As an investor, you want to pursue risk (and high return) with your stock investments, for your fixed income investment, their role is not to pursue higher yields, instead, they should act as a cushion when stocks tank therefore you can rebalance your portfolio and buy stocks on the low.
High Quality Bond Funds
An appropriate fixed income investment candidate is high quality bond funds, such as Vanguard's Total Bond Market ETF (BND) and iShares Core U.S. Aggregate Bond ETF (ACG). More than 60% of each fund's investment is in U.S government backed bonds, the rest are in investment grade corporate bonds, both bonds gained more than 5% in 2008 and served its role exactly as expected - stock shock absorber.
At this time, both funds have yields in the low 2% range, not spectacular, but decent safe yields.
Do you want to boost your safe yields further? We will introduce another investment candidate next blogpost.