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Portfolio 1:
Stocks 60%
Bonds 30% (total idx or intermediate mostly)
Cash 10% (nothing riskier than very short-term bonds)
Portfolio 2:
Cash 30%
Stocks 70%
Question is whether there is really any disadvantage of Portfolio 2?
True, a lot tied up in low yielding cash but that enables an extra 10% in stocks to offset it. True, bonds have a stabilizing effect on volatility, but then again they have some market price risk, too, whereas cash is the ultimate stabilizer and has virtually no market risk. And portfolio 2 gives you rock solid protection for 7+ years.
So who needs bonds (other than as near-cash)?
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Rich
Tampa, FL (ESR-bound. Really. I mean it. Seriously.)
As if you didn't know..If the above message happens to contain medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any medical purpose whatsoever. Consult your own doctor for all medical advice.
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