I have been totally redoing my investments and have pretty much settled on the equity portion of things. I still have to wrestle down where to best put my bond side. I'm hopefully a year from ER at 52 y.o. and am looking at a 60/40 mix of bonds to equities. Right now I'm only looking mostly at taxable investments. I will need to use at least a portion of my bond income for my living expenses. I'm probably a mix of intermediate muni bond funds and money markets as we speak.
It seems like at least a few that I've noticed are using total or other bond funds for a major portion of thier bond portfolio. As far as I can tell, the books on the reading list are light on bond coverage and recommend not using bond funds but directly investing in bonds to avoid expenses and risk to NAV. And also that they target 1-5 year durations as the most efficient returns, which pretty much counts out my intermediate investments as well as a total bond market fund. This also seems especially touchy with higher rates in the crytsal ball. Even with some reinvestment in higher rates in a bond fund, it seems to me like it would take a long time for funds to recover a loss in NAV.
I guess this pretty much leaves a laddering of treasuries or CD's in the 1- 5 year range? I've already maxed out my bank I bond allowance which seems like a decent place for the shorter term. I still need some decisions on the remainder. Help appreciated.
It seems like at least a few that I've noticed are using total or other bond funds for a major portion of thier bond portfolio. As far as I can tell, the books on the reading list are light on bond coverage and recommend not using bond funds but directly investing in bonds to avoid expenses and risk to NAV. And also that they target 1-5 year durations as the most efficient returns, which pretty much counts out my intermediate investments as well as a total bond market fund. This also seems especially touchy with higher rates in the crytsal ball. Even with some reinvestment in higher rates in a bond fund, it seems to me like it would take a long time for funds to recover a loss in NAV.
I guess this pretty much leaves a laddering of treasuries or CD's in the 1- 5 year range? I've already maxed out my bank I bond allowance which seems like a decent place for the shorter term. I still need some decisions on the remainder. Help appreciated.