The Money Mustache Community

Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: hexdexorex on June 07, 2014, 09:59:12 AM

Title: Blend of stocks/bonds
Post by: hexdexorex on June 07, 2014, 09:59:12 AM
How do you allocate your stock/bond portfolio?

Personally I have always thought the mathematical approach that financial advisers take when they advise people what to do with their money is silly. It ignores probably what are huge mistakes in the pricing of certain markets.

For instance I feel the same as buffett does on bonds currently...

http://video.cnbc.com/gallery/?video=3000166399

And my allocation is similar to what he recommends - 90% equities and 10% cash

This approach has done really well since I started investing/earning money in 2006 with a 18% annualized return since. VS the market index of 6%. Obviously looking back alot of this is luck - betting on the market when it was at its lows...etc. But still I believe bonds - at least long term are a crazy bet.
Title: Re: Blend of stocks/bonds
Post by: taekvideo on June 07, 2014, 11:15:52 AM
Bond rates are crap right now, you'd earn more with your money in a 2% CD.
Hell I think my checking account has a higher rate than current 3 month treasuries..
Title: Re: Blend of stocks/bonds
Post by: Mr Mark on June 07, 2014, 11:21:39 AM
Maybe....

or maybe the interest rates will drop further, as a small absolute%drop will have a big impact on intermediate bond prices...

I just switched a heap of cash to VSCSX and VFIDX, so we'll see who was right! :-)