I’ve been pouring over this forum, trying to learn as much as possible about bonds. And I feel this has made it even more difficult to decide on the “set it and forget it” fixed income side of my portfolio. The approaches and styles for fixed income are endless, and it is so hard to cover yourself for the different future economic circumstances that may happen. Deflation? Expected Inflation? Unexpected Inflation? Rising rates? Falling rates?
To accomplish the goal is such a challenge! In the worst of times, your fixed income portfolio needs to be perfectly safe, but in all other times, that same portfolio needs to earn and keep up with or exceed inflation. You need to reach, but not too far!
I’m also finding that many on this forum actually time the market when it comes to fixed income. They do not always stick with one portfolio. They watch rates and make adjustments. This is not something I’d enjoy doing. I am seeking a set it and forget it approach.
Here is a sample I think might be my best bet for a long-term retirement portfolio. This could work for many people as well:
75% - Vanguard Intermediate-Term treasury fund or similar
-No credit risk
-Duration of 5-years at the moment
-Factors in expected inflation and other market conditions
-Should be mostly there if/when you need it.
25% Vanguard TIPS fund or similar
-No credit risk
-Duration of 6.7-years at the moment
-Covers you for the less common unexpected inflation
-Should be mostly there if/when you need it.
It doesn’t seem like holding more TIPS than this is a benefit, since TIPS cover you during “unexpected” inflation, which is less common. TIPS seem to be more akin to insurance.
This portfolio skips corporates since there could theoretically be credit risk and they can be volatile.
This portfolio skips international bonds since there could be credit risk, and no convincing benefit to hold them that I’ve seen.
This portfolio skips long-term bonds since they behave more like stocks and most people likely could not stick with them.
I would imagine one could do worse than utilizing this portfolio? I welcome all comments.
To accomplish the goal is such a challenge! In the worst of times, your fixed income portfolio needs to be perfectly safe, but in all other times, that same portfolio needs to earn and keep up with or exceed inflation. You need to reach, but not too far!
I’m also finding that many on this forum actually time the market when it comes to fixed income. They do not always stick with one portfolio. They watch rates and make adjustments. This is not something I’d enjoy doing. I am seeking a set it and forget it approach.
Here is a sample I think might be my best bet for a long-term retirement portfolio. This could work for many people as well:
75% - Vanguard Intermediate-Term treasury fund or similar
-No credit risk
-Duration of 5-years at the moment
-Factors in expected inflation and other market conditions
-Should be mostly there if/when you need it.
25% Vanguard TIPS fund or similar
-No credit risk
-Duration of 6.7-years at the moment
-Covers you for the less common unexpected inflation
-Should be mostly there if/when you need it.
It doesn’t seem like holding more TIPS than this is a benefit, since TIPS cover you during “unexpected” inflation, which is less common. TIPS seem to be more akin to insurance.
This portfolio skips corporates since there could theoretically be credit risk and they can be volatile.
This portfolio skips international bonds since there could be credit risk, and no convincing benefit to hold them that I’ve seen.
This portfolio skips long-term bonds since they behave more like stocks and most people likely could not stick with them.
I would imagine one could do worse than utilizing this portfolio? I welcome all comments.
Statistics: Posted by TrustTheMarket — Sat Oct 05, 2024 4:19 pm — Replies 11 — Views 856