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Need Help On Bonds In My Portfolio
Old 12-28-2008, 01:19 PM   #1
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Need Help On Bonds In My Portfolio

Since my mother informed me that she's getting a 5% or 6% return on her GNMA bonds, I became more interested in bonds going forward. Problem is, there are so many kinds of bonds, in general, I'm a little lost. My primary holding is in Vanguard Wellington (IRA), which is 40% bonds, but, I'd like to add more bonds to my IRA. How do I decide among GNMAs, TIPS, municipal bonds or even Vanguard Total Bond Index fund? Thanks, in advance.
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Old 12-28-2008, 01:32 PM   #2
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Since it's an IRA, you don't need to have or think about muni bonds.

For the others, there is no way to know which will perform best in the future. I think they will all perform about the same over the long term Thus a not too bad way to decide is to roll dice, flip coins, buy all of them, ... whatever. It really isn't going to matter, so don't stress out too much about deciding and don't waste too much time on it either.

Full disclosure: I own Vanguard GNMA and inflation-protected securities bond funds among others.
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Old 12-28-2008, 04:09 PM   #3
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I look for GNMA yields to decrease as more people refinance. I would be looking at TIPS
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Old 12-28-2008, 04:20 PM   #4
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We have Fidelity US bond index in DW's IRA, Schwab Total Bond index in my 401k and Vanguard Total Bond index in my IRA. Schwab total bond has been terrible this year compared to the other 2, but that is the only bond index I have available in my 401k.

As stated above I would not consider tax exempt bond funds in an IRA.
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Old 12-28-2008, 04:51 PM   #5
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I own VFIIX, VIPSX, VFSTX, and plenty of other corporate bonds via VWINX. Agreed a mix of types and durations is probably best. It is possible to achieve gains with bonds, but I view them as the anchor for my portfolio, to live off when stocks are down, not as the growth component.
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Old 12-28-2008, 06:17 PM   #6
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The Vanguard GNMA fund (VFIIX) has paid out ~5-5.5% interest for decades. The price of the fund has varied from 9.50-10.50 over the same period of times. I agree with headingout it an anchor of my portfolio rather than a growth component. In my case also a very dependable source of income.
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Old 12-28-2008, 09:17 PM   #7
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I own VWSTX + VWITX for municipal bonds
I own VIPSX for TIPS
I own VFIIX for GNMAs
I own VWINX + VWELX for corporates.

No long term bonds. No junk bonds. I don't own any dedicated treasury fund at the moment.
46 years old, single, no kids. Exited the job market in 2010 (age 36). Have lived solely off my investments since 2015 (age 41). No pensions.
Current AA: real estate 64% / equities 10% / fixed income 16% / cash 10%
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