Why I Just Bought More of This 4%-Yielding ETF for Passive Income

Core Insights - The focus is on achieving financial independence through passive income generation rather than portfolio size [1] - Bonds are increasingly important for diversifying a stock-heavy portfolio and generating income [2] Group 1: Investment Strategy - The Vanguard Total Bond Market ETF provides broad exposure to over 11,400 investment-grade bonds, with an average yield to maturity of 4.3% and an average effective maturity of eight years, offering stable interest income [3] - High-quality bonds within this ETF carry low default risk, making them suitable for generating passive income and reducing overall portfolio risk [4] - The ETF makes monthly distributions from its bond holdings, which can be reinvested to enhance passive income streams [5] Group 2: Market Position and Recommendations - Despite the benefits of the Vanguard Total Bond Market ETF, it was not included in a list of the 10 best stocks recommended by the Motley Fool Stock Advisor, which suggests potential for higher returns in other equities [6] - Historical performance examples highlight significant returns from stocks recommended by the Motley Fool, indicating a potential trade-off between bond stability and stock growth [7]