And what conservative investment would average 4-5%?5% real from Wellesley would be somewhat extraordinarily high, not that it hasn't happened in the past. 5% nominal doesn't tell you much so it might be excellent or might be a disaster.I would hope for 4-5% average returnIt's easier to be okay with getting 0% when you aren't actually getting 0%, especially when you aren't getting it for year after year while longer-term and/or lower-quality debt is returning at least something, and inflation is eating away your portfolio. I was fortunate to have my "cash-like" investments have guaranteed minimum nominal or real returns (basically annuities or I-bonds) during several time in the last few years, although it still wasn't a productive time for investing for me.My purpose in having a [small] allocation to bonds, is/was to tamp down on volatility. That's it. My investment horizon is infinite. I'm not worried about sequence of returns risk. I expect far lower volatility from my bonds-allocation than from stocks. 50% annual drop in stocks would be harrowing, but not unexpected. 10% annual drop in bonds would be both harrowing, and unexpected. I would rather lose 50% in my stock funds, than 10% in my bond funds. What 2022 made me realize, is that in the non-equity portion of my portfolio, I am OK with gaining 0%, provided that I am nearly certain of losing 0%.
My bond funds are/were mainly tax-exempt short-term and intermediate-term. Other than in Wellington (not Wellesley), I've never dabbled in corporate bonds, international bonds or anything long-term. Even so, the bond portion of my allocation got walloped. Going forward, I won't make any changes, letting the bond funds just drift, as I hate selling and hate realizing capital gains. But I'll never invest in bonds again. The non-equity portion of my portfolio will be in money-markets. This portion will shrink, presumably, as the equity portion will (presumably) keep growing faster.
Statistics: Posted by jasperhobbs — Sat Mar 02, 2024 5:30 pm — Replies 109 — Views 14330