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View Poll Results: Bonds: Use to buy stocks or Use for withdrawals?
Yes: I liquidate bonds to rebalance during a downturn 15 68.18%
No: I only spend from my bonds during a downturn 7 31.82%
Voters: 22. You may not vote on this poll

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Old 03-21-2021, 10:10 AM   #21
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Originally Posted by Whisper66 View Post
When rebalancing back into fixed income, I'm actually just buying money market funds that have almost no return but will hold their dollar value.
Not sure this makes sense (to me, at least). If a MM fund has "almost no return", i.e. near 0% APY, then how can it hold its dollar value relative to inflation? Or did you mean hold its dollar value literally, meanwhile losing ground to inflation?

Personally, I haven't been rebalancing and don't plan to anytime very soon. My target AA is something like 70/30, but in order to get up to 30% on the FI side, I'd have to buy more bonds, which I'm not eager to do right now. Ray Dalio's recent comments about the terribleness of the current bond market really resonated with me. https://www.linkedin.com/pulse/why-w...hen-ray-dalio/
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Old 03-21-2021, 11:22 AM   #22
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Originally Posted by Sojourner View Post
Not sure this makes sense (to me, at least). If a MM fund has "almost no return", i.e. near 0% APY, then how can it hold its dollar value relative to inflation? Or did you mean hold its dollar value literally, meanwhile losing ground to inflation?
Correct - Each dollar invested in the MM fund (VMMXX) holds it's dollar value literally but loses buying value over time to inflation.

We moved most of our fixed assets from VBTLX to VMMXX to slow fixed asset losses. VBTLX is Vanguard's Total US Bond Market fund with an average duration of 6.6 yrs. YTD return on VBTLX is a loss of 3.74%..... a significantly higher loss than VMMXX inflation loss.
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Old 03-22-2021, 04:45 AM   #23
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Since I am disciplined in keeping you asset allocation in check, then the answer to this question for me is both. The markets will determine where the money flows. In my case I withdraw funds for spending in January and re-balance if necessary at that time. If for example my allocation is at nominal in the beginning of the year, I will liquidate funds from both stocks and bonds in the proportion they are held in my accounts for spending.
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Old 03-22-2021, 06:19 AM   #24
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Both actually - currently I hold intermediate treasuries bond funds and I rebalance in/out of them as my AA drifts, but I do maintain a floor below which I will sell no additional bonds during rebalancing.

But I also have an income stream portfolio composed of Ibonds and TIPs funds where the ratio of 2 TIPs funds of differing durations are set to match the timeframe over which I need the money.

Some people do something similar with a standard 60/40 portfolio with nominal bonds in that they set the ratio of 2 bond funds of differing effective durations to match the timeframe over which they need the money. They still rebalance in/out as needed, but the total effective duration itself is still reduced over time.

Cheers.
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Old 03-22-2021, 06:58 AM   #25
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In my rollover IRA, an account I have had since I ERed in 2008 (from my old 401k) but can't really access until I turn ~60 in 2 years, I have rebalanced many times, usually from its one stock fund to its one bond fund, the stay near my desired AA which has gradually drifted toward more bonds as I have aged.

I have rebalanced from its bond fund to its stock fund a few times, not nearly as often as from stocks to bonds. I did rebalance twice from bonds to stocks in March of 2020, however, when the stock amount fell a lot.

In my taxable account, I rarely rebalance because that account has to generate enough income from the bond side to pay my bills. That consideration is the one which most drives any decision to rebalance, not its AA.
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Old 03-22-2021, 08:03 AM   #26
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Reading this thread with great interest. I am 4 years FIRE'ed, DW is working one more year and we are living off of her salary now, more or less.


Portfolio is around 39/61 and very bondfund heavy at the moment... and things are backsliding a bit. My question is, what would a good bond fund alternative be? Looking to move toward a 50/50 with some good market volatility immunity on the bond fund side?
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