Any suggestions what Vanguard fund or funds to put money in for a 10 - 15 year horizon, moderate risk? For a taxable account and (perhaps different) for a Roth IRA?

And can anyone enlighten me on why one would pick a short term, intermediate term, or long term bond fund? Should the maturity term of the underlying investment match the expected term of the investment in the fund? Or what?

I would hesitate to recommend particular funds, other than to say, I don't see 10-15 years as a particularly short horizon, and therefore I'm not sure whether you want to sacrifice capital growth (which comes with risk) for asset protection. You have to decide for yourself what your risk appetite is. Investments come with risk; everyone's risk tolerances vary, depending on their personality and their financial situation.

As far as bond funds go, you pick a bond fund (generally speaking) when you want to lower your risk profile. A short-term fund has the lowest risk of all, but also the lowest potential return. It's for those who value highly asset preservation. (And that comes with a different kind of risk anyway, whether you want to call it opportunity risk or inflation risk or whatever.)


As I'm sure you know, the yield curve ordinarily rewards longer-term investment with higher returns, because longer-term investments carry more risk. Simple example: if you buy a 30-year bond with 1% interest, and interest rates go up to 10%, no one is going to be willing to pay all that much for a bond that only pays 1%, and the value of the bond would decline precipitously. You probably know that.

But bond funds are a little weirder than that, because they are actively managed to keep the average maturity in a range, so they're selling as things get shorter than their desired maturity range, and replacing with other bonds with longer maturities. Example: let's say a long-term bond fund's target is 20 years, so it buys a lot of 20 year bonds. Two years later, those bonds all mature in 18 years. So the average maturity is now 18, not 20. If they really want an average maturity of 20, they'll have to sell some 18s and buy (for example) something that has a remaining maturity of 25. What they can do and will do to manage average maturity should be laid out in the prospectus.

(And now we sit and wait for Jon to criticize and/or disagree and/or nitpick that explanation. But hopefully, by giving him a target to shoot at, he'll chime in.)