Intermediate-term bonds is the compromise between higher return and greater stability.Culbretd wrote: ↑Tue Sep 04, 2018 8:14 amVery valid point. Thank you for pointing that out. Everyday I read this sight I learn something new or think about things in a different way.aristotelian wrote: ↑Tue Sep 04, 2018 6:10 amArguably yes. Backtesting says that you would outperform a portfolio with intermediate bonds, with lower volatility. The question is, with a long timeframe, why would you be in bonds in the first place? If you are seeking return and have a high risk tolerance, 100% stock would seem to be the ideal approach.Culbretd wrote: ↑Tue Sep 04, 2018 5:34 amKnowing absolutely nothing about bonds (disclosure) would it not be better for someone in their early 30’s or 20’s to hold long term bonds in their Roth IRA along with their Stocks? We are assuming here that this is an investment that will not be touched for 30 to 40 years. Will the long term bonds not give them the most return at th end of 30 years? We are also under the assumption that they rebalance with new contributions too to keep align with the IPS. I know this would lead to a lot of volatility in the Roth IRA but if one could handle that wouldn’t the greatest return be from long term bonds?
If I’ve missed something please correct my thinking; as it seems that is what pension funds seem to do (going for long term bonds.... correct?). Now once the individual gets closer to retirement they would start to use a glide path on the bond and start to shortened the duration of course but would it not make sense to go long when you are younger?
Most people want bonds for stability, so intermediate is the general recommendation.
As such it never feels totally satisfactory.