Because there has been a lot of pain in bonds - interest rates were raised to try to control inflation.I am 73 and have been retired for 16 years.
I have about $600k (30%) in the Vanguard Total Bond Index Fund. With Bonds not doing too well in recent years I am not sure whether to sell all of the Bonds and put them into some Mutual Index Stock Funds.
I am basically a 'buy and hold' investor, I do move some funds around but not someone who tries to judge the stock market. I know the Vanguard founder said to buy and hold and not to try and beat the market. It has worked well for me over the 20 plus years I have been with Vanguard.
I am wondering what other investors have done with their bonds, have they kept with normal basic idea of having stocks and bonds.
Thanks Dave
Inflation is now generally falling. Bonds are paying a lot higher yields. That will be reflected in the dividends bond funds give out, going forward - higher than when interest rates were down at 1-2%.
It's certainly not the time to cash in your chips on bonds.
I would stick with the 30%. Whilst we cannot forecast how bonds will do, we can say that you will get higher dividends from the fund. Also now that interest rates are much closer to economic "normal" of 4-5%, and inflation falling, there's less need for the Federal Reserve to hike interest rates.
If you are really concerned about safety of principal, then a "ladder" of FDIC insured CDs, say 1-5 years maturity, will protect those savings from price falls. You could invest say 10-15% of your total portfolio (half your fixed income allocation of 30%) in those.
Statistics: Posted by Valuethinker — Wed Jun 19, 2024 6:24 am — Replies 19 — Views 1314