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Fixed Income Options
Old 06-21-2017, 08:34 AM   #1
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Fixed Income Options

Under Firecalc's portfolio section, there is an option to specify the percentage of your portfolio in equities and "fixed income" -- Here are the options for fixed income:
  • Commercial Paper
  • Long Interest Rate (default)
  • 30 Year Treasury
  • 5 Year Treasury

I have been using the default, but I'm not sure if that is correct. In reality, my bond portfolio looks like this:

20% = iBonds (30 yr)
80% = Mixture of these 4 bond funds:
  • Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares MUTF: VWIUX
  • Vanguard Tax-Managed Balanced Fund Admiral Shares MUTF: VTMFX (50% bonds, 50% stocks)
  • Vanguard Total Bond Market Index Fund Institutional Shares MUTF: VBTIX
  • FidelityŽ U.S. Bond Index Fund Premium Class MUTF: FSITX

Is it reasonable to keep using the default (Long Interest Rate), given my bond portfolio?

Thanks.
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Old 06-21-2017, 09:03 AM   #2
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IMO, the Long Interest Rate default is probably the best of the 4 options.
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Old 06-21-2017, 09:41 AM   #3
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Quote:
Originally Posted by slowsaver View Post
Under Firecalc's portfolio section, there is an option to specify the percentage of your portfolio in equities and "fixed income" -- Here are the options for fixed income:
  • Commercial Paper
  • Long Interest Rate (default)
  • 30 Year Treasury
  • 5 Year Treasury

I have been using the default, but I'm not sure if that is correct. In reality, my bond portfolio looks like this:

20% = iBonds (30 yr)
80% = Mixture of these 4 bond funds:
  • Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares MUTF: VWIUX
  • Vanguard Tax-Managed Balanced Fund Admiral Shares MUTF: VTMFX (50% bonds, 50% stocks)
  • Vanguard Total Bond Market Index Fund Institutional Shares MUTF: VBTIX
  • FidelityŽ U.S. Bond Index Fund Premium Class MUTF: FSITX

Is it reasonable to keep using the default (Long Interest Rate), given my bond portfolio?

Thanks.
I didn't think so.

I never use the long-bond option because I don't think long bonds do as well for rebalancing stocks, and I don't own any. I don't have a current reference handy, but this was shown on EMT charts I studied long ago.

So I picked an intermediate option for my models as I pretty much own intermediate or shorter bond funds, and I have used the 5 year treasury as the fixed income option in all my models.
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