Author Topic: When should I start buying bonds?  (Read 223 times)

Fantasticmrfox

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When should I start buying bonds?
« on: April 23, 2024, 01:49:53 AM »
Greetings fellow Mustachians,

I've been investing for the last 6 years and I've managed to invest 180K USD currently valued at about 230K on the market. My goal is to reach 550K USD. I'm currently working in a job that despite a travel addiction has helped me to save 50% of my salary for the last 6 years. I am planning on moving to Australia soon where I am not sure how much I will be able to save just yet.

My current portfolio is 100% VWRD. I was wondering when I should start to buy bonds and at what percentage of my portfolio I should have in bonds in the next few years?

As always, I am deeply appreciative of the advice I receive from this forum.

FireLane

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Re: When should I start buying bonds?
« Reply #1 on: April 24, 2024, 01:54:16 PM »
The usual advice in these situations is that you don't start out by contributing 100% to stocks and then add bonds later on (unless you're building a bond tent, but that's something specific you do when you're approaching your retirement date).

Instead, you should decide on an asset allocation in advance, and every dollar you invest should follow that allocation. So for example, if you want to be 80% stock and 20% bonds, 80 cents of every dollar you contribute should go to your chosen stock fund and 20 cents to your chosen bond fund. If your portfolio drifts from those percentages, you contribute more to the fund that's under-allocated until you're back on target.

80/20 is what I use. From what I've read, it's almost as good for growth as 100% stocks, but with less volatility. But this depends a lot on you - on how aggressive you want to be and whether you have the temperament to stay calm in the face of market swings.

 

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