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| Ignored facts still exist |
Ok, so as one gets older, you want to reduce stocks and split things into, as an example, 70% stocks and 30% bonds, or so they say. I have the stock part figured out, and I'm happy with my strategy which includes a mix of index funds covering various sectors, value, and growth. Done. But the "bond" part is not so obvious. And with the interest rate risk, do I even want to touch bonds? would a ladder of CD's be better? if a bond fund, which one? Treasuries, and if so, long term, short term, or something else? Recall many bonds didn't do so well during the 2007-2009 meltdown, especially high yield bonds. Please name a few bond funds that you would hold for a decade or two for the purpose of the retirement part of one's 70/30 stock/bond split. It seems like the difference here is getting somewhere between 0.15% in some money market, vs whatever bonds or something else gives you..something like 3 to 5%, not even sure. thanks! . | ||
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| Eschew Obfuscation |
I'm definitely not an investment guru, but it's hard to beat Vanguard. _____________________________________________________________________ “One of the common failings among honorable people is a failure to appreciate how thoroughly dishonorable some other people can be, and how dangerous it is to trust them.” – Thomas Sowell | |||
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Invest Early, Invest Often |
Vanguard Wellington would be one to look into. | |||
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| Do No Harm, Do Know Harm |
I'm not knowledgeable on the subject, but I looked up CDs out of curiosity. 2.35% was the best rate I found. You'd do better to turn it all into gold and panhandle once a month for an afternoon. Then again, I have no idea what I'm talking about  Knowing what one is talking about is widely admired but not strictly required here. Although sometimes distracting, there is often a certain entertainment value to this easy standard. -JALLEN "All I need is a WAR ON DRUGS reference and I got myself a police thread BINGO." -jljones | |||
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posting without pants |
Hell, some of the panhandlers around here make more per hour than I do... It is hard to be mad at them... good work is you can get it. All jokes aside, CD"s are decent for a portion of the money, as they are about as safe as you can get. About the only things safer, but with less rates of return are ammo, and gold/silver. there are money market accounts (although a slightly higher return than CD"s throught the banks, and usually have minimum balances or withdrawels) can get a small return and are pretty damn safe as most are FDIC insured). Then mutual funds, some of which are very low yield and save in bonds, and some which are higher risk (and all in between). Only advice I have is find an investment manager that can diversify your savings among all of these, according to the level of risk you want to have. If you have enough saved, then you probably should employ a professional. Those folks usually don't keep their jobs if they are fools... While none of them are infallible, most know what they are doing. Strive to live your life so when you wake up in the morning and your feet hit the floor, the devil says "Oh crap, he's up." | |||
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| Member |
This. They also have age-based portfolios that do the balancing for you. Target Retirement 2020, etc... Very low fees and excellent service. ----------------------------- Proverbs 27:17 - As iron sharpens iron, so one man sharpens another. | |||
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| I believe in the principle of Due Process  |
Why bonds? The return is lousy at present, and when interest rates rise, they will lose value. Your choice at that point will be to hold to maturity and accept a below market retun until then, or sell and take a loss of principal. What kind of bonds? US Treasuries are the safest and pay the lousiest. State and Muni bonds pay a good deal higher rates and are mostly tax exempt, until they go broke and stop paying. Corporate bonds are a crap shoot, too. I always believed a bond gave you a certain claim on corporate assets which would be honored, but look what happened to Chrysler bondholders when Chrysler went through bankruptcy. Financial statements are too complicated to allow certainty of analysis when off balance sheet claims have become common place, pension liabilities, etc. A cat that has jumped on a hot stove won't jump on a cold one either. Luckily, I have enough willpower to control the driving ambition that rages within me. When you had the votes, we did things your way. Now, we have the votes and you will be doing things our way. This lesson in political reality from Lyndon B. Johnson "Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." - Justice Janice Rogers Brown | |||
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Grapes of Wrath |
If you're already comfortable with indexing, I suggest reading the "Start Here" section of: https://www.bogleheads.org/ | |||
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quarter MOA visionary |
My question too, why bonds? What is your strategy? | |||
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| Member |
something like this as I mentioned auto-pilot https://personal.vanguard.com/...=0682&FundIntExt=INT ----------------------------- Proverbs 27:17 - As iron sharpens iron, so one man sharpens another. | |||
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| Lawyers, Guns and Money  |
It's a good question. You have two risks: credit quality and duration. Rising interest rates will harm a bond portfolio's value. Even Alan Greenspan is warning: Equity bears hunting for excess in the stock market might be better off worrying about bond prices, Alan Greenspan says. That’s where the actual bubble is, and when it pops, it’ll be bad for everyone. “By any measure, real long-term interest rates are much too low and therefore unsustainable,” the former Federal Reserve chairman said in an interview. “When they move higher they are likely to move reasonably fast. We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.” https://finance.yahoo.com/news...bonds-220001092.html
But... since you asked, here's the name of one I have used: Oppenheimer Senior Floating Rate Y (OOSYX) This should not be construed as specific advice because I don't know you and haven't evaluated your situation.  "Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." -- Justice Janice Rogers Brown "The United States government is the largest criminal enterprise on earth." -rduckwor | |||
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Equal Opportunity Mocker |
Oy, this sums us up well. We got burned by the downturn in '08, so never put more in. Now we're still standing on the sidelines with a pile o cash, and not earning anything, waiting for the right time to jump back in. Surely the next downturn, right? Only, it never has seemed to quite get here.... And we are still skeered. ________________________________________________ "You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving." -Dr. Adrian Rogers | |||
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| Ignored facts still exist |
I think there are many in the same boat. . | |||
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| Ignored facts still exist |
In my original post , I said:
I'm open to all logical alternatives. But I don't need more stocks since I'm covered there. I just need to know what to do with the non-stock part of the portfolio. . | |||
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| I believe in the principle of Due Process |
I question allocation schemes, so much in this, so much in that, a bit over here, etc. Why must you have a "non-stock part of the portfolio?" Luckily, I have enough willpower to control the driving ambition that rages within me. When you had the votes, we did things your way. Now, we have the votes and you will be doing things our way. This lesson in political reality from Lyndon B. Johnson "Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." - Justice Janice Rogers Brown | |||
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| Member |
Please do your own research. You have no way of knowing what I or anyone else here has at stake or how savvy we are. I could be a multi-millionaire or living paycheck to paycheck ... how would you know? There's a ton of info out there. More than ever before. Bottom line - you have to be able to sleep at night with your choices... not me. Nobody knows the ins and outs of your financial situation better than you do. Last thing - some people think to do well financially your plans have to be complicated. That is definitely not true. ------------------------------------------------------- Proverbs 27:17 - As iron sharpens iron, so one man sharpens another. | |||
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| Partial dichotomy |
For that "part" of your portfolio, I'd stick with high quality dividend paying companies. SIGforum: For all your needs! Imagine our influence if every gun owner in America was an NRA member! Click the box>>>  | |||
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| quarter MOA visionary |
There is a ton of good info out there better than any of us recommending anything. I am with Schwab and my wife is with Merrill Lynch ~ both have a ton of good investing help at any level of investing. When I review any funds on Schwab ~ I get a lot of data, history and even alternative funds to compare to. Depending on your age and amount of money perhaps talk to an actual financial planner. It's all about risk vs return and I assume that's where your "70% 30%" strategy "they said" came from. Good Luck. | |||
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| Ammoholic |
In the Bond Bubble that we living in I'm a big fan of thinking in terms of "Income" rather than "Bonds". Dividend paying stocks, Real Estate, Hard Money loans, etc... There are lots of options. Only you can decide which ones are right for you. | |||
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| Green grass and high tides  |
here is my take. Bond funds are a hedge for a drop in the market. you are trying to protect assets not necessarily build them at the point where retirement is close. So if you had $500k invested. Retirement is 5 years off. A 40/60, 30/70ish mix of bond and stock funds seems reasonable. If the market does well. The stock portion does well. The bond portion trickles in a tiny bit. If the market tanks. your stocks do as well. The bonds do well. hence the hedge. If interest rates spike. Stocks will do well. Bonds won't. Simplistic. This is not advice. Just my very basic explanation. This would be someone again who is conservative minded at this point. I am not against a good bond type fund in this senario to whatever degree one feels comfortable. My take anyways. Good luck. "Practice like you want to play in the game" | |||
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