Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Bond Ballast Allocation - Is it time to to make some tweaks?
Old 04-16-2021, 05:50 AM   #1
Full time employment: Posting here.
 
Join Date: Oct 2015
Posts: 572
Bond Ballast Allocation - Is it time to to make some tweaks?

It took me a number of years, but I finally made peace with holding bond funds in my AA viewing them as a ballast as opposed to a "must get yield/total return" investment. My 60/40 AA holds a majority of intermediate bond funds/ETFs in the fixed allocation with maybe a 1/3rd in short term treasuries.

As we all know, rising interest rates has been a prediction now for many years and my intermediate bond funds over time have performed just as I had hoped during this time. Due to the market run up, along with some new money I will be investing, I had planned to do a little early rebalancing. YTD, my intermediate bond funds are down between 2.5% - 3% with my short term treasuries returning around 0%. This all got me thinking that perhaps I should be more like 50/50 short term bond funds & intermediate? For those ballasts folks, what type of bond mix do you keep and what triggers any tweaks, fine tuning, if at all?
DawgMan is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-16-2021, 05:56 AM   #2
Thinks s/he gets paid by the post
VanWinkle's Avatar
 
Join Date: Oct 2017
Location: Brighton
Posts: 1,727
Quote:
Originally Posted by DawgMan View Post
It took me a number of years, but I finally made peace with holding bond funds in my AA viewing them as a ballast as opposed to a "must get yield/total return" investment. My 60/40 AA holds a majority of intermediate bond funds/ETFs in the fixed allocation with maybe a 1/3rd in short term treasuries.

As we all know, rising interest rates has been a prediction now for many years and my intermediate bond funds over time have performed just as I had hoped during this time. Due to the market run up, along with some new money I will be investing, I had planned to do a little early rebalancing. YTD, my intermediate bond funds are down between 2.5% - 3% with my short term treasuries returning around 0%. This all got me thinking that perhaps I should be more like 50/50 short term bond funds & intermediate? For those ballasts folks, what type of bond mix do you keep and what triggers any tweaks, fine tuning, if at all?
The time lapse before I need the money has the most influence on my
bond duration. I have all of my bond money in 2 funds, both intermediate bond funds from Vanguard. They are also down 3-3.5% this year at this time. They did well last year so I don't expect the same return every year. "Don't do something, stand there" a quote from John Bogle makes sense to me in many situations. Portfolios are like a bar of soap, the more you rub them, the smaller they get. I just re-balanced equities to intermediate bonds to get back to my 50/50 allocation. I do keep about 1 year in cash, but the rest is invested in my 50/50 allocation.

Good luck to you,

VW
__________________
Retired May 13th(Friday) 2016 at age 61.
VanWinkle is offline   Reply With Quote
Old 04-16-2021, 06:26 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Aug 2016
Location: Northern Virginia
Posts: 3,071
Quote:
Originally Posted by DawgMan View Post
It took me a number of years, but I finally made peace with holding bond funds in my AA viewing them as a ballast as opposed to a "must get yield/total return" investment. My 60/40 AA holds a majority of intermediate bond funds/ETFs in the fixed allocation with maybe a 1/3rd in short term treasuries.

As we all know, rising interest rates has been a prediction now for many years and my intermediate bond funds over time have performed just as I had hoped during this time. Due to the market run up, along with some new money I will be investing, I had planned to do a little early rebalancing. YTD, my intermediate bond funds are down between 2.5% - 3% with my short term treasuries returning around 0%. This all got me thinking that perhaps I should be more like 50/50 short term bond funds & intermediate? For those ballasts folks, what type of bond mix do you keep and what triggers any tweaks, fine tuning, if at all?
I would be thinking about floating rate bonds and minimizing duration.

But if "ballast" is your only objective you want to the 100 pct long treasuries.
Montecfo is offline   Reply With Quote
Old 04-16-2021, 08:06 AM   #4
Thinks s/he gets paid by the post
Dash man's Avatar
 
Join Date: Mar 2013
Location: Limerick
Posts: 3,171
Iím going the bond ladder route to be able to take advantage of increasing rates if they continue. Iím using Schwabís Wasmer Schroeder Strategies 3-7 year taxable bonds ladder since I donít trust bond funds and am not comfortable doing it myself. There is a .55%/yr fee, but itís probably cheaper than the mistakes Iíd make.
Dash man is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Fixed Allocation - Ballast or Yield Driven? DawgMan Stock Picking and Market Strategy 43 12-21-2020 07:39 PM
Time to buy some bond funds for retired guy? gquiring Stock Picking and Market Strategy 7 06-10-2020 07:28 PM
Focused Bond, Bond Mutual Fund, And Bond ETF Questions clobber FIRE and Money 15 05-10-2020 12:10 PM
Social Security Needs Small "Tweaks" Purron FIRE and Money 46 05-19-2010 08:53 PM

» Quick Links

 
All times are GMT -6. The time now is 03:40 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.