Since I am so far from retirement, I won't have enough to retire on for a long time. I'll probably change to a less risky portfolio when I am within ten years of retirement, but exactly when that is may depend on how my portfolio does.555 wrote:The case I was thinking of is if one has a risky allocation, and after a while it does well, and you decide you have "enough", and so you then decide to lock in gains by jumping to a much more conservative allocation.grabiner wrote:As with most investors, I would change allocation plans only because of a change in my needs. I could become disabled, or married, or change jobs.
Poll: What is your Bond Allocation %?
Re: Poll: What is your Bond Allocation %?
Re: Poll: What is your Bond Allocation %?
Hubby is extremely risk-averse, with all his stuff in CD's and bond funds, plus I have a COLA'd pension (and we both have SS), so I'm going way more into stocks than I would otherwise. Age: 58 sniffing around the front door; split 56/44, and it might go up from there, once I brood over this some more. I voted age - 15.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri
- abuss368
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Re: Poll: What is your Bond Allocation %?
Our bond allocation is simple and very effective:
Taxable account - Intermediate Term Tax Exempt Bond Fund
Tax Advantaged accounts - Total Bond Market Index Fund
We have been on the fence about the Inflation Protected Bond Fund and decided to remove it for the time being. Besides, Mr. Bogle's interview with Steve Forbes where the two gentleman noted they moved away from TIPS due to the horrible yields probably influenced us as well.
In addition, Rick Ferri's "Core Four" and Taylor Larimore's "Three Fund Portfolio" is just to overwhelming and convincing.
Keep investing simple.
Taxable account - Intermediate Term Tax Exempt Bond Fund
Tax Advantaged accounts - Total Bond Market Index Fund
We have been on the fence about the Inflation Protected Bond Fund and decided to remove it for the time being. Besides, Mr. Bogle's interview with Steve Forbes where the two gentleman noted they moved away from TIPS due to the horrible yields probably influenced us as well.
In addition, Rick Ferri's "Core Four" and Taylor Larimore's "Three Fund Portfolio" is just to overwhelming and convincing.
Keep investing simple.
John C. Bogle: “Simplicity is the master key to financial success."
Re: Poll: What is your Bond Allocation %?
0% bonds. I have a lot of low interest debt and I consider that "bond like". My spouse and I also have very "bond like" jobs. I don't need any bonds for now.
There are no guarantees, only probabilities.
- Aptenodytes
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Re: Poll: What is your Bond Allocation %?
I don't see how you can possibly come to any other conclusion. While the data don't tell us how people's allocations change with respect to their age, they very clearly tell us that they are not using age-in-bonds as their strategy. There's no possible way that any population of age-in-bonds investors could every generate the results obtained. So we can very clearly reject the hypothesis that readers of this forum, on average, pursue age-on-bonds as their fixed income strategy.MachAF wrote:I don't think you can come to that conclusion. There could be more people joining who are older.JustinR wrote:Right now, with 210 votes and over 24 hours after the poll began, the mean is at "Age - 9" in bonds.
...
This reaffirms the fact that Bogleheads themselves in practice do not follow the age-in-bonds guideline.
...
...
Re: Poll: What is your Bond Allocation %?
Anybody else getting a bit concerned about the VG TIPS fund? It is dropping like a rock in the last couple of days. I am tempted to bail out. I have age in bonds with a large chunk of TIPs.
Best Wishes, SpringMan
Re: Poll: What is your Bond Allocation %?
Do we have any idea how many of the poll respondents are retirees and how many are not? My hunch is that these two sets of people may respond differently to the question posed.
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Re: Poll: What is your Bond Allocation %?
Hi Springman,SpringMan wrote:Anybody else getting a bit concerned about the VG TIPS fund? It is dropping like a rock in the last couple of days. I am tempted to bail out. I have age in bonds with a large chunk of TIPs.
Please see some of my earlier posts over the past week or so. I bailed for a simple four fund portfolio. We are thankful for the simplicity and one less fund to watch and worry about.
Mr. Bogle bailing on this fund also influenced me!
Kind regards.
John C. Bogle: “Simplicity is the master key to financial success."
Re: Poll: What is your Bond Allocation %?
I was talking about the assumption that Bogleheads actually do Age -9 in bonds. I agree we as a whole don't follow Age in bonds, nor should we. There are too many variables.Aptenodytes wrote:I don't see how you can possibly come to any other conclusion. While the data don't tell us how people's allocations change with respect to their age, they very clearly tell us that they are not using age-in-bonds as their strategy. There's no possible way that any population of age-in-bonds investors could every generate the results obtained. So we can very clearly reject the hypothesis that readers of this forum, on average, pursue age-on-bonds as their fixed income strategy.MachAF wrote:I don't think you can come to that conclusion. There could be more people joining who are older.JustinR wrote:Right now, with 210 votes and over 24 hours after the poll began, the mean is at "Age - 9" in bonds.
...
This reaffirms the fact that Bogleheads themselves in practice do not follow the age-in-bonds guideline.
...
...
Re: Poll: What is your Bond Allocation %?
I plan on increasing my fixed income allocation next January, and I plan to do this with the TIPS fund.Anybody else getting a bit concerned about the VG TIPS fund? It is dropping like a rock in the last couple of days. I am tempted to bail out....
Gordon
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Re: Poll: What is your Bond Allocation %?
In Mr. Boge's latest book, he advises that a new fund be created - Total Corporate Bond Index Fund - because of the present state of yields.
John C. Bogle: “Simplicity is the master key to financial success."
Re: Poll: What is your Bond Allocation %?
My investment strategy is driven by fear: I (1) avoid cash or CDs because of inflation, (2) avoid stocks because the market tends to crash from time to time, and (3) avoid bonds because interest rates may rise, taking bond values down. I think dangers (1) and (3) are almost inevitable, and that leaves (2), so I invest in stocks only. It's a matter of choosing possible loss over certain loss.
Greg, retired 8/10.
Re: Poll: What is your Bond Allocation %?
If it's dropping like a rock, that seems to indicate that it's time to buy, not sell.SpringMan wrote:Anybody else getting a bit concerned about the VG TIPS fund? It is dropping like a rock in the last couple of days. I am tempted to bail out. I have age in bonds with a large chunk of TIPs.
Cordially, Jeri . . . 100% all natural asset allocation. (no supernatural methods used)
Re: Poll: What is your Bond Allocation %?
I have a question: for "age minus 10" does this simply mean subtract 10 from your age or does it mean subtract 10% from your age? Mr. Bogel wrote in "The Little Book of Common Sense Investing" that one could subtract 10% from one's age for one's bond allocation.
Re: Poll: What is your Bond Allocation %?
The first one, subtract 10 from your age. That's the first time I've heard about the 10% thing, interesting.hpowders wrote:I have a question: for "age minus 10" does this simply mean subtract 10 from your age or does it mean subtract 10% from your age? Mr. Bogel wrote in "The Little Book of Common Sense Investing" that one could subtract 10% from one's age for one's bond allocation.
Thanks to the results of this poll, in which the mean, median, and mode is "Age - 10", I'll be slowly moving from Age-in-Bonds to Age-10 when I rebalance. I'm in my mid-20s.
Does this seem like a reasonable action, or am I violating my investment plan by switching strategies?
Re: Poll: What is your Bond Allocation %?
We are 60 and 58. Our allocation is ~50/50. So, age - 10.
"..the cavalry ain't comin' kid, you're on your own..."
Re: Poll: What is your Bond Allocation %?
Thanks JustinR and Peppers. I'm 67. I anticipated that age minus 10 was correct for this poll, and not 10%, and already allocated 57% for bonds. Glad you folks confirmed this!
Re: Poll: What is your Bond Allocation %?
Would members who perhaps aren't aware of this asset allocation poll please select an option?
Thank you!
Thank you!
Last edited by hpowders on Fri Oct 12, 2012 12:06 pm, edited 1 time in total.
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Re: Poll: What is your Bond Allocation %?
How?hpowders wrote:Would members who perhaps aren't aware of this asset allocation poll please vote?
Brian
Re: Poll: What is your Bond Allocation %?
Select the appropriate bubble in the poll regarding your age relative to bond % and click on "submit vote". See the top of this thread for the poll.
I have 57% invested in BND and I am 67, so I selected "my age-10".
I have 57% invested in BND and I am 67, so I selected "my age-10".
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Re: Poll: What is your Bond Allocation %?
No, I mean how can people who are unaware of the poll vote in it?hpowders wrote:Select the appropriate bubble
Brian
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Re: Poll: What is your Bond Allocation %?
I selected Age - 20, because that is where the Vanguard Target I've selected has me. But, I had recently decided (weeks ago) to increase to Age -10. I don't need to take the risk.
- abuss368
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Re: Poll: What is your Bond Allocation %?
Who?Default User BR wrote:How?hpowders wrote:Would members who perhaps aren't aware of this asset allocation poll please vote?
Brian
John C. Bogle: “Simplicity is the master key to financial success."
Re: Poll: What is your Bond Allocation %?
You had me on that one!Default User BR wrote:No, I mean how can people who are unaware of the poll vote in it?hpowders wrote:Select the appropriate bubble
Brian
By reposting on this thread, I was hoping that those who were previously unaware, would see the poll and vote.
Vote early and often-as we say in the great state of Florida!
Last edited by hpowders on Fri Oct 12, 2012 8:58 pm, edited 4 times in total.
Re: Poll: What is your Bond Allocation %?
Age minus 10 seems to be the "sweet spot".
Re: Poll: What is your Bond Allocation %?
Age 62 Bonds 30
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
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Re: Poll: What is your Bond Allocation %?
During my early years of saving and investing, I never even thought about keeping my age in bonds. I kept around 95% in equities for growth over the long-term. As I reached my mid to later 40s, I went slowly towards about 80% in equities. as I reached my upper 50s, I went slowly towards 60% fixed. I actually went as high as 70% fixed, but quickly went back down to around 60% fixed. I'm 62 now, with around 62% in fixed. I don't look at it as an "age in bonds" issue, but more as a protecting my portfolio issue. I like to manage my portfolio so that we have a sustainable portfolio that will meet our needs for at least 40 years even if the equity market were to drop 50% and stay down for 10 to 20 years. I also look at is so that we can spend what it takes to maintain our normal lifestyle, but still have in our portfolio at the end of the year the same amount we started the year with plus an additional amount to cover inflation, at a minimum. I play with the allocation to make sure that both goals are met. The future is unknown, so there's no way to know for sure whether we will continue to meet both goals, but I think we will over the long haul, plus leave a measurable amount for my son to inherit when he's hopefully getting closer to reaching his retirement age. The bottom line for me is to have a reasonably conservative portfolio that still allows for a reasonable level of growth, all things considered.
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Re: Poll: What is your Bond Allocation %?
[quote="MachAF"]
In part, MachAF said:
I don't think age minus a certain number is a good recommendation. It all depends on your time horizon, current assets, and risk tolerance.
I agree with MachAF that the decision is better made based on "time horizon, current assets, and risk tolerance" rather than simply following a predetermined formula like the "age minus a certain number" thing, which excludes some of the most relevant factors to be considered. IMO, it's best used, if at all, as another reference point one might consider in determining the advisability of a particular allocation.
In part, MachAF said:
I don't think age minus a certain number is a good recommendation. It all depends on your time horizon, current assets, and risk tolerance.
I agree with MachAF that the decision is better made based on "time horizon, current assets, and risk tolerance" rather than simply following a predetermined formula like the "age minus a certain number" thing, which excludes some of the most relevant factors to be considered. IMO, it's best used, if at all, as another reference point one might consider in determining the advisability of a particular allocation.
Re: Poll: What is your Bond Allocation %?
Risk tolerance is the most crucial factor. If underestimating it, time horizon won't mean much. What works on paper and what works in reality are quite different. Ask anyone who suffered through 2008 with serious real time losses. How many of them were still in the stock market by the end of 2008? I'm 57% in BND and happy to be there.
- ruralavalon
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Re: Poll: What is your Bond Allocation %?
Age 67
50/50 allocation, intend that to be static for the near future.
50/50 allocation, intend that to be static for the near future.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: Poll: What is your Bond Allocation %?
I had to try this out as I was just curious about it. It gave me very nearly the allocation I have, 33.72% based on birth year 1960. It looks like it will max me out at 40% about the time I turn 61. What is this based on? Or what is it attempting to do? I'm not much of a math head.ThatGuy wrote:=MIN(0.4, 1-COS((YEAR(TODAY())-$BIRTHYEAR)*PI()/180),1-(LOG10(100-(YEAR(TODAY())-$BIRTHYEAR))-1))
In the poll I voted Age - 20 even though it's more like age - 22.
I'm actually following the 2025 Target Retirement Fund AA, but doing it on my own to get better ER's and skipping the international bonds. Also am in Total S/T Bond Index instead of Intermediate.
Kalo
"When people say they have a high risk tolerance, what they really mean is that they are willing to make a lot of money." -- Ben Stein/Phil DeMuth - The Little Book of Bullet Proof Investing.
Re: Poll: What is your Bond Allocation %?
What is "Total S/T Bond Index?"Kalo wrote:Also am in Total S/T Bond Index instead of Intermediate.
Kalo
Re: Poll: What is your Bond Allocation %?
I am 66 and have 58% in fixed income - targeting 60% by age 70 and most likely holding at that level. Do not use age in bonds as a ongoing rule of thumb - nice starting point though.
Re: Poll: What is your Bond Allocation %?
I use a glidepath, not an age based formula, and currently hold 20% bonds, which is my age-18.
When I turn 45 I plan to go to 30% bonds (so age-15) and at 55 to 40% bonds (age-15), where I will stay forever.
When I came up with my IPS I considered my time horizon to retirement, my ability to take risk (my income level and job security), and my own best assessment of my ability to stay the course while holding 80% equities during periods of poor performance. I wouldn't say age played that great a role in this process.
I voted age-20 by the way
When I turn 45 I plan to go to 30% bonds (so age-15) and at 55 to 40% bonds (age-15), where I will stay forever.
When I came up with my IPS I considered my time horizon to retirement, my ability to take risk (my income level and job security), and my own best assessment of my ability to stay the course while holding 80% equities during periods of poor performance. I wouldn't say age played that great a role in this process.
I voted age-20 by the way
- zaboomafoozarg
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Re: Poll: What is your Bond Allocation %?
S/T = short termMunir wrote:What is "Total S/T Bond Index?"Kalo wrote:Also am in Total S/T Bond Index instead of Intermediate.
Kalo
https://personal.vanguard.com/us/funds/ ... IntExt=INT
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Re: Poll: What is your Bond Allocation %?
age 70, bonds 30%; Ida sliced equities(equities for heirs)grabiner wrote:Rather than holding 0% bonds, I have chosen to hold 10% bonds and increase the risk of the stock portion of my portfolio, overweighting small-cap, value, and emerging markets.
I am 44, so I answered Age-35, but I expect to stay 10% bonds for at least ten more years.
- ruralavalon
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Re: Poll: What is your Bond Allocation %?
Probably meant short-term.Munir wrote:What is "Total S/T Bond Index?"Kalo wrote:Also am in Total S/T Bond Index instead of Intermediate.
Kalo
Age 69, retired, our asset allocation is still 50/50 where it has been since 2009, and still intend to keep that for the near term.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
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Re: Poll: What is your Bond Allocation %?
In our younger working years, we held an aggressive portfolio - about 80% stock. Now, in our 70's and 80's, age (of the younger of us) in bonds feels just about right.
Re: Poll: What is your Bond Allocation %?
I gave a current snapshot answer, but I don’t have a bond strategy that is based on my age. My goal in retirement is to hold 10 years of annual expenses in fixed income investments, with 3 years of that number allocated to uber-safe things like CD’s and short term US treasuries, and I’m on a glide path designed to get me there in the next couple of years. My theory is that I’ll be less likely to panic in the next bear market with a fixed $ strategy than with a fixed % strategy. Even a modest equity allocation could cause a heart-pounding drop in my total portfolio in a severe bear market, but I think I’ll be less likely to panic if I know that I have 10 years for the market to recover before I need to start selling equities. I know that sounds a bit ridiculous, but its all psychological.
Always enjoy the polls, thanks.
Jena
Always enjoy the polls, thanks.
Jena
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Re: Poll: What is your Bond Allocation %?
What's the difference between a duck? One of its legs are both the same !!!!
You are asking a silly question and the answers are meaningless. I'm 63. our "investment portfolio" is 75 % Stocks. But our investment portfolio is only a fraction of our assets. We own our house and have DB pensions and SS. Our investment portfolio is 43% of our assets and the investment portfolio is 75% stocks. So our asset allocation to stocks is 31% Even if we owned NO bonds
Sheesh
Will a garlic and chicken bone cross drive away the spreadsheet zombies?
You are asking a silly question and the answers are meaningless. I'm 63. our "investment portfolio" is 75 % Stocks. But our investment portfolio is only a fraction of our assets. We own our house and have DB pensions and SS. Our investment portfolio is 43% of our assets and the investment portfolio is 75% stocks. So our asset allocation to stocks is 31% Even if we owned NO bonds
Sheesh
Will a garlic and chicken bone cross drive away the spreadsheet zombies?
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Re: Poll: What is your Bond Allocation %?
I am 61 and hold my age in bonds. However, I may keep this allocation steady as I age and not "glide" lower.
I retired at age 60, but work part-time at my old job. I also collect a fixed pension.
steve
I retired at age 60, but work part-time at my old job. I also collect a fixed pension.
steve
In broken mathematics, We estimate our prize, --Emily Dickinson
Re: Poll: What is your Bond Allocation %?
I know S/T means short-term, but there is no Vanguard bond fund title that includes the words "total" and "short-term". Is Kalo referring to the Short Term Bond Index Fund or to The Total Bond Index Fund? Maybe it doesn't matter !zaboomafoozarg wrote:S/T = short termMunir wrote:What is "Total S/T Bond Index?"Kalo wrote:Also am in Total S/T Bond Index instead of Intermediate.
Kalo
https://personal.vanguard.com/us/funds/ ... IntExt=INT
Re: Poll: What is your Bond Allocation %?
What's also interesting here is how the number evolves. Boggleheads were most into stocks just before the 2008 crash. They then moved back in favour of bonds after the crash, but that's been weakening as the current bullmarket has progressed.JustinR wrote:Right now, with 261 votes, the mean is at "Age - 9" in bonds.
Compare to previous polls: 1 2
This reaffirms the fact that Bogleheads themselves in practice do not follow the age-in-bonds guideline. I'm not actually suggesting it be changed, but just as a thought I wonder if the Boglehead philosophy should ever be changed to reflect a recommendation of Age-10 in bonds, if indeed most Bogleheads follow something closer to that.
- Bogleheads 2007: Age - 13
Bogleheads 2011: Age - 6
Bogleheads 2012: Age - 9
What do you think?
I suggest this data shows that Boggleheads only act like Boggleheads to an approximation. If the immediate post-crash allocation, which may most closesly represent real risk tolerance, was close to Age then the Age philosophy may be a good one.
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Re: Poll: What is your Bond Allocation %?
hiddensee wrote:
Risk aversion with bonds involves a tradeoff, like everything else in the risk/reward investing world. During a market crash investor emotions of fear, panic, extreme anxiety, and outright depression often take over. At such times high bond allocations look very appealing. That provides great short term balm for what hurts but it isn't free. The price you pay for it is lower long term portfolio returns which may ultimately lead to running out of money when you're old and retired and have no options. Preparing a portfolio to maximally deal with short term risk may therefore increase long term risk. Long term risk doesn't have the emotional immediacy of a severe bear market and therefore is not such a potent driver of investor behavior. Nonetheless it is a real risk. Unless you're very, very wealthy, in which case anything works, the option of choosing a no risk all weather emotionally comfortable asset allocation is not open to you. Most of us have to determine a tradeoff point between short term and long term flavors of risk and find a balance between them that we can live with through thick and thin. I suspect that ultimately my generation, the boomers, will suffer massively from long term risk, being old and needy and running out of money.
Garland Whizzer
I suggest that one rule doesn't apply to all investors, Bogleheads or not. It seems to me that there are so many variables from investor to investor--ability to take on risk, willingness and need to do so, as well as numerous highly personal factors related to psychological makeup, obligations, goals and aspirations, etc.--that setting up one rule for all in terms of bond allocation is not the optimal approach for everyone. "Know yourself," Socrates taught, and it's still great advice especially for investors. If you learned your true risk tolerance in the 2008-9 crash, perhaps it is best to stick with it. I believe that many of us have to go through a few serious bear markets and bull markets before we gain such knowledge.I suggest this data shows that Boggleheads only act like Boggleheads to an approximation. If the immediate post-crash allocation, which may most closesly represent real risk tolerance, was close to Age then the Age philosophy may be a good one.
Risk aversion with bonds involves a tradeoff, like everything else in the risk/reward investing world. During a market crash investor emotions of fear, panic, extreme anxiety, and outright depression often take over. At such times high bond allocations look very appealing. That provides great short term balm for what hurts but it isn't free. The price you pay for it is lower long term portfolio returns which may ultimately lead to running out of money when you're old and retired and have no options. Preparing a portfolio to maximally deal with short term risk may therefore increase long term risk. Long term risk doesn't have the emotional immediacy of a severe bear market and therefore is not such a potent driver of investor behavior. Nonetheless it is a real risk. Unless you're very, very wealthy, in which case anything works, the option of choosing a no risk all weather emotionally comfortable asset allocation is not open to you. Most of us have to determine a tradeoff point between short term and long term flavors of risk and find a balance between them that we can live with through thick and thin. I suspect that ultimately my generation, the boomers, will suffer massively from long term risk, being old and needy and running out of money.
Garland Whizzer