Do you hold your age in bonds?

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bottlecap
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Re: Do you hold your age in bonds?

Post by bottlecap » Fri Jan 27, 2012 10:40 am

I'm about age - 10 in bonds. I'll probably continue with this formula until maybe I am close to retirement. It's going to be dependent on how much I have at retirement, though. If I'm shorter than I hoped, I'll probably bump it up to age in bonds. If not, I'll probably stick with the formula.

JT

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fundtalker123
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Re: Do you hold your age in bonds?

Post by fundtalker123 » Fri Jan 27, 2012 12:17 pm

dbr wrote:Well, a TSM 100% equity allocation will not outperform an SV tilted asset allocation which will not outperform a 100% SV allocation.
Huh? You know this because you have time traveled to the future and back?

dbr
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Re: Do you hold your age in bonds?

Post by dbr » Fri Jan 27, 2012 12:53 pm

fundtalker123 wrote:
dbr wrote:Well, a TSM 100% equity allocation will not outperform an SV tilted asset allocation which will not outperform a 100% SV allocation.
Huh? You know this because you have time traveled to the future and back?
This is just a reference to the expected return (in the statistical meaning of the word) as assessed by most everyone in the industry today. The comment was a response to an observation that a 100% equity allocation will outperform a less than 100% equity allocation. That comment is also understood to be framed as an expectation in the statistical sense. The point of my comment is that if a person wants to choose an asset allocation based on outperformance, there is no reason to stop at 100% equities.

It goes without saying that investors should be making choices based on more considerations than return and that expected return is not a guarantee of return.

Rajsx
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Re: Do you hold your age in bonds?

Post by Rajsx » Fri Jan 27, 2012 6:59 pm

I am 55, DW is 50. The Target AA is 45% Stocks & 55% fixed but presently is 49 St and 51% fixed.
It may be the recent market surge, and secondly there is no room for fixed in the Tax advantaged accounts, apart from using Tax Exempt Inter Bond MF in the Taxable accounts. I look forward to adding some more bonds into Roth IRA this year.
We do not stop laughing because we grow old, we grow old because we stop laughing !!

403bob
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Re: Do you hold your age in bonds?

Post by 403bob » Fri Jan 27, 2012 7:18 pm

Bonds = Age - 4. (Almost 64 years old. Have 60% bonds.)

Bob

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Littlefinger
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Re: Do you hold your age in bonds?

Post by Littlefinger » Fri Jan 27, 2012 7:31 pm

age-10

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wander
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Re: Do you hold your age in bonds?

Post by wander » Fri Jan 27, 2012 7:45 pm

Equity:
- 100 - Age (conservative)
- 110 - Age (moderate)
- 120 - Age (aggressive)

Tony_L
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Re: Do you hold your age in bonds?

Post by Tony_L » Fri Jan 27, 2012 8:14 pm

I use 120 minus my wife's age in equities. She is one year younger than me. I change it around her birthday each year.

bungalow10
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Re: Do you hold your age in bonds?

Post by bungalow10 » Fri Jan 27, 2012 10:13 pm

close.

We are 33ish and have about 30% in bonds. I think I'll hold at 30% for awhile.
An elephant for a dime is only a good deal if you need an elephant and have a dime.

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ray.james
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Re: Do you hold your age in bonds?

Post by ray.james » Fri Jan 27, 2012 10:18 pm

I am 26. Hold age + 4 at 30% bonds

I don't think the extra return for the risk is worth it beyond 80% stocks.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939

ARB57
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Re: Do you hold your age in bonds?

Post by ARB57 » Fri Jan 27, 2012 11:20 pm

56...retired a year ago. 40% equities/60% fixed income. Technically, of the 60% fixed income, only 2% is in bonds. The rest is in CD's averaging about 5%. Once the CD's mature, I will likely convert some/much of that money to bonds, depending upon interest rates at the time.

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Goldfinger
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Re: Do you hold your age in bonds?

Post by Goldfinger » Sat Jan 28, 2012 10:36 am

AA 54/46

I like age in bonds as a starting point, but in our case, age in bonds is our proper ending point.

Ages: 46 (me), 45 (dw)
Eligible for pension @ age 55 (me)

We were age-10 until '08/09. We just don't need to take on that level of risk anymore, given where we are.

--Goldfinger
"At cocktail parties lovely ladies would corner me and ask my opinion of the market, but alas, when they learned I was a bond man, they would quietly drift away." -- Sidney Homer/Salomon Bros

lwfitzge
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Re: Do you hold your age in bonds?

Post by lwfitzge » Sat Jan 28, 2012 11:26 am

age minus 5

Dealmaster00
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Re: Do you hold your age in bonds?

Post by Dealmaster00 » Sat Jan 28, 2012 11:40 am

i will, once my roth IRA transfers over to vanguard :twisted:

wawoodjr
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Re: Do you hold your age in bonds?

Post by wawoodjr » Sat Jan 28, 2012 11:50 am

Age in bonds. I don't like to make "micro" changes in AA every year on my birthday , so my IPS allows for change every 5 years. Currently at age 56 (age 55-60) I'm 55% bonds. When I hit 60, I'll move it to 60%. Although after age 60, I'm considering leaving my AA at 60% bonds for life as it looks like we will have more than enough for wife and me, and will start considering age of children beneficiaries in later calculations.

bungalow10
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Re: Do you hold your age in bonds?

Post by bungalow10 » Sat Jan 28, 2012 11:54 am

wawoodjr wrote:Age in bonds. I don't like to make "micro" changes in AA every year on my birthday , so my IPS allows for change every 5 years. Currently at age 56 (age 55-60) I'm 55% bonds. When I hit 60, I'll move it to 60%. Although after age 60, I'm considering leaving my AA at 60% bonds for life as it looks like we will have more than enough for wife and me, and will start considering age of children beneficiaries in later calculations.
Just curious - when did you start doing "age in bonds"?

Anyone else can answer too. I'm just wondering if many on this board moved to "age in bonds" as they approached retirement, or did it their entire savings career.
An elephant for a dime is only a good deal if you need an elephant and have a dime.

wawoodjr
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Re: Do you hold your age in bonds?

Post by wawoodjr » Sat Jan 28, 2012 4:23 pm

bungalow10 wrote:
wawoodjr wrote:Age in bonds. I don't like to make "micro" changes in AA every year on my birthday , so my IPS allows for change every 5 years. Currently at age 56 (age 55-60) I'm 55% bonds. When I hit 60, I'll move it to 60%. Although after age 60, I'm considering leaving my AA at 60% bonds for life as it looks like we will have more than enough for wife and me, and will start considering age of children beneficiaries in later calculations.
Just curious - when did you start doing "age in bonds"?

Anyone else can answer too. I'm just wondering if many on this board moved to "age in bonds" as they approached retirement, or did it their entire savings career.
Good question: I kept the accelerator all the way down from age 30-50 with virtually 100% equities (1987 I didn't flinch, 2001-2002 was more painful as I had more money at stake). Discovered the philosophy of Mr. Bogle and others in 2006 which was about 10 years from retirement and moved to 60/40 (age-10 in bonds). Downturn in 2008 showed me that I didnt have quite the risk tolerance I thought (plus I had a lot more money at stake than previous downturns) and have since settled on age in bonds, never to look back. I have 3 adult sons in their twenties who are committed at an early age to the Boglehead philosophy with IPSs that they review annually. I'm envious of their potential should they stay the course.

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rob
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Re: Do you hold your age in bonds?

Post by rob » Sat Jan 28, 2012 4:43 pm

No - I never understood how asset allocation and age are related to each other - I know a lot of people seem to think they are but that's more of an over use of a rule of thumb I guess. At this point mine are different - I am far older then my bonds would tell me :-(
| Rob | Its a dangerous business going out your front door. - J.R.R.Tolkien

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ofcmetz
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Re: Do you hold your age in bonds?

Post by ofcmetz » Sun Jan 29, 2012 7:21 am

I'm 32 and the wife is 35.

We are currently 75% stocks/ 25% bonds. We are moving towards a 30% bond position which we plan to hold until our mid 40's.
Never underestimate the power of the force of low cost index funds.

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mgullo
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Re: Do you hold your age in bonds?

Post by mgullo » Sun Jan 29, 2012 11:29 am

It's about 5-10% in bonds. The wife and I are in our early 30s and our only investments are our RIRAs. We each have a target retirement (mine Vanguard, hers T Rowe Price) which allocate our assetts for us and I also contribute to Vanguard's emerging markets. After some significant growth in our total balance, I'll most likely move some of the balance into a bond fund.
Aim above morality. Be not simply good, be good for something. | -Thoreau

SamB
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Re: Do you hold your age in bonds?

Post by SamB » Sun Jan 29, 2012 12:10 pm

No, and I have always found this rule to be basically stupid, especially if it is applied without any thought whatsoever to your liquid investment assets. You need to take a look at your consumption and compare that to your assets. If you have pension, SS, annuity cash streams that you feel will meet your needs then you can make a decision about how much risk you want to take in your stock and bond assets, and it has nothing to do with your age. Keep enough bonds available in case there is a risk of losing some of those pension or SS cash streams, or for the unexpected health need (LTC?), but otherwise, it really serves no purpose to mechanically change your stock/bond ratio with age.

As your consumption becomes a smaller and smaller percentage of your overall wealth the age rule makes less and less sense. It is like saying Bill Gates should have an age related percentage of his $50B in bonds, not Microsoft stock.

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ej76az
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Re: Do you hold your age in bonds?

Post by ej76az » Sun Jan 29, 2012 12:23 pm

I think age in bonds is way too conservative. Even Bogle says age–10. I mimic the allocation of the Vanguard Target Retirement fund that corresponds to my retirement age.

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Re: Do you hold your age in bonds?

Post by bungalow10 » Sun Jan 29, 2012 12:35 pm

DH and I are both fairly young - 33, and have pensions.

We have about $250k in our retirement accounts.

DH has $32k in his pension, and I think I have about $75k in mine. I'm not sure if I should be using those pension amounts to in our AA to count as fixed income? Collecting those pensions is so far off in the future...
An elephant for a dime is only a good deal if you need an elephant and have a dime.

gerntz
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Re: Do you hold your age in bonds?

Post by gerntz » Sun Jan 29, 2012 12:40 pm

63 yo & ~55% fixed

Sconie
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Re: Do you hold your age in bonds?

Post by Sconie » Sun Jan 29, 2012 1:16 pm

Age is 63 and currently 85% equities/15% fixed + hold a couple of years worth of expenses in cash. In my view, we're about at the end of a 30 year-long bull market in bonds----and when things start to change, it "ain't going to be pretty."
I know that you think you understand what you thought I said, but I don't think you realize that what I said is necessarily what I meant......

Nathan Drake
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Re: Do you hold your age in bonds?

Post by Nathan Drake » Sun Jan 29, 2012 2:20 pm

100% equities. Much like how bonds were a wonderful investment opportunity back in the early 80s with double digit rates, I feel like we're now in the opposite scenario; record low rates -- huge difference between stock earnings yield vs. 10 year treasury yields.

Equities appear to be undervalued while bonds highly overvalued. We've had a decade of bond out-performance, and I believe reversion to the mean will occur during my investment horizon.

Like another poster, I may never transition my portfolio to any significant bond holdings unless we ever see a return of very high interest rates like in the early 1980s.

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Aptenodytes
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Re: Do you hold your age in bonds?

Post by Aptenodytes » Sun Jan 29, 2012 2:43 pm

rokidtoo wrote:Nope. I basically hold my age in stocks. Two reasons:
1.) I receive a federal pension that I can live on. Counting the pension, I'm 80%+ fixed income.
2.) Every study I've seen suggests a high stock allocation if you want to withdraw 4% per annum of your porfolio over an extended period.---Jim
I can't imagine any circumstance where age-in-stocks would make sense as a strategy. Of course there will come a point in every person's life where they happen to have age in stocks, but to increase your stock holdings every year seems weird.

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Aptenodytes
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Re: Do you hold your age in bonds?

Post by Aptenodytes » Sun Jan 29, 2012 2:46 pm

I'm at age-28 in fixed income. My investment plan calls for this number to gradually fall over the next 25 years to arrive at age in fixed income.

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FrugalInvestor
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Re: Do you hold your age in bonds?

Post by FrugalInvestor » Sun Jan 29, 2012 2:52 pm

My wife and I are retired and the average of our ages is 55 years. We are about 50% stocks, 50% fixed. I have no plans to change that AA significantly at this time.
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

Mitchell777
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Re: Do you hold your age in bonds?

Post by Mitchell777 » Mon Jan 30, 2012 8:27 am

About age + 11 in bonds. Actually it is age + 11 in fixed income (CD, Bond funds, Stable value, TIPS). Getting close to retirement and can't handle the risk any longer and do not think I need to take on any more risk at this point

texas_archer
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Re: Do you hold your age in bonds?

Post by texas_archer » Mon Jan 30, 2012 9:13 am

Age 34
AA 60% equity/40% income

amfox1
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Re: Do you hold your age in bonds?

Post by amfox1 » Mon Jan 30, 2012 10:06 am

We are both age 45. We currently hold bonds equal to age-5 (60/40 stock/bonds). We treat cash and cash equivalents as bonds for this purpose.

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Clearly_Irrational
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Re: Do you hold your age in bonds?

Post by Clearly_Irrational » Mon Jan 30, 2012 4:50 pm

No for a couple of reasons:

1) I prefer lower beta exposure than would be appropriate using that rule (which would mean more bonds)

2) Part of the low beta portion of my portfolio is in gold instead of bonds (but this ends up actually giving me less bonds overall)

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Tortoise
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Re: Do you hold your age in bonds?

Post by Tortoise » Mon Jan 30, 2012 4:58 pm

We used age-10 in bonds until I was diagnosed three years ago with health issues (cancer of blood platelets). We are now at my age in bonds, even though my wife is younger.
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