money Market Funds like Fidelity Cash Reserve.

Thank you for your help...Sorry could not figure out how to get rid of double spacing.

Chad

Put 1/2 in a 1 year insured CD, and the rest in a MMF......

Stay away from bond funds.....

t

Thank you Taylor....would you explain why bond funds are not safe.

Thanks again.....chad.

Thank you Taylor....would you explain why bond funds are not safe.

Thanks again.....chad.

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I am not Taylor, but the reason I would not buy an intermediate or long term bond fund right now is because I think you would be buying them at their peak as I think the interest rates will rise in the not too distant future.  We may get a 0.25% drop in interest rates tomorrow, but I think that is already priced into bonds right now.

Ultra short and short term bond funds aren't as interest rate sensitive, but not as safe as a money market fund.  If this is your emergency money, I would put it all in a money market fund.  I don't think a 1 year CD is a good idea if this is your emergency funds.  You would have to pay an early withdrawal penalty if you take money out of a CD early.  Of course if you never need to use the money, then the CD would be better usually as they usually earn more interest.  But I thought the point of the emergency funds were that they were liquid.

Tough pill to swallow, huh?  That old risk=reward thing.

I think you answered your own question.  Let me try to help................YOU CAN LOSE PRINCIPLE IN BOND FUNDS.........Does that fact satisfy your only stated goal?

I think Taylor probably feels that rates have no where to go but up, and I have to probably agree.  But what the heck do I know, I am just another fool on the internet.  There is speculating on interest rates and then there is just plain common sense, dunno exactly where I fit in!   

Speaking of ultra short funds.... 

Some of those ultra short funds that were being used as proxy for money markets were not near as safe as many investors thought.  I bet they wish they stayed in the MM instead of seeking that tad bit of extra yield.

This is your emergency fund, you may need to tap it at any time, hold tight in MM for now.  Keep duration short on CD's if you go that route. 

JMHO, hope it helps and good luck.

Brian

Thank you Brian & KCallie for your insight.I know nothing about bond funds.

As I said before this is emergency saving and parked in FDRXX.History of FGOVX & FTBFX shows they have pretty good 1,3,5,10 year record and are 5* funds.So I was tempting to switch, but thank God you guys are so gracious and kind to provide good advice just in time......chad