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Need to buy more bond funds to rebalance
Old 09-15-2010, 12:43 PM   #1
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Need to buy more bond funds to rebalance

Hello All - please give me your thoughts and recommendations. I am 4 years from retirement but I am still, at this time, too heavy into stocks. 85% stocks, 15% bonds. I need to rebalance and would like to be at 70/30, then 60/40 2 years from now, and at retirement 55/45.

I need to buy some bond funds in order to accomplish this, can you please recommend several bond funds that I should consider buying into? I promise to do my own research before doing anything but I believe that I can benefit from the savvy investors in this Forum by asking for your thoughts and recommendation on bond funds to look into.

Thank you All!
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Old 09-15-2010, 12:55 PM   #2
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Pimco Total Return if you want something that is managed

Vanguard Total Bond Market for simplicity and low fees.
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Old 09-15-2010, 01:01 PM   #3
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VWAHX, then VWALX has treated me very well. All federally TE dividends, 30 day compound.
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Old 09-15-2010, 01:02 PM   #4
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Another possibility is to buy some CDs.
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Old 09-15-2010, 02:18 PM   #5
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My opinion is that you need to decide where you want to be with respect the the following four issues:

1) TIPS vs nominal bonds (I am 33/67)
2) Treasuries vs Corporate Bonds. (I am 50/50 for the non-TIPS))
3) Short Term vs Intermediate Term (I am 50/50 for the non-TIPS)
4) Taxable vs non-Taxable (I am 95/5 for the non-TIPS)

Once you have made this decision, use the following bond funds to implement

VG Tax Exempt Short Term
VG Short Term Investment Grade
VG Short Term Treasury
VG Tax Exempt Intermediate Term
VG Intermediate Term Investment Grade
VG Intermediate Term Treasury
VG
Inflation-Protected Securities

I would avoid any long term bond funds. You mileage will vary WRT the ratios I have listed.

Edit:

I guess you also need to decide 5) Do you want any exposure to mortgage backed securities? I choose no myself. I did have 50% TIPS, which I purchased at 3.5-4% yield. I have since sold 34% of them, believing the TIPS down side is much greater than the upside at the present date.
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Old 09-15-2010, 02:24 PM   #6
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Personally, I have stopped putting more money into bond funds. I mostly buy CDs now.
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Old 09-15-2010, 08:34 PM   #7
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Hi Retire2014,

I like the Vanguard Total Bond Market fund to keep it simple.

For the rebalancing, are you doing those within a retirement account or outside of one? The main reason I'm asking is because if within that can be a taxable event.

When I rebalance, I first try to do so within my IRA accounts, then after that with outside of retirement accounts. (I'm an indexer with Vanguard, so have both Total Bond Market, Total Stock Market, Total International Market, Prime Money Market funds both under an IRA and outside and rebalance them as so).

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Old 09-16-2010, 03:38 AM   #8
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I agree with Brewer and Firedreamer here.
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Old 09-16-2010, 04:56 AM   #9
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VG has a number of low cost bond funds.

CDs make sense too.


The decision should be based on specific goals, needs and tolerance for risk (potential drop in value).
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