Several years back I realized I needed to diversify more into bonds. Believing that interest rates at the time were near an all-time low, I stuck with short- and intermediate-duration funds, planning to move to longer durations - and higher yields - when interest rates were higher.
Well, they're certainly higher now, and my funds (VFSTX and BIV, for example) are down 10%-ish. Long-duration funds are down even more. I'd like to stick to my original plan of (eventually) moving to longer-duration funds, but I'm not sure of the best timing or strategy. I know that no one has a crystal ball, but does anyone have any thoughts on this? Rates may still climb for a while. I'm hesitant to sell my holdings while they're so depressed (I know - sunk cost fallacy), but then, the long term funds are even cheaper (relatively). Should I wait a bit? Start dollar-cost averaging into longer durations now? Move it all now?
Well, they're certainly higher now, and my funds (VFSTX and BIV, for example) are down 10%-ish. Long-duration funds are down even more. I'd like to stick to my original plan of (eventually) moving to longer-duration funds, but I'm not sure of the best timing or strategy. I know that no one has a crystal ball, but does anyone have any thoughts on this? Rates may still climb for a while. I'm hesitant to sell my holdings while they're so depressed (I know - sunk cost fallacy), but then, the long term funds are even cheaper (relatively). Should I wait a bit? Start dollar-cost averaging into longer durations now? Move it all now?