Just retired

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Wog
Posts: 1
Joined: Fri Oct 16, 2020 1:59 pm

Just retired

Post by Wog »

Just retired with 403 b invested in vanguard 2020 fund Want to move to ira with total stock market index and total international stock index. Was wondering on the bond side any suggestions. Total bond index and total int bond index or total bond index with intermediate inflation protected securities index. How bought short term tips?
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ruralavalon
Posts: 19417
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Just retired

Post by ruralavalon »

Congratulations on your retirement :D .

Wog wrote: Fri Oct 16, 2020 2:09 pm Just retired with 403 b invested in vanguard 2020 fund Want to move to ira with total stock market index and total international stock index. Was wondering on the bond side any suggestions. Total bond index and total int bond index or total bond index with intermediate inflation protected securities index. How bought short term tips?
I would not use the international bond fund.

In my opinion either total bond, or total bond plus a TIPS fund, would be reasonable. It's hard to predict which might be best.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
mhalley
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Joined: Tue Nov 20, 2007 6:02 am

Re: Just retired

Post by mhalley »

Bogleheads have not jumped on the intl bond fund bandwagon yet. Whether to use tips or not is difficult. I keep thinking about adding them yet never do after being retired 5 years.
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Watty
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Joined: Wed Oct 10, 2007 3:55 pm

Re: Just retired

Post by Watty »

When looking at an international bond fund one thing to realize is that most(or all?) of Vanguards international bond funds are currency hedged so that if the dollar goes up or down the fund will not change in value.

The Vanguard International Bond fund only has a yield of 0.26% and it has a duration of 8.4 years which mean that if interest rates go up by 1% you can expect for the fund to go down in value by about 8.4%.

If the international bond fund was not currency hedged then it at least it could do well if the dollar dropped in value.

I didn't really like that since it I did not see any likely upside to owning it and lots of ways that they could be hurt including not keeping up with inflation. I don't mind taking some risk but I want to be paid for taking the risk.

Last spring I moved away from a Vanguard Target date fund, which has a significant international bond holding, just to get away from the international bond fund.

There was not any other bond fund that I could get excited about so set up a three or four fund portfolio where I have more short term TIPS instead of the International Bonds. I do not expect to keep my investments like this forever but with the pandemic and weird politics going on felt it was a good time to be defensive since I am retired. This could no doubt be classified as market timing but I am OK with that.
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