Age in Bonds?

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bck63
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Age in Bonds?

Post by bck63 » Fri Mar 29, 2019 5:36 am

A simple question. I'm 55 years old, and have about $255,000 saved for retirement. I save about 25 percent of my gross income. I'll be working until 65 or 67, and will be relying on my investments and social security.

Is age in bonds such a bad idea? I'm not sure how I'd handle a big drop in my savings once I hit retirement.

ivk5
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Re: Age in Bonds?

Post by ivk5 » Fri Mar 29, 2019 5:43 am

Simplistic rules of thumb are a poor substitute for assessing your personal risk tolerance.

If 45/55 is where you need to be to sleep at night and stick to your AA come what may, then it may be right for you.

Worth looking at historical max drawdowns for that allocation, as well as your inflation risk due to lower equity exposure, and make sure the return assumptions you use in your planning are not over-optimistic.

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beyou
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Re: Age in Bonds?

Post by beyou » Fri Mar 29, 2019 5:48 am

I would consider a target date fund, which may help avoid the “not sure how I would handle” issue. Simple, leaves the rebalancing to Vanguard, something you can and should set and forget. Keeping up with the savings is most critical IMO.

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bck63
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Re: Age in Bonds?

Post by bck63 » Fri Mar 29, 2019 1:12 pm

ivk5 wrote:
Fri Mar 29, 2019 5:43 am
Simplistic rules of thumb are a poor substitute for assessing your personal risk tolerance.

If 45/55 is where you need to be to sleep at night and stick to your AA come what may, then it may be right for you.

Worth looking at historical max drawdowns for that allocation, as well as your inflation risk due to lower equity exposure, and make sure the return assumptions you use in your planning are not over-optimistic.
Thanks for the response. I've been doing some calculations and at my current savings rate and a 4% withdrawal rate I would be okay at age in bonds. I've always been conservative with my return assumptions. I use 2%. Of course I would desire more. Just wondering how I could convince myself to be open to more risk. But maybe where I'm at is okay.

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galeno
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Re: Age in Bonds?

Post by galeno » Fri Mar 29, 2019 1:13 pm

We use "age in bonds". We like it.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 4.0%. TER = 0.4%. Port Yield = 2.82%. Term = 33 yr. FI Duration = 6.0 yr. Portfolio survival probability = 95%.

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bck63
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Re: Age in Bonds?

Post by bck63 » Fri Mar 29, 2019 1:24 pm

beyou wrote:
Fri Mar 29, 2019 5:48 am
I would consider a target date fund, which may help avoid the “not sure how I would handle” issue. Simple, leaves the rebalancing to Vanguard, something you can and should set and forget. Keeping up with the savings is most critical IMO.
Thanks very much. I'm currently in the 2025 Vanguard Target Retirment Fund (VTTVX) in tax deferred and may use my taxable account to get me to age in bonds overall.

I appreciate the input.

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Wiggums
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Re: Age in Bonds?

Post by Wiggums » Fri Mar 29, 2019 1:35 pm

It sounds like your AA works well for you. Considering your target retirement age and being a conservative investor, it looks like you are in good shape.

While rules of thumbs are useful to people as general guidelines, they may be too oversimplified in many situations, leading to underestimating or overestimating an individual’s needs.

Rules of thumb do not account for specific circumstances or factors occurring at a particular time, or that could change over time, which should be considered for making sound financial decisions. For example, in a tight job market, an emergency fund amounting to six months of household expenses does not consider the possibility of extended unemployment. As another example, buying life insurance based on a multiple of income does not account for the specific needs of the surviving family, which include a mortgage, the need for college funding and an extended survivor income for a non-working spouse.

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Taylor Larimore
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Two Suggestions

Post by Taylor Larimore » Fri Mar 29, 2019 6:16 pm

bck63 wrote:
Fri Mar 29, 2019 5:36 am
A simple question. I'm 55 years old, and have about $255,000 saved for retirement. I save about 25 percent of my gross income. I'll be working until 65 or 67, and will be relying on my investments and social security.

Is age in bonds such a bad idea? I'm not sure how I'd handle a big drop in my savings once I hit retirement.
bck63:

I doubt if anyone knows their exact best asset allocation between stocks and bonds. I'll offer two suggestion:

1. An investor should expect their portfolio to decline at least 50% of their stock allocation in the next bad bear market. In other words, a portfolio with a 60% stock allocation will probably decline 30%. If that is going to make you sell or lose sleep, you should lower your stock allocation now.

2. This Vanguard Questionnaire will help you make your all-important stock/bond decision.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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bck63
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Re: Two Suggestions

Post by bck63 » Fri Mar 29, 2019 6:38 pm

Taylor Larimore wrote:
Fri Mar 29, 2019 6:16 pm
bck63 wrote:
Fri Mar 29, 2019 5:36 am
A simple question. I'm 55 years old, and have about $255,000 saved for retirement. I save about 25 percent of my gross income. I'll be working until 65 or 67, and will be relying on my investments and social security.

Is age in bonds such a bad idea? I'm not sure how I'd handle a big drop in my savings once I hit retirement.
bck63:

I doubt if anyone knows their exact best asset allocation between stocks and bonds. I'll offer two suggestion:

1. An investor should expect their portfolio to decline at least 50% of their stock allocation in the next bad bear market. In other words, a portfolio with a 60% stock allocation will probably decline 30%. If that is going to make you sell or lose sleep, you should lower your stock allocation now.

2. This Vanguard Questionnaire will help you make your all-important stock/bond decision.

Best wishes.
Taylor
Thank you for taking the time to respond Mr. Larimore! I have decided to reduce my portfolio to about age in bonds, which would be approximately a 20% loss in the worst of cases (based on past events, at least). That, I could handle.

Thanks again for the help. Best wishes to you as well.
Brian

nix4me
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Re: Age in Bonds?

Post by nix4me » Fri Mar 29, 2019 7:32 pm

Age in bonds is 80's behavior.
Bonds are terrible for wealth accumulation phase.

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ruralavalon
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Re: Age in Bonds?

Post by ruralavalon » Fri Mar 29, 2019 7:45 pm

bck63 wrote:
Fri Mar 29, 2019 5:36 am
A simple question. I'm 55 years old, and have about $255,000 saved for retirement. I save about 25 percent of my gross income. I'll be working until 65 or 67, and will be relying on my investments and social security.

Is age in bonds such a bad idea? I'm not sure how I'd handle a big drop in my savings once I hit retirement.
No, age in bonds is not a bad idea.

Age in bonds is a just a rule of thumb, and a good starting point for assessing risk tolerance. Asset allocation is a very personal decision which you must make based on your own ability, willingness and need to take risk.

bck63 wrote:
Fri Mar 29, 2019 6:38 pm
Taylor Larimore wrote:
Fri Mar 29, 2019 6:16 pm
bck63 wrote:
Fri Mar 29, 2019 5:36 am
A simple question. I'm 55 years old, and have about $255,000 saved for retirement. I save about 25 percent of my gross income. I'll be working until 65 or 67, and will be relying on my investments and social security.

Is age in bonds such a bad idea? I'm not sure how I'd handle a big drop in my savings once I hit retirement.
bck63:

I doubt if anyone knows their exact best asset allocation between stocks and bonds. I'll offer two suggestion:

1. An investor should expect their portfolio to decline at least 50% of their stock allocation in the next bad bear market. In other words, a portfolio with a 60% stock allocation will probably decline 30%. If that is going to make you sell or lose sleep, you should lower your stock allocation now.

2. This Vanguard Questionnaire will help you make your all-important stock/bond decision.

Best wishes.
Taylor
Thank you for taking the time to respond Mr. Larimore! I have decided to reduce my portfolio to about age in bonds, which would be approximately a 20% loss in the worst of cases (based on past events, at least). That, I could handle.

Thanks again for the help. Best wishes to you as well.
Brian
Age in bonds is the right allocation for you at age 55 and 10-12 years to retirement, if that allocation gives you an amount of risk you could handle.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: Age in Bonds?

Post by z3r0c00l » Fri Mar 29, 2019 8:04 pm

I looked at how various portfolios did in the past and decided on a simple rule that I can follow easily:

Age-10 in bonds with 5% precision, rebalancing quarterly. At 60, I don't intend to ever drop below 50/50 but who knows what the world will be like then.

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Phineas J. Whoopee
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Re: Age in Bonds?

Post by Phineas J. Whoopee » Fri Mar 29, 2019 8:41 pm

Age in bonds is a starting point for people who don't have another. It's not bad. Will it produce the highest possible returns? Probably not. Will it protect an investor from emotionally going all-in during a bull stock market then selling out if it drops? Yes it will. It's a matter of risk management.

If you have some other reasoning, you can use that. If you don't, age in bonds ain't bad.

We have an ALL CAPS member trying to prove market timing works in general and for anyone. It's come up before. I wish the person all the luck in the world.

PJW
Last edited by Phineas J. Whoopee on Fri Mar 29, 2019 8:51 pm, edited 1 time in total.

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willthrill81
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Re: Age in Bonds?

Post by willthrill81 » Fri Mar 29, 2019 8:48 pm

bck63 wrote:
Fri Mar 29, 2019 5:36 am
A simple question. I'm 55 years old, and have about $255,000 saved for retirement. I save about 25 percent of my gross income. I'll be working until 65 or 67, and will be relying on my investments and social security.

Is age in bonds such a bad idea? I'm not sure how I'd handle a big drop in my savings once I hit retirement.
At your present age, probably not. For a 20 year old? Probably.

The data suggests that a 25/75 AA has been no more volatile than a 0/100 AA but has had higher returns than the latter. To the extent that we expect that to remain the case going forward, if we used the 'age in bonds' rule, however, those older than age 75 would be unnecessarily conservative.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Age in Bonds?

Post by gamboolman » Sat Mar 30, 2019 12:11 am

bc
We used FIRECalc, Portfolio Visualizer, I-orp, the ole homemade spreadsheets, etc....... to run many scenarios of different asset allocations for our retirement criteria, i.e., our nest egg and estimated expenses vs the different AA's.

For us and our situation: Age 59 and planning to retire at end of this year. Over the last 3 to 4 years we have moved our asset allocation from ~70/30 stocks/bonds to 55/45

Really recommend running the numbers for your specific criteria.

gamboolman.....

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bck63
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Re: Two Suggestions

Post by bck63 » Sat Mar 30, 2019 6:06 am

Taylor Larimore wrote:
Fri Mar 29, 2019 6:16 pm
bck63 wrote:
Fri Mar 29, 2019 5:36 am
A simple question. I'm 55 years old, and have about $255,000 saved for retirement. I save about 25 percent of my gross income. I'll be working until 65 or 67, and will be relying on my investments and social security.

Is age in bonds such a bad idea? I'm not sure how I'd handle a big drop in my savings once I hit retirement.
bck63:

I doubt if anyone knows their exact best asset allocation between stocks and bonds. I'll offer two suggestion:

1. An investor should expect their portfolio to decline at least 50% of their stock allocation in the next bad bear market. In other words, a portfolio with a 60% stock allocation will probably decline 30%. If that is going to make you sell or lose sleep, you should lower your stock allocation now.

2. This Vanguard Questionnaire will help you make your all-important stock/bond decision.

Best wishes.
Taylor
One more thought on this. In 2008-9, I didn't even look at my portfolio. Just let it ride and went on with my life. Nowadays, I pay much more attention, partly because in addition to my tax-deferred accounts I now have a taxable account which I contribute two every pay check. It's harder for me to not pay attention to it.

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burt
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Re: Age in Bonds?

Post by burt » Sat Mar 30, 2019 6:55 am

Age in bonds works for me, and probably for most of the general population of modest means.
I don't have the "ability" or "need" to take risk.

burt

3feetpete
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Re: Age in Bonds?

Post by 3feetpete » Sat Mar 30, 2019 9:13 am

To me that is too conservative. My preference is to have enough in bonds so that I could live by selling bonds and SS for five years without having to sell stocks. I'm 67 and have been retired two years. Since I am not collecting SS until I'm 70 I have about 30% in bonds now. When I start collecting SS it will meet most of my requirements and I'll gradually reduce my bonds to 20%. I actually started out with 25% bonds but with stocks at current high levels I chose to live exclusivley off of stocks for the last two years and let my bond percentage increase. I probably won't sell bonds until the next major downturn in stocks.

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vineviz
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Re: Age in Bonds?

Post by vineviz » Sat Mar 30, 2019 9:35 am

willthrill81 wrote:
Fri Mar 29, 2019 8:48 pm
bck63 wrote:
Fri Mar 29, 2019 5:36 am
A simple question. I'm 55 years old, and have about $255,000 saved for retirement. I save about 25 percent of my gross income. I'll be working until 65 or 67, and will be relying on my investments and social security.

Is age in bonds such a bad idea? I'm not sure how I'd handle a big drop in my savings once I hit retirement.
At your present age, probably not. For a 20 year old? Probably.

The data suggests that a 25/75 AA has been no more volatile than a 0/100 AA but has had higher returns than the latter. To the extent that we expect that to remain the case going forward, if we used the 'age in bonds' rule, however, those older than age 75 would be unnecessarily conservative.
Even a stopped clock is right twice as often as "age in bonds".

Image
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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goingup
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Re: Age in Bonds?

Post by goingup » Sat Mar 30, 2019 9:37 am

bck63 wrote:
Fri Mar 29, 2019 1:24 pm
beyou wrote:
Fri Mar 29, 2019 5:48 am
I would consider a target date fund, which may help avoid the “not sure how I would handle” issue. Simple, leaves the rebalancing to Vanguard, something you can and should set and forget. Keeping up with the savings is most critical IMO.
Thanks very much. I'm currently in the 2025 Vanguard Target Retirment Fund (VTTVX) in tax deferred and may use my taxable account to get me to age in bonds overall.

I appreciate the input.
Just as another data point..the Vanguard TRF 2030 is about 70/30. Since you plan to retire in about 10 years, this is something to consider.

Watching your balance too closely isn't helpful for long-term thinking. A behavioral finance theory called Myopic Loss Aversion suggests that we feel such intense pain at losses that we go to greater-than-warranted lengths to avoid them. In short, we become too conservative. The remedy is to not look too frequently at portfolio balances and feel the day-to-day stock market volatility.

My advice is to pick an allocation that is appropriate given your time frame of investing, and then try very hard to leave it alone. :beer

UpperNwGuy
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Re: Age in Bonds?

Post by UpperNwGuy » Sat Mar 30, 2019 9:52 am

My view is that the expected year of retirement is more important than chronological age.

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willthrill81
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Re: Age in Bonds?

Post by willthrill81 » Sat Mar 30, 2019 10:21 am

burt wrote:
Sat Mar 30, 2019 6:55 am
I don't have the "ability" or "need" to take risk.
Would you mind explaining that? Those with 'excess' funds may have no need, but they seem to nearly always have the ability to take on some risk.

One of the reasons I'm not a fan of the 'need, willingness, and ability' quote of Swedroe's is that it strongly insinuates that there are risk-free roads. There are none.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Age in Bonds?

Post by reisner » Sat Mar 30, 2019 10:36 am

I'm 73, my wife 59. We have only 39% in bonds. But: we can live on my pension and SS and dividends; our house is free and clear; we have medical and dental coverage along with the pension; in eight years, when my wife reaches 67, our SS will go up by half; and perhaps most importantly, the amount in bonds is probably more than we will ever spend. So for us I don't think the rule applies. It makes no sense to sell any of the stock index, which is all in a taxable fund, in order to keep to an arbitrary rule.

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SpringMan
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Re: Age in Bonds?

Post by SpringMan » Sat Mar 30, 2019 11:00 am

We were 60% bonds at age 60 but now at age 72 we are 50/50. We sold from bond funds in our IRAs and invested it in stock funds in a taxable account. Since I don't want to take more risk than 50/50, future RMDs will go into a tax exempt bond fund in taxable. We are in the 22% federal tax bracket which may mean a tax exempt fund does not make sense but better than a MM fund.
Best Wishes, SpringMan

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patrick013
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Re: Age in Bonds?

Post by patrick013 » Sat Mar 30, 2019 11:57 am

bck63 wrote:
Fri Mar 29, 2019 5:36 am
Is age in bonds such a bad idea? I'm not sure how I'd handle a big drop in my savings once I hit retirement.
Age in Bonds developed at a time when interest rates were much higher. Easily twice as high. Low rates always make decisions harder bond wise. Age in Bonds stop at 50 seems like a good idea but higher bond AA's are also justifiable. Just because an equity AA of 90% or 75% will produce higher risk and return doesn't mean it's going to in every time frame. Especially in your 70's when the last thing needed is a major market crash which would wreck your retirement budget.

Living comfortably with a high bond AA is living comfortably, you have to decide. I think higher equity AA's in retirement are for those with discretionary funds. Funds not really needed in retirement to live comfortably. A market crash affecting those funds for a few years or more would have minimal effect on the retirement budget. Any market can crash but Age in Bonds can keep your nondiscretionary funds safe and higher returns every decade may not be the case going forward.
age in bonds, buy-and-hold, 10 year business cycle

HoosierJim
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Re: Age in Bonds?

Post by HoosierJim » Sat Mar 30, 2019 12:09 pm

I think I need to be more bonds too but this isn't the most appealing chart:

Daily Treasury Yield Curve Rates
Image

What does age in bond rules of thumb say about duration? Doesn't look rewarding to be 2-5 years out. Not sure how anyone or any institution could buy 30 year bonds? Could somebody explain? If you stay shorter durations does that usually cover inflation?

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Re: Age in Bonds?

Post by radiowave » Sat Mar 30, 2019 12:29 pm

3feetpete wrote:
Sat Mar 30, 2019 9:13 am
To me that is too conservative. My preference is to have enough in bonds so that I could live by selling bonds and SS for five years without having to sell stocks. I'm 67 and have been retired two years. Since I am not collecting SS until I'm 70 I have about 30% in bonds now. When I start collecting SS it will meet most of my requirements and I'll gradually reduce my bonds to 20%. I actually started out with 25% bonds but with stocks at current high levels I chose to live exclusivley off of stocks for the last two years and let my bond percentage increase. I probably won't sell bonds until the next major downturn in stocks.
This is a good approach. Instead of modeling a portfolio based on a % bonds, consider how many years do you need in bonds to fund retirement then the rest in equity. For us, 55/45 AA (45% bonds) gives us about 10 years for anticipated expenses. If you have too much in bonds, e.g. fund out 20-25 yrs in retirement, you may be sacrificing growth in the long term.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

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willthrill81
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Re: Age in Bonds?

Post by willthrill81 » Sat Mar 30, 2019 12:57 pm

vineviz wrote:
Sat Mar 30, 2019 9:35 am
willthrill81 wrote:
Fri Mar 29, 2019 8:48 pm
bck63 wrote:
Fri Mar 29, 2019 5:36 am
A simple question. I'm 55 years old, and have about $255,000 saved for retirement. I save about 25 percent of my gross income. I'll be working until 65 or 67, and will be relying on my investments and social security.

Is age in bonds such a bad idea? I'm not sure how I'd handle a big drop in my savings once I hit retirement.
At your present age, probably not. For a 20 year old? Probably.

The data suggests that a 25/75 AA has been no more volatile than a 0/100 AA but has had higher returns than the latter. To the extent that we expect that to remain the case going forward, if we used the 'age in bonds' rule, however, those older than age 75 would be unnecessarily conservative.
Even a stopped clock is right twice as often as "age in bonds".

Image
It certainly appears that way.

On a risk-adjusted basis, it seems that as long as the investor could handle the volatility, a pretty good argument could be made to be 100% stock until 10 years prior to one's anticipated retirement date and only then start incorporating some fixed income. I'm not saying that that would be an optimal strategy, not the least of which is because I don't believe that there exists an 'optimal' strategy for everyone, but it certainly seems more plausible to me than 'age in bonds'.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Amphian
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Re: Age in Bonds?

Post by Amphian » Sat Mar 30, 2019 1:56 pm

willthrill81 wrote:
Sat Mar 30, 2019 12:57 pm
On a risk-adjusted basis, it seems that as long as the investor could handle the volatility, a pretty good argument could be made to be 100% stock until 10 years prior to one's anticipated retirement date and only then start incorporating some fixed income. I'm not saying that that would be an optimal strategy, not the least of which is because I don't believe that there exists an 'optimal' strategy for everyone, but it certainly seems more plausible to me than 'age in bonds'.
I'm sort of doing that with the exception that I am buying I Bonds now, since they have a yearly limit. My retirement investments are all stock except for that, and I plan to look at the ratio when I get a dozen or so years out from retirement and decide how much to shift and into what kind of fixed income.

J295
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Re: Age in Bonds?

Post by J295 » Sat Mar 30, 2019 2:47 pm

Depends.
110- age in stocks works for us as retirees.

Perhaps some bond naysayers are much younger or didn’t have material assets in 2001-01, 2007- 03/2009, or .....

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willthrill81
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Re: Age in Bonds?

Post by willthrill81 » Sat Mar 30, 2019 4:53 pm

J295 wrote:
Sat Mar 30, 2019 2:47 pm
Perhaps some bond naysayers are much younger or didn’t have material assets in 2001-01, 2007- 03/2009, or .....
Or maybe they've seen the real returns of bonds from 1977-1981 and believe that they aren't as 'safe' as many believe them to be.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Phineas J. Whoopee
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Re: Age in Bonds?

Post by Phineas J. Whoopee » Sat Mar 30, 2019 9:09 pm

willthrill81 wrote:
Sat Mar 30, 2019 4:53 pm
J295 wrote:
Sat Mar 30, 2019 2:47 pm
Perhaps some bond naysayers are much younger or didn’t have material assets in 2001-01, 2007- 03/2009, or .....
Or maybe they've seen the real returns of bonds from 1977-1981 and believe that they aren't as 'safe' as many believe them to be.
Can the cognoscenti among us please, possibly, avoid the word safe in our posts?

PJW

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willthrill81
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Re: Age in Bonds?

Post by willthrill81 » Sat Mar 30, 2019 10:21 pm

Phineas J. Whoopee wrote:
Sat Mar 30, 2019 9:09 pm
willthrill81 wrote:
Sat Mar 30, 2019 4:53 pm
J295 wrote:
Sat Mar 30, 2019 2:47 pm
Perhaps some bond naysayers are much younger or didn’t have material assets in 2001-01, 2007- 03/2009, or .....
Or maybe they've seen the real returns of bonds from 1977-1981 and believe that they aren't as 'safe' as many believe them to be.
Can the cognoscenti among us please, possibly, avoid the word safe in our posts?

PJW
I completely concur, which is why I bracketed the word. The phrase "bonds are for safety" literally makes me cringe.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

NMBob
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Re: Age in Bonds?

Post by NMBob » Sat Mar 30, 2019 11:28 pm


rgs92
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Re: Age in Bonds?

Post by rgs92 » Sat Mar 30, 2019 11:41 pm

I prefer 60/40 forever. Vanguard Balanced Index is good for this IMHO. It's the ultimate simplicity.

stocknoob4111
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Re: Age in Bonds?

Post by stocknoob4111 » Sun Mar 31, 2019 12:57 am

For reference Fidelity Target Date 2030 (FFFEX) which syncs with your retirement horizon has 25% in bonds. I plan to retire about the same time as you at around 55 and have 17.5% bonds and i'm happy with that allocation although my situation may be very different from yours.

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burt
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Re: Age in Bonds?

Post by burt » Sun Mar 31, 2019 5:57 am

willthrill81 wrote:
Sat Mar 30, 2019 10:21 am
burt wrote:
Sat Mar 30, 2019 6:55 am
I don't have the "ability" or "need" to take risk.
Would you mind explaining that? Those with 'excess' funds may have no need, but they seem to nearly always have the ability to take on some risk.

One of the reasons I'm not a fan of the 'need, willingness, and ability' quote of Swedroe's is that it strongly insinuates that there are risk-free roads. There are none.
I met my goal of maintaining a modest standard of living in retirement, so I have no need to take risk. Because my standard of living is modest, I don't have the ability to take risk. I refuse to give up my Wednesday meatloaf dinner at the local diner, in the event my investments go south.

I can't eliminate risk, but I can certainly reduce it.

burt

international001
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Re: Age in Bonds?

Post by international001 » Sun Mar 31, 2019 7:34 am

Going back to topic,

consider also glide paths. e.g. target for 30% of stocks at 65 and increase it slowly so you get to 60% at 80

https://www.kitces.com/blog/managing-po ... -red-zone/

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willthrill81
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Location: USA

Re: Age in Bonds?

Post by willthrill81 » Sun Mar 31, 2019 9:20 am

burt wrote:
Sun Mar 31, 2019 5:57 am
willthrill81 wrote:
Sat Mar 30, 2019 10:21 am
burt wrote:
Sat Mar 30, 2019 6:55 am
I don't have the "ability" or "need" to take risk.
Would you mind explaining that? Those with 'excess' funds may have no need, but they seem to nearly always have the ability to take on some risk.

One of the reasons I'm not a fan of the 'need, willingness, and ability' quote of Swedroe's is that it strongly insinuates that there are risk-free roads. There are none.
I met my goal of maintaining a modest standard of living in retirement, so I have no need to take risk. Because my standard of living is modest, I don't have the ability to take risk. I refuse to give up my Wednesday meatloaf dinner at the local diner, in the event my investments go south.

I can't eliminate risk, but I can certainly reduce it.

burt
Thank you.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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