Hello all,
I need your wisdom on how to manage the fixed income part of our portfolio. Currently 55 years old with asset allocation of 57/43, which I am happy to let drift up to 60/40 but not much more. Not sure of when I might retire but most likely would be between 65-67 when a retirement incentive becomes available at work. Total portfolio is at 35X-40X range (not sure exactly since expenses are uncertain). About 20% of the stock part of the portfolio is in a total international stock fund while the rest of it is in a total US total stock market fund.
Like everyone else I was badly burned by my total bond fund in 2022. I don't think I sold much of my total bond and am waiting patiently for it to recover. Given the yields on MM and treasuries, I decided to start putting half of new FI investments in such instruments.
Going forward, is it reasonable to aim for a 50/50 split between a total bond fund and individual treasuries or MM funds? This is what I am doing and planning to continue forever. This way, no matter what happens to interest rates at least half of my fixed income will provide a guaranteed return while the other half could go or down depending upon the performance of the total bond fund.
My worry of course is that interest rates will go down soon enough and I will miss out on the increase in the value of the bond fund. But if interest rates settle around 3-4% say, I reckon the yield on the total bond fund will also fall so both sides of my fixed income portfolio should yield about the same in coming years. The key difference I see is the increase in the value of the bond fund if interest rates fall and the continued fluctuations it always goes through.
Would you recommend any changes to how I manage the fixed income allocation? Having 10X in fixed income whose nominal value does not fluctuate (I will definitely hold all of individual treasuries to maturity) gives me some comfort and also helps me sleep well at night.
Thank you for your insights and time!
I need your wisdom on how to manage the fixed income part of our portfolio. Currently 55 years old with asset allocation of 57/43, which I am happy to let drift up to 60/40 but not much more. Not sure of when I might retire but most likely would be between 65-67 when a retirement incentive becomes available at work. Total portfolio is at 35X-40X range (not sure exactly since expenses are uncertain). About 20% of the stock part of the portfolio is in a total international stock fund while the rest of it is in a total US total stock market fund.
Like everyone else I was badly burned by my total bond fund in 2022. I don't think I sold much of my total bond and am waiting patiently for it to recover. Given the yields on MM and treasuries, I decided to start putting half of new FI investments in such instruments.
Going forward, is it reasonable to aim for a 50/50 split between a total bond fund and individual treasuries or MM funds? This is what I am doing and planning to continue forever. This way, no matter what happens to interest rates at least half of my fixed income will provide a guaranteed return while the other half could go or down depending upon the performance of the total bond fund.
My worry of course is that interest rates will go down soon enough and I will miss out on the increase in the value of the bond fund. But if interest rates settle around 3-4% say, I reckon the yield on the total bond fund will also fall so both sides of my fixed income portfolio should yield about the same in coming years. The key difference I see is the increase in the value of the bond fund if interest rates fall and the continued fluctuations it always goes through.
Would you recommend any changes to how I manage the fixed income allocation? Having 10X in fixed income whose nominal value does not fluctuate (I will definitely hold all of individual treasuries to maturity) gives me some comfort and also helps me sleep well at night.
Thank you for your insights and time!
Statistics: Posted by saveninvest — Sat Aug 10, 2024 2:57 pm — Replies 0 — Views 66