When covid started, my total index bond fund dropped notably and quickly just like my total stock index fund did. Different percentages, sure, but both components of my portfolio certainly had a high feeling of uncertainty at that point. In my mind, both were being affected by, and part of, "the market". And while I do understand the definition you and others seem to be working with, surely you all have heard the term "bond market" before. So if there is a "stock market" and a "bond market" - which are obviously two different things - it's not entirely unreasonable that simply referring to "the market" could include both of these
@CrankAddict, the bolded statement seems perfectly reasonable to me from a standpoint of pure logic. As someone who likes reading about financial markets, I have sometimes seen usages where people seem to mean bonds and stocks together as "the market", so there are examples of what you say. That said, often people who say "the market" do mean "the stock market" or some particular stock market, so the commenter who previously claimed that "the market" means "the stock market" has supporting examples too. I think there are more opinions about exact definititions than there is agreement. :)
Fwiw, all of your questions throughout the thread have seemed very reasonable and clear, with one questionable assumption I'll address below. To me it looks like some of the commenters misread what you wrote. I could be wrong. (Probably am, but in the meantime, much respect to you for your calm answers and persistence.) Anyway, congrats on raising your savings rate and investing focus over the years; it sounds like you're on a very good track these days.
On your original questions, I think 7% is a trickier target than has been traditionally assumed, but fewer bonds may be a good idea. As others have said, this increases your volatility but may be to your advantage if a higher stock % builds your investments faster. You've described being confident and stable during prior crashes, so probably you can implement the higher stock % well.
A more diverse portfolio rather than just replacing BND with VTI may be helpful, at the price of being more complex. I think the idea of diversifying internationally could be helpful. It's not guaranteed of course but you might be on to something there. I have an international component - it's been weaker than US for about 20 years, it'll pay off any decade now! :)
In case anyone hasn't mentioned timeframes enough, most investing strategies take 15 years or longer before they can reliably beat their opponents, so whether any given strategy improves returns in just 8 short years depends a lot on luck. Anyway, below are recaps and references; skip to number 8 for possible action items if you want.
Recapping key points fwiw:
1) You sort of assumed 7% is a reasonable target for annual returns and that a portfolio can be constructed to meet that goal. You got a lot of flak for that because in the 8 year timeframe you gave, stock markets vary too much to make 7% more than a maybe. Most return expectations are highly uncertain for timeframes less than 15 to 20 years. As others said in various words, if we have a bad decade for most investors, almost any portfolio could lose money in 8 years, adjusted for inflation - in which case 7% might be unachievable.
2) You are totally correct that your original question, should you change your allocation, is consequential and under your control; your decision can reasonably be expected to influence results, and can possibly be done in ways that are more likely to achieve your goals than other alternatives or even your existing allocation.
3) Bonds have low returns these days but are different from stocks. You have experienced similar behavior but they're different animals and don't always act the same. Maybe because of the low returns it's better to have fewer bonds. Still, opinions differ and both sides have (or can have) good reasons.
4) Upthread, you expressed desire to minimize complexity, and said you don't have financial reading as a hobby. Fair enough!!
5) I laughed hard at your comment about finding the person you had trouble communicating with. Again fair, though I must say in other contexts she has often been very insightful, fwiw.
6) Someone explained Sequence of Returns Risk can be thought of as applying to your earning/accumulation phase, not just your retirmement/ post-earning phase. Your purpose in the thread shows this is true. With 8 years to your approximate target, you don't want to lose money unduly. A huge long lasting stock plunge 5 years from now could block you from your target date. You have SORR.
So now what?
7) Big Ern at Early Retirement Now has a couple of thoughtful articles about SORR:
a. (article points out that when SORR hurts retirees, it helps investors who are still working; the opposite is also true)
https://earlyretirementnow.com/2017/05/17/the-ultimate-guide-to-safe-withdrawal-rates-part-14-sequence-of-return-risk/b. (discussion with fairly complex math concludes that SORR is more important to safety than average rates of return are, mentions Variable Percentage Withdrawal as a possible solution but it's a bit complex
https://www.bogleheads.org/wiki/Variable_percentage_withdrawal, discusses a couple of strategies that don't seem to directly address your question.)
https://earlyretirementnow.com/2017/05/24/the-ultimate-guide-to-safe-withdrawal-rates-part-15-sequence-of-return-risk-part2/8) Complexity could pay off. Someone (Malcat, maybe!) mentioned complexity comes in different forms. For example, a two fund portfolio that you rebalance quarterly might take more work than a three fund portfolio that you rebalance annually. Unfortunately, certain forms of complexity may offer an edge compared to having your bond allocation: using non-bond assets to diversify, and having diversification plus rebalancing among different sector funds within your stock allocation. Also, real estate has often been helpful in this regard and you could buy Real Estate Investment Trusts (REITs) to diversify. Some people think gold in some form is a helpful diversifier. In my opinion the best example of diversification being valuable was discussed in the thread Idiots vs Gurus:
https://forum.mrmoneymustache.com/investor-alley/portfolio-design-idiots-v-gurus/The Idiots vs Gurus takeaways:
a. Historically, picking "random" (naive, mechanical) or "Idiot" complex portfolios of the investment choices listed in portfoliocharts.com beat nearly all "Guru" or expert-designed portfolios, in the sense of protecting against SORR. These were complex portfolios with many components (like 15 or 20), each in small equal percentages rebalanced annually.
b. The investment choices in portfoliocharts.com aren't known to have any magic in them, they're just the most comprehensive list of various known plausible investment choices that the website's author could find data for. The site has definitions (and examples?) of each investment type.
c. The Idiot portfolios also often had higher average returns than the Guru portfolios.
d. The idiot portfolios were weird, in that they routinely included crazy-looking stuff like REITs and gold.
e. Despite being randomly chosen and having some weird components, the idiot portfolios mostly had 70% to 75% stocks.
f. I think part of the Idiot advantage was in having many components, while part was in having a high stock %
From these, I guess that if you want some of the idiot advantage without the full complexity, you could go with something like 50% US stock fund, 25% foreign stock, 7% BND, 6% REIT fund, 6% some gold thing (maybe GLD), 6% cash. Possibly for cash, consider I-bonds.
If you want to test examples yourself, use the My Portfolio tool on portfoliocharts.com's Charts section:
https://portfoliocharts.com/charts/PS. If you don't read the whole Big ERN article in 7b, one of his points was that if you start long enough enough before retirement, you might be safer just piling everything into stock index funds than having bonds at all. Eventually you'll be far enough ahead that when the stocks drop, you're still ok. But whether 8 years is long enough is uncertain. Given that you're not wedded to the 8 year number, just seeking reasonable results, I think choosing all stock or not choosing all stock are both pretty reasonable choices. Sorry not to give a definite answer, but from what you've said, you're not at a point where there is one solution that's indisputably better than all others. Fwiw, though, I think you'll succeed reasonably no matter choice you make - because of your good savings rate and the fact you're choosing among reasonable choices.
