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Alec,
Thanks for the links! I have quickly perused the document and plan to return to it and the site later.
I have been thinking that I would add TIPS to the Treasury allocation in the future. I want to hold on to those high fixed return I Bonds as long as possible as you recommended. Have been using taxable funds to live on since retiring at 55, so getting low in $ to buy additional I Bonds even if I wanted to at current low rate. Thought would use Vanguard's TIPS fund, but could also set up a brokerage account in my IRA for purchasing bonds directly.
Main change I see in your recommended fixed income allocation is ditching the GNMA. If I read correctly in my quick perusal, the Jarett study didn't evaluate them due to lack of data. I currently "take the dividend" from GNMA in my IRA to my IRA money market from which I will be making my 59 1/2 withdrawals. Influenced to GNMA for high quality based securities and relatively high dividend (note, not taking a high risk of having to sell at a low NAV). Also have seen positive info on GNMA in Scott Burns analysis of govt bonds, and most recently Bill Gross' bond allocation advice: split equally between GNMA, Corporate and TIPS.
Since Short Term Corporate, US Treasury and Cash cover my safety stash for not liquidating equities in a downward spiral, Frank Armstrong would probably recommend putting the GNMA 16% in equities but I'm too conservative for that! Based on this further clarification of how I am viewing my fixed income allocation, do you still feel negative on GNMA? Would you increase equity? I guess there is also the alternative of using high yield without decreasing my current equity allocation.
Best regards, William
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