Originally Posted by antmary
Sorry I wasn't very clear...
yes, the situation is interest rate risk that I am concerned about. Similarly to FireD, CD's and I-Bonds look more stable going forward. Right now I am inclined to open a Roth CD for this year (actually, 2012); We have a neighborhood bank nearby that had only one foreclosure during the recent housing crisis. I'll let the other parts of our portfolio stay put.
Some food for thought: John Bogle gave an interview (sorry, I can't provide a link) that he is concerned with what is happening with TIPS and Treasuries right now re: rising interest rates. There is, of course, lots of info on the Boglehead site.
Thanks a lot for your continuing response, Everyone!
It isn't just Bogle that is concerned, everybody from Bill Gross, the manager of PIMCO, to Warren Buffett have described US Treasury as "return-free risk". Now collectively these smart guys,and those off us who follow them have been wrong on our prediction that the bond bubble is going to burst for 4 or 5 years. On the other hand we have been right saying equities will do better, and bonds funds are finally starting to dip.
I recently started moving some of my 87 year old mom's money from Vanguard GNMA to Wellesley. I know Wellesley is still 60% bonds, but
I have some confidence the Wellesley managers will be able to navigate the tricky fixed income water better than the average manager/investor.
If you comfortable with Wellesley than even 100% allocation to the fund only moves your asset allocation for 40% equities to 56%. A 50% allocation to Wellesley along with some CDs seems very sensible to me. BTW, Vanguard also offers CDs and they are generally very competitive.