Increase Bonds & Where To?

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ronin
Posts: 37
Joined: Wed Apr 22, 2009 9:17 pm

Increase Bonds & Where To?

Post by ronin » Mon Jan 24, 2011 11:32 pm

I’m currently at a 90/10 (stocks/bonds) split in my 100% tax-sheltered/deferred retirement portfolio. The 10% in bonds is currently represented in the Wellesley Fund, however I’m not married to it. I don’t envision retiring any sooner than 25 years from now, however I’m considering shifting my bond allocation to somewhere between 20%-40%.

I would appreciate help in understanding:

1 – Why do the Vanguard Target Retirement Fund 2040 and 2035 have about 10% in bonds, but the 2030/2025 jumps to about 20%?

2 – The logic behind some people’s recommendations to avoid TBM and instead pick up a combination of a short and intermediate index fund – does it have something to do with avoiding MBS securities, etc.?

3 – What percentage of a TIPs bond fund (if any) is advisable to make up my bond portfolio? I don’t have an interest in purchasing individual bonds directly at this point.

4 - Any suggested Vanguard bond fund portfolios

Thank you!

    Beantown85
    Posts: 1264
    Joined: Wed Oct 07, 2009 9:11 am

    Re: Increase Bonds & Where To?

    Post by Beantown85 » Tue Jan 25, 2011 8:44 am

    ronin wrote:1 – Why do the Vanguard Target Retirement Fund 2040 and 2035 have about 10% in bonds, but the 2030/2025 jumps to about 20%?

    2 – The logic behind some people’s recommendations to avoid TBM and instead pick up a combination of a short and intermediate index fund – does it have something to do with avoiding MBS securities, etc.?

    3 – What percentage of a TIPs bond fund (if any) is advisable to make up my bond portfolio? I don’t have an interest in purchasing individual bonds directly at this point.

    4 - Any suggested Vanguard bond fund portfolios

    Thank you!
      1 - This is why when TR are suggested here, they are suggest by choosing the right AA, not using the year.

      2 - Some people avoid TBM for the MBS, some avoid it to try and shorten duration. Some people prefer all treasuries. I personally hold TBM.

      3 - 0-50% is fine. There is a lot of good info on the TBM/TIPS recommended split here, but no consensus (that I know of).

      4 - 100% TBM. 50/50 TBM/TIPS. 50/50 ST/IT treasuries.

      Ed 2
      Posts: 1510
      Joined: Sat May 15, 2010 9:34 am

      Post by Ed 2 » Tue Jan 25, 2011 8:53 am

      I just made new contribution into Roth IRA with new money into Total Bond Market Index Fund and Short Term Bond Tax Exempt Index fund into my taxable account rebalanced annually. Good time to rebalance in January. if rates rise, so be it, better yields.
      "The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel

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