Is Bond/Bond Fund investing just a bad idea all around now?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Stoney178
Posts: 54
Joined: Thu Aug 08, 2013 12:05 pm

Is Bond/Bond Fund investing just a bad idea all around now?

Post by Stoney178 »

My entire retirement portfolio is about 70% domestic stocks now - i have been informed to diversify a bit more into bonds and international stocks but bonds arent doing well obviously so should i sell all my bonds and transfer them to cash until bonds bounce back up?
User avatar
stevewolfe
Posts: 1537
Joined: Fri Oct 10, 2008 7:07 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by stevewolfe »

What constitutes bounce back up? If you don't know if now is a good time to sell, how will you know when to buy? Just curious....
Randomize
Posts: 212
Joined: Sun Aug 05, 2012 3:08 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by Randomize »

What's your timeframe for when you'll need the money? If it's comparable to or longer than the duration of your bonds or bond fund, it would be a bad idea to stay in cash.
Topic Author
Stoney178
Posts: 54
Joined: Thu Aug 08, 2013 12:05 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by Stoney178 »

this is long term. its in my individual brokerage account but still part of my overall retirement. may be some flexibility as far as withdrawal with this but am thinking long term.

im referring to a short term bond fund by the way

thanks
redhounds
Posts: 160
Joined: Thu Sep 20, 2012 10:43 am

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by redhounds »

Stoney178 wrote:this is long term. its in my individual brokerage account but still part of my overall retirement. may be some flexibility as far as withdrawal with this but am thinking long term.

im referring to a short term bond fund by the way
Wait, is this a taxable account? You should be using Muni bonds if you're holding them in taxable. That's the only change that I would make.
--Red
redhounds
Posts: 160
Joined: Thu Sep 20, 2012 10:43 am

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by redhounds »

Forgot to add the usual (and good) advice: you could also buy Series I Savings Bonds (up to $10,000 per year per spouse at Treasury Direct + up to $5,000 more via your tax refund) or CD's if it helps you sleep at night. Are you looking to change your allocation from 70/30 to something else?
--Red
User avatar
pteam
Posts: 419
Joined: Wed Mar 17, 2010 2:27 am

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by pteam »

And when stocks drop -20% to -40% will you want to sell them to? The point of owning different assets is they balance out your portfolio. Stocks are the most volatile class and could easily drop 10% just next week. Then people will be asking if they shouldn't be in stocks
User avatar
ruralavalon
Posts: 20506
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by ruralavalon »

Stoney178 wrote: . . . . . but bonds arent doing well obviously so should i sell all my bonds and transfer them to cash until bonds bounce back up?
"Obviously" a great idea if you can predict just exactly when bonds are going to "bounce back up", and so can get back in just before the "bounce".

Best of luck with that. I don't think that I'm that lucky :( .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
ab80
Posts: 112
Joined: Wed Jul 17, 2013 2:35 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by ab80 »

should i sell all my bonds and transfer them to cash until bonds bounce back up?
Why would you sell low and buy high?
User avatar
dratkinson
Posts: 5264
Joined: Thu Jul 26, 2007 6:23 pm
Location: Centennial CO

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by dratkinson »

ab80 wrote:
should i sell all my bonds and transfer them to cash until bonds bounce back up?
Why would you sell low and buy high?
+1

Why wait until they are high to buy them? It violates the basic principle of buy low, sell high.

If you need bonds, buying them when they are cheap is the preferred method.
d.r.a., not dr.a. | I'm a novice investor, you are forewarned.
Topic Author
Stoney178
Posts: 54
Joined: Thu Aug 08, 2013 12:05 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by Stoney178 »

Well let me ask this, aside from bonds where else can i invest other then domestic equities?

thanks
am
Posts: 3692
Joined: Sun Sep 30, 2007 9:55 am

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by am »

Bonds are going to be losers from a return perspective for a long time. Especially with the low yields right now. Often yields help make up for interest rates rising, but certainly not now.

Having said that, bonds serve a useful purpose in a diversified portfolio. They allow for rebalancing when stocks go on sale. They help reduce your losses in bears. They reduce the volatility of a portfolio and reduce the dispersion of returns. If you are investing for the long term, then there will be many more cycles over the next 50+ years of investing if you are young. Psychologically, nice to see some green when stocks are in the red. Nice to see an interest payment every month. So stay the course!
User avatar
Noobvestor
Posts: 5751
Joined: Mon Aug 23, 2010 1:09 am

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by Noobvestor »

Stoney178 wrote:Well let me ask this, aside from bonds where else can i invest other then domestic equities?

thanks
Bond yields are up, not down. Now is a *better* time to invest in bonds than before. You need to reverse your mentality and see this as a buying opportunity, not a selling one. As for other asset classes ... I would think international equities would be next, but those aren't sufficient diversification. You need fixed-income assets as well, be that cash, CDs or bonds.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
livesoft
Posts: 75087
Joined: Thu Mar 01, 2007 8:00 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by livesoft »

Since September 5th, intermediate-term bond funds are UP a rip-roaring 2%!! And the GNMA bond fund is UP 3%!

Since bond funds are relatively conservative and staid, these moves are positively HUGE! Are we in a bond BUBBLE now?
Wiki This signature message sponsored by sscritic: Learn to fish.
YDNAL
Posts: 13774
Joined: Tue Apr 10, 2007 4:04 pm
Location: Biscayne Bay

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by YDNAL »

Stoney178 wrote:My entire retirement portfolio is about 70% domestic stocks now - i have been informed to diversify a bit more into bonds and international stocks but bonds arent doing well obviously so should i sell all my bonds and transfer them to cash until bonds bounce back up?
Stoney178 wrote:this is long term. its in my individual brokerage account but still part of my overall retirement. may be some flexibility as far as withdrawal with this but am thinking long term.

im referring to a short term bond fund by the way

thanks
Your posts are confusing and lacking details - the reason for this link at the top of the Forum.
link: http://www.bogleheads.org/forum/viewtop ... f=1&t=6212
Last edited by YDNAL on Sat Sep 28, 2013 1:41 pm, edited 1 time in total.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
Topic Author
Stoney178
Posts: 54
Joined: Thu Aug 08, 2013 12:05 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by Stoney178 »

right now i have a short term bond fund with about $20K in there. i put that in cause i wanted a better rate of return then my savings account which is now 0.84. would there be an advantage to sell and buy into an intermediate bond fund?

this is the one ive been looking at switching to.... SGVAX. Right now I have VBISX
Topic Author
Stoney178
Posts: 54
Joined: Thu Aug 08, 2013 12:05 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by Stoney178 »

Also everyone is talking about the bond bubble bursting very soon. so is that more incentive to get out of bonds immediately?
User avatar
Munir
Posts: 2783
Joined: Mon Feb 26, 2007 4:39 pm
Location: Oregon

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by Munir »

livesoft wrote:Since September 5th, intermediate-term bond funds are UP a rip-roaring 2%!! And the GNMA bond fund is UP 3%!

Since bond funds are relatively conservative and staid, these moves are positively HUGE! Are we in a bond BUBBLE now?
Yes. Sell :happy .
John3754
Posts: 1289
Joined: Tue Mar 19, 2013 8:56 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by John3754 »

Stoney178 wrote:Also everyone is talking about the bond bubble bursting very soon. so is that more incentive to get out of bonds immediately?
"Everyone" is talking about the stock market crashing too, so why are you worried about bonds but not stocks?
User avatar
nedsaid
Posts: 14369
Joined: Fri Nov 23, 2012 12:33 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by nedsaid »

Stoney178, anytime is a good time to diversify into International Stocks. Having 30% of your stocks in International Markets is close to the "sweet spot" on the efficient frontiers. Posters on this forum who invest internationally are recommending between 20% and 50% of stocks. I would just do this.

Don't give up on your bonds. So called bond alternatives are expensive too. The "safe" investments that everyone fled to during the 2008-2009 financial crisis and bear market have been bid up in price. Everyone was looking for safe havens for their money. The "safe" money may not be as "safe" as everyone thinks.

The best thing might be to just stay a tad bit stock heavy. Cash returns basically zero right now. If you sit in cash for the next three years and the bond market stays where it is, you will have passed on three years of interest. That would be a bit more than 6% on your money. The big Bond Bear Market of 2013 that Bogleheads have agonized over has seen huge drops in the bond market of 2-3%. The horror of it all!! So I wouldn't go to cash to guard against a small drop in principal when you are forgoing bond interest altogether.

My expectation is that over time that interest rates will go up. Part of this is the Fed Tapering and the end of the Fed bond buying program. Part of it is the expected recovery of the economy. That is my expectation. But nothing says that the markets have to meet my expectations. The bond market could stay at current levels or even rally from here!! Interest rates could drop again!!

So if you have some years before retiring, I would not sweat it. Keep your desired asset allocation and reinvest the dividends from your bond funds. No matter what interest rates do, you should be just fine.
A fool and his money are good for business.
dimdum
Posts: 216
Joined: Fri Mar 04, 2011 2:50 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by dimdum »

If you are too worried about bonds NAV dropping due to increasing interest rate, go short term bonds index.
Falling NAV (bonds price) will be compensated with raising yield (interest rate). Since they are short term (typically 2.5 yrs), they will be stable and maybe able to get you some positive (real return).

Other option CD (~1.0%) won't give you real return (after taking in account inflation).

My point being there are not much option if you want to look for stable funds which give real return.
A mix of short term and IT bonds is what I would suggest.
Topic Author
Stoney178
Posts: 54
Joined: Thu Aug 08, 2013 12:05 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by Stoney178 »

No I already have a short term bond index (VBISX) and I want to sell and buy IT Bond SGVAX since its been performing better (even though exp ratio is higher)
John3754
Posts: 1289
Joined: Tue Mar 19, 2013 8:56 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by John3754 »

Stoney178 wrote:No I already have a short term bond index (VBISX) and I want to sell and buy IT Bond SGVAX since its been performing better (even though exp ratio is higher)
Performance chasing is a poor strategy.
User avatar
nedsaid
Posts: 14369
Joined: Fri Nov 23, 2012 12:33 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by nedsaid »

Can you accept the volatility of your short term bond fund dropping maybe 1/2 of one percent or one percent? After the horrors of the great bond bear market of 2013, one percent still sounds like a lot!! I am being facetious here.

Going to a shorter term bond fund actually is a good idea, particularly if you are retired or near retirement and worried about loss of principal. The trade-off is that you will get less interest. My bond funds are mostly intermediate term and I have determined to let things ride and reinvest the dividends. If you are worried about fluctuation of principal, good old Certificates of Deposit at your FDIC Insured bank are another alternative. A lot depends on your time horizon.
A fool and his money are good for business.
Topic Author
Stoney178
Posts: 54
Joined: Thu Aug 08, 2013 12:05 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by Stoney178 »

No again I currently have a short term bond fund...I asked if I should go to an intermediate bond fund instead
The Wizard
Posts: 13356
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by The Wizard »

John3754 wrote:
Stoney178 wrote:No I already have a short term bond index (VBISX) and I want to sell and buy IT Bond SGVAX since its been performing better (even though exp ratio is higher)
Performance chasing is a poor strategy.
It's a much better strategy for Bond Funds than for Stock Funds...
Attempted new signature...
The Wizard
Posts: 13356
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by The Wizard »

Stoney178 wrote:No again I currently have a short term bond fund...I asked if I should go to an intermediate bond fund instead
My shares in VBILX are DOWN 3.0% YTD.
My money in my Ally savings account is UP 0.63% YTD.
Which one is winning?
Attempted new signature...
User avatar
nedsaid
Posts: 14369
Joined: Fri Nov 23, 2012 12:33 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by nedsaid »

If you want to know whether you should be in a short term fund or an intermediate term fund, we need to know a couple things.

Some people say, take your risk on the stock side of the portfolio and not on the bond side of the portfolio. If you are in that camp, the short term fund is your best bet. If you are like me and are willing to accept a bit of risk in your bond portfolio to get a bit more return, then the intermediate term portfolio is better.

If you are relatively young and have many years to invest new monies and reinvest your dividends, then you should lean towards intermediate term bond funds. Rates will go up and down, your Net Asset Value of your fund will go up and down, and you can go on living with not a care about your bond investments. Over time, things even out. You should get more return (and risk) from intermediate term bonds than short term bonds.

If you are retired or near retirement and believe like I do that interest rates are heading up, you might consider short term bond funds. You might not be able to stomach the volatility of intermediate term bond funds. Presumably, you are taking the dividends from the funds to live on and are not reinvesting them. If you see a big drop in NAV because of higher interest rates, it might be a long time (if ever) that you see a recovery in your principal. You don't have the reinvestment to bail you out. Certificates of Deposit at a Bank or Credit Union are another good possibility.

So I hope that helps.
A fool and his money are good for business.
Topic Author
Stoney178
Posts: 54
Joined: Thu Aug 08, 2013 12:05 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by Stoney178 »

Thanks- I am 39 and am planning to retire at 70-75 and am looking for aggressive growth now but want to stay somewhat balanced in the event of a crash. My total portfolio now is 70% domestic stock and 18% bonds

also the IT bond fund i am looking at SGVAX has 0.96% exp ratio but good returns, another one, MWIMX is 0.69% and lower returns...have a look,,maybe u will see something im missing
User avatar
kwan2
Posts: 384
Joined: Thu Jun 14, 2012 9:13 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by kwan2 »

well your age in bonds would be 40%. timing as investment is consensus, speculation. so, why not buy a bond index funds, and go with what is known, low expense ratios matter.

meanwhile, cross your fingers, there is no repeat of 2008 coming soon. like oct 17th if your 70% in "stocks"

are those "stocks" index funds?
“The history of Paris teaches us that beauty is a by-product of danger, that liberty is at best a consequence of neglect, that wisdom is entwined with decay."
User avatar
nedsaid
Posts: 14369
Joined: Fri Nov 23, 2012 12:33 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by nedsaid »

I am now 54, I have had approximately a 70-30 portfolio since the year 2000. During the two bad bear markets of 2000-2002 and 2008-2009, my portfolio dropped each time about 35%.

At 39, you probably should have intermediate term bonds.

Don't forget to have International Stocks as part of your stock portfolio.

So for someone your age, a 70/30 stock/bond portfolio is about right. I am at 69/31 and am a bit stock heavy for my age because 2% to 2 1/2% interest just does not excite me.

I think age in bonds minus 10 is a good rule of thumb. So I ought to be probably in a 56% stocks/44% bond portfolio now. I am not because of the very low interest rates. So if you want to go a bit more aggressive than 70/30, that is probably okay. But how much a drop in your portfolio can you stomach? My limit seemed to be the 35% drops.
A fool and his money are good for business.
Topic Author
Stoney178
Posts: 54
Joined: Thu Aug 08, 2013 12:05 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by Stoney178 »

Fidelity bond index funds are doing worse than what i already have (the VBISX)
YDNAL
Posts: 13774
Joined: Tue Apr 10, 2007 4:04 pm
Location: Biscayne Bay

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by YDNAL »

YDNAL wrote:
Stoney178 wrote:My entire retirement portfolio is about 70% domestic stocks now - i have been informed to diversify a bit more into bonds and international stocks but bonds arent doing well obviously so should i sell all my bonds and transfer them to cash until bonds bounce back up?
Stoney178 wrote:this is long term. its in my individual brokerage account but still part of my overall retirement. may be some flexibility as far as withdrawal with this but am thinking long term.

im referring to a short term bond fund by the way

thanks
Your posts are confusing and lacking details - the reason for this link at the top of the Forum.
link: http://www.bogleheads.org/forum/viewtop ... f=1&t=6212
Now, I'm not only confused in this thread, but starting to wonder about your other threads and your overall approach to learn.
http://www.bogleheads.org/forum/viewtop ... 0&t=123816
http://www.bogleheads.org/forum/viewtop ... 6#p1813816
http://www.bogleheads.org/forum/viewtop ... 4#p1805684
http://www.bogleheads.org/forum/viewtop ... 9#p1771849
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
Topic Author
Stoney178
Posts: 54
Joined: Thu Aug 08, 2013 12:05 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by Stoney178 »

Its pretty simple actually.

And posting all of my previous threads is passive aggressive behavior
User avatar
LadyGeek
Site Admin
Posts: 69779
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by LadyGeek »

YDNAL wrote:
YDNAL wrote:
Stoney178 wrote:My entire retirement portfolio is about 70% domestic stocks now - i have been informed to diversify a bit more into bonds and international stocks but bonds arent doing well obviously so should i sell all my bonds and transfer them to cash until bonds bounce back up?
Stoney178 wrote:this is long term. its in my individual brokerage account but still part of my overall retirement. may be some flexibility as far as withdrawal with this but am thinking long term.

im referring to a short term bond fund by the way

thanks
Your posts are confusing and lacking details - the reason for this link at the top of the Forum.
link: http://www.bogleheads.org/forum/viewtop ... f=1&t=6212
Now, I'm not only confused in this thread, but starting to wonder about your other threads and your overall approach to learn.
http://www.bogleheads.org/forum/viewtop ... 0&t=123816
http://www.bogleheads.org/forum/viewtop ... 6#p1813816
http://www.bogleheads.org/forum/viewtop ... 4#p1805684
http://www.bogleheads.org/forum/viewtop ... 9#p1771849
The links in human readable format:
- Question about the S&P Index fund
- Thoughts on real estate?
- New to the forum- can use some advice

Stoney-

I see where you are coming from, but let's put this in a different perspective. In order help you the best, it's important that the members see all of the information in one spot. Posting different questions in different threads scatters the information and makes it very difficult to give you the best possible advice.

In order to stay organized, we've come up with a "standard" format which is designed to give us the information we need. If you can supply us with the information in this format, we can answer your questions knowing that we have all the information. Otherwise, we'd be guessing on what to tell you - which is not good. The format is in: Asking Portfolio Questions

The last post in New to the forum- can use some advice and the one by YDNAL are asking you to use this format because we don't have the information we need. It's why YDNAL has listed your prior threads- we're missing the information. You might think that you've given the information, but there are indeed more details missing.

May I recommend you supply the information in the format of Asking Portfolio Questions? There's no need to start a new thread, just add to New to the forum- can use some advice. If you don't understand anything, just ask.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
User avatar
ruralavalon
Posts: 20506
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by ruralavalon »

Stoney178 wrote:Well let me ask this, aside from bonds where else can i invest other then domestic equities?

thanks
Diversify.

Get low investing expenses.

Don't try to chase performance.

In general, invest in a broadly diversified mix, suitable to your age, of:
1. Bond funds
2. Domestic stock index funds
3. International stock index funds
4. REIT index fund

Don't try to guess which type of investment is going to do best this week or this year. You will probably guess wrong.

Keep expenses low, for higher net return. Low expenses are the best guarantee of improved return.

Put all of your information in one place, so actual concrete investing ideas for improvement can be given without having to guess what your current investments consist of.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Topic Author
Stoney178
Posts: 54
Joined: Thu Aug 08, 2013 12:05 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by Stoney178 »

Ok thank you- isnt the REIT basically like following the S&P500?
Last edited by Stoney178 on Sun Sep 29, 2013 12:11 pm, edited 1 time in total.
User avatar
cflannagan
Posts: 961
Joined: Sun Oct 21, 2007 11:44 am
Location: Working Remotely

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by cflannagan »

Did those so-called "Wall Street professionals" succeed in telling others to abandon the bond market completely? What's with threads like this?
User avatar
LadyGeek
Site Admin
Posts: 69779
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by LadyGeek »

cflannagan wrote:Did those so-called "Wall Street professionals" succeed in telling others to abandon the bond market completely? What's with threads like this?
It's a lot of things. With interest rates low, investors want more return. You can't get more return without taking more risk (there is no free lunch). The risk is in the stock market.

These threads reflect someone trying to understand what's going on and make a good investment choice. Without further information (like from this forum), there's not much else to go on. So, the OP is asking.

Stoney - REITs have the volatility (fluctuation of returns) like stocks, but they are not stocks. See: Real estate investment trust, look under Role in a portfolio.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
HurdyGurdy
Posts: 1177
Joined: Wed May 09, 2012 10:21 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by HurdyGurdy »

As Nisiprius wrote some time ago,
h) I think bonds will not do as well over the next thirty years as they did during the last thirty. So what? Suppose someone says "I don't think Walt Disney World is as good as it used to be," what do you do, take your 4-year old to a Wagner opera as a substitute? If you need Disney World, you need Disney World. If you need bonds, you need bonds.
(http://www.bogleheads.org/forum/viewtop ... st=1468140)
User avatar
Phineas J. Whoopee
Posts: 9675
Joined: Sun Dec 18, 2011 6:18 pm

Re: Is Bond/Bond Fund investing just a bad idea all around n

Post by Phineas J. Whoopee »

"Bond"

That's a nice, simple, four letter (without any vulgarity) word we like to use. But it gets us into trouble with posts like the OP's.

"Fixed income" would be better. But it's longer. And still it's inadequate.

"Set of assets with far less volatility than equities which we can use to dampen the swings of an otherwise very risky portfolio, and even use to help with rebalancing for investors who choose that path" is probably pretty good. But who wants to stand around intoning that all day?

To the OP: if you don't want to own bonds you don't have to. If you don't want to own fixed income you don't have to. You don't even have to hold anything aside from stocks, if that's what floats your boat.

But from an overall portfolio perspective it's probably best to mix riskier assets with less risky ones, and bonds are most of what there is that's suitable for the purpose.

Pay no attention to net asset value. Pay attention to the accumulated worth of your bond portfolio with dividends reinvested. Bond fund NAVs fluctuate, but that effect is insignificant compared to the massive effect of compounding interest over long periods of time.

PJW
Post Reply