Your Survival Guy’s been digging through his investment attic looking for wrapping paper and came across these four letters: GNMA. It’s been a while since I’ve written to you about Vanguard GNMA, and like most investments I make, I still own it. I’m a collector. A pack rat, if you will. I find things I forgot I have all the time. But I never really forgot about Vanguard GNMA. I know many of you, too, wonder about it. Let’s talk about it.
It’s been slim pickings through the most recent years with Vanguard GNMA. But those are the cards we were dealt by the Fed’s zero percent interest rates that nailed GNMA to the floor. That time, for now, is over. And I’m sticking with it.
The reasons I like GNMA are twofold: one, it has explicit government backing, and two, the average maturity date of its holdings creates an average life I can live with. But it’s not for the short-term “what have you done for me lately” investors. It’s best served over time.
Then there’s the question. Will the Fed cut, stay put, or be forced to raise rates down the road? I don’t worry about the answer. As long as I’m getting around 5.9% yield to maturity today in a government-backed bond investment with a reasonable duration, I’m good. It’s just another position tucked away in my sack.
Action Line: Don’t let perfect timing get in the way of a good investment. I’m here if you need me.
Originally posted on Your Survival Guy.
