@DavidV: Thanks for the question which is very bond specific. As you suggest, with bonds there are many variables in terms of credit quality, duration, structure and place of issuance (in the case of foreign securities). I find it best to invest in broader income-focused or asset allocation funds and let an expert sort this all out. T. Rowe Price's summary and annual reports for RPSIX (available on their website) probably should be required reading. The fund is not for everyone, but its composition offers insights into how someone might structure an income based portfolio. There's many other fine funds with similar objectives but different approaches. Max mentioned some.
My take on RPSIX's current approach is that the fund is pretty much avoiding bonds further out than 10 years duration and also underweighting government bonds in favor of mid-grade and lower quality corporates. The near 50% weighting in BBB and lower is most interesting. I don't think Price is including the fund's near 20% equity stake in their credit analysis, so that needs to be taken with a grain of salt.
(I attempted to cut & paste some relevant features from their summary page. But the fund's approximately 20% stake in equities made presenting an accurate representation too difficult.)
View Summary: http://www3.troweprice.com/fb2/fbkweb/composition.do?ticker=RPSIX

@DavidV & MFO Members Here are some suggestions.
Regards,
Ted
Suggested Bond Time Period Allocations:
25 Years + To Retirement:
11-25 " " "
1-10 " " ":
Retirement:
:
http://www.seninvest.com/article13.htm

Hi @DavidV,
One of the newsletters that I read and I believe will be helpful, to you, and offers good information is linked below for both stock and bond allocations along with their recommended composition. See page six of the newsletter for details on the bond portfolio.
http://funds-newsletter.com/jan16-newsletter/jan16_new.htm

Monte Carlo is ok to get a broad overview of the probability of maintaining the lifestyle you want until you die. For many people, however, the use of Monte Carlo is not so great. The majority of folks (not on this board) have never saved for retirement, or if so, have done a bare minimum. They spend a lot more than they make. And they approach retirement with more baggage than will fit in their assigned overhead bin. I still maintain that starting retirement with no mortgage and no credit card debt is huge, something a lot of people should work to achieve. There are a lot of basic principles that people should use, but two of the most important are 1) spend less than you earn and 2) pay yourself first - meaning have a goal of maxing out your retirement plan contributions.

I don't get the M* commentary. Nothing has changed with this fund's structure, style, process, or philosophy since it started. I have spent a lot more time than M* talking to the entire management team at Osterweis over the past 12 years. Interesting the commentary was written only about two weeks after the same analyst praised the fund and its management for its "excellent risk-adjusted" performance and as a "shelter in the current storm", and "outshining its benchmark", "relative resilience". He goes on to compliment the managers who "are better at assessing credit risk than the rating agencies", and then said the fund's volatility "has been on par with the Barclays Agg". Given that nothing changed at the fund during those two weeks, the new commentary is hard to swallow. When I first read it a few weeks ago, I tried to get a response from M*. Of course they did not respond to my inquiry about the 180-degree about face. This for me is more evidence that the written analysis of funds is often worth a lot less than digging through the numbers and fund documents themselves.

No magic recipe. Just keep the more exotic and high yield stuff small, particularly later during work and into retirement. I took a look at their recent "Bond Squad" entries in the Morningstar Discussions. There's a whole big menu, over there. At 61, I'm 43 stocks, 39 bonds. The rest is cash or "other," held in the funds. Some might say I'm too heavy in stocks. But I do believe I'm in the ballpark of what's not overly-risky. Don't over-think it. If you are high-income, use a lot of munis, but not exclusively. ...Actually, I've chosen three separate bond funds, and after that, I let the Fund Managers do the arranging. PREMX, PRSNX, DLFNX. But I have two "Balanced" funds holding both stocks and bonds, too. MAPOX and PRWCX. But PRWCX is closed right now, unless you're already into it. Look also at DODIX. MWTRX. But these are solely open-ended. Others can clue you in to closed-end funds. I even forget whether there is such a thing as a bond ETF..... There are indeed professionals here, and they can give you something "from the horse's mouth."

@Dex @MikeM @MJG
As noted by Dex.....these first four
- know how to budget
- track your spending
- pay yourself first
- spend less then you earn
>>>If the person can not be involved with or control any of these, there will be no need for anything related to the Monte Carol machine.
Probably more so today than with my generation, there is a high likelihood that a college graduate today, or anyone employed has not a clue as to where they will find their arse on retirement day.
But, one thing is written; in that if the 4 items in the list above can not be properly controlled, the retirement roadmap will not exist to any value.
I know from 2015 the same type of budget information I know from 1970; as to how much and where monies travel in the broad budget categories. Tis not difficult to track.
Catch

Simple heuristics (rules-of-thumb) are fine when making common everyday decisions like buying a hamburger or not, but are totally inadequate when making complex, significant decisions like those about retirement.

If there is one thing that rules of thumb work best - it is retirement planning especially when you are young:
- know how to budget
- track your spending
- pay yourself first
- spend less then you earn
- invest 100 (or 110) - age to stocks, rest to bonds
- understand cash flow thrown off by your investments and your retirement needs
Those simple rules of thumb and maybe a few others are the foundation for financial retirement planning.
While those calculators are interesting ( I've experimented) with them, they are useless without the basics.
Financial planners and stock salesmen like those calculators because they make retirement planning complicated and retirement a nearly impossible goal.

FYI:
Regards,
Ted
Bloomberg Slant:
http://www.bloomberg.com/news/articles/2016-02-22/u-s-index-futures-point-to-gain-after-stocks-best-week-in-2016
Reuters Slant:
http://www.reuters.com/article/us-usa-stocks-idUSKCN0VV17T
MarketWatch Slant;
http://www.marketwatch.com/story/dow-industrials-poised-for-a-more-than-1-gain-as-oil-roars-ahead-2016-02-22/print
USA Today Slant;
http://www.usatoday.com/story/money/markets/2016/02/22/stocks-dow-monday/80723986/
IBD Slant:
http://www.investors.com/market-trend/stock-market-today/stocks-rise-more-than-1-fitbit-plunges-after-hours/
WSJ Markets At A Glance:
http://markets.wsj.com/us
Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-tracker
Current Futures:
http://finviz.com/futures.ashx

@sligo & MFO Members: Fund opened on 11/1/13 @$10.00 and closed last Friday @$8.58, 74%, in cash, and a ER of 2.33%, just say no to Renee !
Regards,
Ted
Renee Haugerud:

This fund was being recommended to a Mutual Fund Store client which surprised me a little as I thought they were generally against esoteric funds. The SilverPepper website certainly contains a lot of narrative, however with an E/R of 2.23% and 146% turnover their promotion of a hedge fund for "the little people" (my words) might be a little rich for the short history of the mutual version. Wondered if anyone had any thoughts on such a product.

Using a 4-5% withdrawal rate, the 100-age allocation could be very problematic, as it always has been. Unless there is simply more savings/investments than will ever be used, folks could find they are eating up principal much faster than their longevity will allow. Of course, not having a mortgage when retiring is a game changer, as is receiving a public pension. No mortgage AND a pension are huge. There is no 'rule of thumb' that should be applied here. It is very individualistic, and each household should spend a good amount of time planning just what 'retirement' looks like, both in terms of cash flow and life activity.

Anything to back that up or is it from your life experience?

Look out below! The average weighted price of bonds in Vanguard's Long-Term Treasury VUSTX is $110.58. If that is not a recipe for disaster somewhere down the road, I don't know what is. The average coupon is 3.67%. The actual 30-day yield is 2.29%. It doesn't take a rocket scientist to see the potential problems here. Just moving to intermediate-range bonds in VFIUX brings the average price down to $100.41, but there is still some disconnect with the average coupon at 2.97% vs. a yield of 1.29%. Still much safer than long-term treasuries.

Using a 4-5% withdrawal rate, the 100-age allocation could be very problematic, as it always has been. Unless there is simply more savings/investments than will ever be used, folks could find they are eating up principal much faster than their longevity will allow. Of course, not having a mortgage when retiring is a game changer, as is receiving a public pension. No mortgage AND a pension are huge. There is no 'rule of thumb' that should be applied here. It is very individualistic, and each household should spend a good amount of time planning just what 'retirement' looks like, both in terms of cash flow and life activity.

TurboTax Delux is available for $50 at Costco. The last of 1099-Div and 1099-B arrived this week and our 2015 return is now completed.

With the lack and disappearance of "steady" job prospects, ( compared to the boomer generation ) innovation in alpha producing investments, and lack of planning help available to young investor, they will have to be more DYI going forward. Robo advisors, buy and hold index investing, and 60 / 40 "glidepath" funds won't help in the accumulation of the millions of dollars needed for survival either.
One of the best steps that a young investor can take, is the opening and funding a ROTH IRA, and then investing in small cap value * . Applying a quantitative tactical model to a portfolio of small cap value, long bond fund and cash equivalents has taken a smaller investment stake and produced risk alpha above the buy and hold of small cap value **.

True dat!
As to small cap value info. Is it saying 100% into SCV? If so I would lean more to the old allocation of 100-age = stocks and remainder into bonds.

With the lack and disappearance of "steady" job prospects, ( compared to the boomer generation ) innovation in alpha producing investments, and lack of planning help available to young investor, they will have to be more DYI going forward. Robo advisors, buy and hold index investing, and 60 / 40 "glidepath" funds won't help in the accumulation of the millions of dollars needed for survival either.
One of the best steps that a young investor can take, is the opening and funding a ROTH IRA, and then investing in small cap value * . Applying a quantitative tactical model to a portfolio of small cap value, long bond fund and cash equivalents has taken a smaller investment stake and produced risk alpha above the buy and hold of small cap value **.
* https://docs.google.com/document/d/1kToqLWLISRk4n4YnSzv1hT5kBN54l5CvhwGgDwJKPJI/edit?usp=sharing
** https://docs.google.com/presentation/d/1pQuBfbPd18ca0G-KiZc5FIWNMx0pNa87INgsLjEwuzY/edit?usp=sharing
https://docs.google.com/presentation/d/1C37CJypoxHWHB09e3g25ewOGjP83wDZhj5j6tlrLJoA/edit?usp=sharing

FYI: Investors have piled into U.S. mutual bond funds and exchange-traded funds targeting Treasury debt for 10 consecutive weeks, the longest stretch in nearly five years.
The winning streak underscores surging demand for safe-haven assets amid an uncertain global economic outlook and growing volatility across many asset classes.
Regards,
Ted
http://blogs.wsj.com/moneybeat/2016/02/19/investors-pile-into-treasury-bond-funds-for-10th-straight-week/tab/print/

FYI: You can make an ETF out of anything. Even hedge fund positions that are at least 45 days old.
Goldman Sachs Group Inc. earlier this month filed a prospectus for a new exchange-traded fund it plans to launch. The product it’s proposing, dubbed the Goldman Sachs Hedge Fund VIP ETF, will track an index of some of the most popular positions held by U.S. hedgies. It’s plan: To track an index of 50 stocks that appear the most in the top 10 holdings of U.S. hedge funds that rely on “fundamental” stock analysis.
Regards,
Ted
http://blogs.wsj.com/moneybeat/2016/02/19/goldman-plans-etf-to-mimic-hedge-funds-with-a-delay/tab/print/

(This is a follow-up article)
FYI: Just when mutual-fund managers thought the systemic-risk talk was over, the New York Fed has stoked the fire. Sort of.
In a post published Thursday on the New York Federal Reserve’s Liberty Street Economics blog, economists argued that mutual funds are at risk of fire-sales and runs.
Regards,
Ted
http://blogs.wsj.com/moneybeat/2016/02/19/can-mutual-funds-be-too-big-to-fail-ny-fed-says-yes-sort-of/tab/print/