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Old 04-02-2012, 09:29 PM   #41
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Originally Posted by traineeinvestor


I also intend to hold at least two years of living expenses in cash or near cash. The risk of being forced to sell in a down market (or doing some panic selling) worries me more than the lower return on the money that could have been invested elsewhere. I treat short term bonds as "near cash" for these purposes - the opportunity cost is lower than money market funds etc and the risk to capital if I sell early is relatively small.

If I had a COLA'd pension or similar that met at least my basic living expenses, I might feel comfortable being more aggressive.
I might be an odd ball, but I have a COLA'd pension that more than takes care of all my living expenses, and because of this I am even less aggressive. I have almost all of my assets in CD's and I Bonds. I continue to save and max out the I Bonds each year and throw a couple hundred a month in an index fund. My reasoning is my pension system is invested predominantly in equities. I dont want to double down in this area too much.

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No fan of bond funds
Old 04-03-2012, 11:34 AM   #42
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No fan of bond funds

There was a post back there that said bonds were not bond funds. +1 on that!

Maybe the bond funds didn't dive quite so far as equity funds when the commode hit the windmill, but many were hurting real bad!

I might have this all wrong, but it seems to me bond funds are a sorta dumb idea in general, because you're at the mercy of the bozos invested with you. If the fund is 100% invested in bonds, and people get spooked, they sell, forcing the fund manager to sell at the wrong time (before maturity) and your account value shrinks. If, on the other hand, you took the time to assemble a bond ladder, your account value would 'never' shrink (unless you bought something that defaulted or you ran out of money and had to sell before maturity).

So my advice would be to work your way into your own bond ladder, and out of bond funds.


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