Of Human 'Bond'age

Back when I first retired I owned no bonds. In fact
investment-wise I was strictly CDs (like the Terhorsts
when they began) plus some real estate. This was
before I developed my 50/50 bonds and real estate
theory.

Anyway, if someone had told me when I started that I would be almost completely out of CDs and loaded with
long term bonds, I would have questioned their sanity.
My idea back then was that I could stand a low yield
but had to have that FDIC insurance at all costs.
I guess the lesson is "never say never".

JG

Mr. Galt, I've read in some of your other posts that you are considering selling some of those long-term bonds and getting 5 year CD's. I think this might be a safer move for you. Those long-term bonds could really suffer if rates accelerate, as you know. Why not 25/25/50 of Bonds/CDs/Real Estate? Good luck.

Why not indeed.............25% bonds/25% CDs/50% real estate
makes perfect sense, and I can still sell some bonds at par if I want to move into CDs. Addicted to that 7% yield I guess On pure bonds, the lowest rate I am getting right now is
5% AAA rated. When I went into it you couldn't find a
5 year CD paying 5%. My theory was that (1) It was
just as safe as a CD, and (2) It was "forever" money
so if the NAV dropped I could just hold on. So, where
I am now is thinking how much better off am I getting
7% instead of 5%, but without the FDIC and with the NAV risk?
Is the 2 points worth it? Not sure. Probably not.

JG

[charlie]

JG, I don't think you have a prayer for finding 7%
AAA bonds. Anything close to that is going to be
junk. If I understand your persuasion, you would
be better off building a 5 year ladder at Penfed
or buying floating rate bonds on the secondary
market. There are several companies rated A or
better with secondaries yielding 2+% + CPI.

Cheers,

Charlie

Hi Charlie. I agree that my 7% is all
"junk" or near "junk". The 5% is AAA. I also have a
small amount in CDs. Anyway, the question is whether
the extra 2% is worth it. I think about it a lot. I honestly don't know the answer and suspect each ER
needs to answer it for themselves.

JG

[charlie]

JG, if you buy your "junk" at the right price and
use a fund to spread the risk then adding some
to your port is not a bad idea. Buying individual
junk bonds seems riskier than buying individual
stocks IMHO. I believe I mentioned this before
but have you considered an immediate annuity
for your "forever" money? That's the only "safe"
way I know to get 6+% until you and your wife
are both pushing up daisies.

Cheers,

Charlie

[Dawg52]

Quote:

*This was before I developed my 50/50 bonds and real estate theory. JG

What kind of real estate do you own? REITS, rental property or what?

Home in Illinois, condo in Texas. That's it. Condo mostly rented and probably will continue.

JG