ArmchairMillionaire
Recycles dryer sheets
This is my first post (other than the 'Hi...' one) so bear with me a little.
As you can tell by my username I am a big fan of Lewis and Schiff's "The Armchair Millionaire" and have used their investment strategy pretty consistently for most of the last 20 years or so. In a nutshell, they proposed being 100% invested in the stock market and splitting your investments into:
1/3 Large Cap US index funds
1/3 Small Cap US index funds
1/3 International index funds
From my early 20s up to my late 40s this allocation worked well for me. As I get closer to retirement I realize that I should include some bond funds in the mix in order to be more diversified. A couple of years ago I switched to a 75% stock, 25% bond mix by switching to the following:
25% Large Cap US index funds
25% Small Cap US index funds
25% International index funds
25% Total Bond Market index funds
Now that I've set a tentative early retirement date (Jan 1st, 2025) and it's less than 5 years away, at the beginning of this year I switched to a more conservative 60/40 stock/bond mix by changing my allocations to:
20% Large Cap US index funds
20% Small Cap US index funds
20% International index funds
40% Total Bond Market index funds
Going back to The Armchair Millionaire portfolio, their reasoning behind their allocation was due to the correlation of the three classes of funds providing the highest overall level of returns. Rarely did all three classes perform poorly at the same time. (they likened it to owning shares in both a sunscreen company and an umbrella company - you could be making money whether the sun was shining or if it was raining) However The Armchair Millionaire made no mention of investing in bond funds.
So my question is - If I were looking to diversify my bond holdings, does anyone know of two low cost (index?) bond funds that have a negative correlation so I could split my 40% bond allocation into two groups of 20% to be more broadly diversified? Or should I just keep it to total bond market funds? (I have four different retirement accounts - previous employer 401-k, current 401-k, Roth IRA and a taxable account that could also be used for an emergency fund)
Thanks in advance for any suggestions.
As you can tell by my username I am a big fan of Lewis and Schiff's "The Armchair Millionaire" and have used their investment strategy pretty consistently for most of the last 20 years or so. In a nutshell, they proposed being 100% invested in the stock market and splitting your investments into:
1/3 Large Cap US index funds
1/3 Small Cap US index funds
1/3 International index funds
From my early 20s up to my late 40s this allocation worked well for me. As I get closer to retirement I realize that I should include some bond funds in the mix in order to be more diversified. A couple of years ago I switched to a 75% stock, 25% bond mix by switching to the following:
25% Large Cap US index funds
25% Small Cap US index funds
25% International index funds
25% Total Bond Market index funds
Now that I've set a tentative early retirement date (Jan 1st, 2025) and it's less than 5 years away, at the beginning of this year I switched to a more conservative 60/40 stock/bond mix by changing my allocations to:
20% Large Cap US index funds
20% Small Cap US index funds
20% International index funds
40% Total Bond Market index funds
Going back to The Armchair Millionaire portfolio, their reasoning behind their allocation was due to the correlation of the three classes of funds providing the highest overall level of returns. Rarely did all three classes perform poorly at the same time. (they likened it to owning shares in both a sunscreen company and an umbrella company - you could be making money whether the sun was shining or if it was raining) However The Armchair Millionaire made no mention of investing in bond funds.
So my question is - If I were looking to diversify my bond holdings, does anyone know of two low cost (index?) bond funds that have a negative correlation so I could split my 40% bond allocation into two groups of 20% to be more broadly diversified? Or should I just keep it to total bond market funds? (I have four different retirement accounts - previous employer 401-k, current 401-k, Roth IRA and a taxable account that could also be used for an emergency fund)
Thanks in advance for any suggestions.