How much of your retirement portfolio belongs in bonds?

[REWahoo]

Check out this thread: http://www.early-retirement.org/forums/f28/historical-cd-rates-vs-inflation-66955.html

 

[HFWR]

Check out this thread: http://www.early-retirement.org/forums/f28/historical-cd-rates-vs-inflation-66955.html

Aha! I note that someone in that thread asked what happened around 2000. My answer would be that banking changed from "banking" to "financial engineering"...

 

[daylatedollarshort]

Can find average CD rates, and inflation rates, but not one combined, and I'm too lazy to plug in the numbers...

I found a table from Putnam Investments with both -

https://www.putnam.com/literature/pdf/II514.pdf

From 1985 to 2014 - Average real return of 1.48% for CDs. A zero real return over 40 years would provide a 2.5% SWR, so CDs may be able to improve on that, at least if we see average real CD returns into the future.

 

[REWahoo]

https://www.putnam.com/literature/pdf/II514.pdf

From 1985 to 2014 - Average real return of 1.48% for CDs. A zero real return over 40 years would provide a 2.5% SWR, so CDs may be able to improve on that, at least if we see average real CD returns into the future.

Quite a contrast in that table if you compare the first 15 years (positive returns every year) to the second 15 (negative returns 60% of the time). The big question is will the next 15 years look more like 85-99 or 00-14?

 

[Mulligan]

Quite a contrast in that table if you compare the first 15 years (positive returns every year) to the second 15 (negative returns 60% of the time). The big question is will the next 15 years look more like 85-99 or 00-14?

My guess is the latter. Obviously 85-99 everyone was chasing the inflation boogeyman from the 70s and early 80s and ready for it to return at a moments notice....Unless of course an escalating inflationary cycle were to ever begin again and then I would be wrong of course.


Sent from my iPad using Tapatalk

 

[HFWR]

I'm surprised that there's any real return to speak of, though I can't argue with "the data".

 

[Mulligan]

I'm surprised that there's any real return to speak of, though I can't argue with "the data".

Maybe it was just local but it seemed like you could easily find CD specials all the time back in the day. I remember having a CD somewhere around 2006-07 that was almost 7% though inflation was nowhere near that. There certainly wasnt a special when I reupped my last remaining CD. A generous 0.34% percent. Let the compounding begin!


Sent from my iPad using Tapatalk

 

[audreyh1]

What stops me reading the article is the name of the author.......

OK - I admit I looked at the tuning table about 10 years ago and found it useful and it's nice to have an updated one.

 

[audreyh1]

It a secondary indicator. A good argument for your point of view would be that despite the 0 bound, banks are holding excess reserves still, to the dismay of fed governors. They can't seem to encourage the banks to lend full tilt - they are acting as if the reserve ratio is higher and it's limiting the money supply effect of the funds rate.


Sent from my iPhone using Early Retirement Forum

I heard somewhere that other financial institutions are starting to offer mortgage loans.

 

[MichaelB]

Quite a contrast in that table if you compare the first 15 years (positive returns every year) to the second 15 (negative returns 60% of the time). The big question is will the next 15 years look more like 85-99 or 00-14?

Perhaps neither. The link in your first post is a nice reminder that we don't need to be at either allocation extreme and can do quite well taking some risk without too much exposure to loss of capital or loss from inflation.

 

[HFWR]

Maybe it was just local but it seemed like you could easily find CD specials all the time back in the day. I remember having a CD somewhere around 2006-07 that was almost 7% though inflation was nowhere near that. There certainly wasnt a special when I reupped my last remaining CD. A generous 0.34% percent. Let the compounding begin!


Sent from my iPad using Tapatalk

I remember some of those deals in the late 80s/early 90s, but I assumed they were bank/CU specific, in that they needed to attract deposits. Sort of like milk as a grocery store loss leader.