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Does 40% bond allocation make sense in today's portfolio

edited September 8 in Other Investing

Does 40% bond allocation make sense in today's portfolio

Whether you’re the kind of investor who meets regularly with an adviser or the set-it-and-forget-it type who rarely looks at your 401(k), there’s a good chance your portfolio is set up with something close to a 60/40 mix of stocks and bonds.

Think it depends on your age and risks assertion. For us have 20s-25s% in bonds distribution, these levels maybe right for us. BTW we also hold other vehicles for risk stratification (strategy)


  • Mine: Cash 6%
    US stocks 27
    Foreign: 8%
    Bonds: 57%
    Other: 2%

    I'm happy. 66 years old last month. The plan is to take a chunk from the IRA which is not insignificant, each January, but that presumes a positive Market, so that the portfolio rises and makes-up that amount through the rest of the year. Otherwise, things are staying untouched. Taxable stuff is in a bond fund, but it's just 8% of total. Distributions are still being re-invested. Wife still works.
  • edited September 8
    “BTW we also hold other vehicles for risk stratification”

    The poster uses a term with which I am not familiar. A search for “risk stratification” led only to its applicability in treating sick / hospitalized patients.

    @JohnN - When you have time, could you give your definition and explain how you implement it in your investment planning?

  • @crash, you asst allocation should do well going forward as the market trending downward. Are you including alternatives and precious metals as they have lower correlations to equities? This month's Commentary have considerable discussion from David Snowball and Charles Brolin.
  • Thanks, @sven. No, no metals nor "alternatives." I don't count the cash we keep ourselves as part of the portfolio. We save, then some big family medical emergency always happens, so a big slug gets sent over there. I don't want to sound like the Orange Abortion, but the Philippines is a sh****le country. Corruption. No middle class. You're either among the tiny handful of rich folks, or you're dirt poor.
    I'll read the Commentary. Metals and "alternatives(?") sounds too fancy for me.
    Investopedia's definition:

    ...Once I looked at that, I was reminded about why I don't own that stuff.:)
  • The article is pretty good but the usual, no real solutions.
    If a retiree doesn't want volatility over 15-20% + no insurance products or alternatives + ballast + higher income + his bonds to make more than the index.

    I have almost all my portfolio in bonds OEFs

    Worth reading, although you can argue Rodriguez's best days are behind him. Hard to think bonds will do much other than loose less than stocks but if inflation picks up they will be toast.

    Diversification, although I doubt many of us can follow Mr Rodriquez and buy one of the 400 odd houses on the shore at Lake Tahoe
  • FWIW, I've tried to lesson my bond allocation. Right now Schwab's portfolio check-up shows my self managed portfolio is at 40/25/14/20 (equity/bonds/cash/other). That "other" category is what I've been growing the last few months in lieu of bonds and cash. portfolio check-up tells me "other" consists mostly of TMSRX, MNWAX, IAU and very small positions in BTAL and UDN.
  • For now only TMSRX, IAU and DRSK.
  • One major reason for 40% bonds is to be able to buy equities when they are on sale.
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