I have been reading the blog and forum for a while now and this is my first post. I am a 34 yo Spaniard pursuing the virtues of Mustachianism and EREism.
Right now I hold a quite basic bogleheadsī style portfolio. We donīt have Vanguard funds over here and ETFs are not a great tool for really long term portfolios either (due to fiscal reasons). So I get by with "cheap" index funds (Amundi and Pictet, considerably more expensive than what I think Vanguard is in the US). Among the significant drawbacks of living in Spain (there are upsides also... just donīt know where they went) are the scarcity of good options to invest. The financial industry in Spain is not competitive at all and regulations for investment, saving and retirement just suck.
But letīs stop the "complainypanting" for now. Basically, I have a geographically diversified portfolio with 85% stocks (indexes) and 15% bonds. I chose this relatively risky distribution due to my also relative youth, my risk profile and to the fact that I thought bonds were overvalued at the moment. However, as time goes by and I am supposed to increase the allocation to bonds I find myself not being sure about the matter.
I guess my question is: if you have an allegedly eternal portfolio with a low enough withdrawal rate, why would you need more safety for? I mean, wouldnīt it be holding too much bonds just overpaying for that "false" sense of security that so much cost us in many other regards? With a big enough portfolio and a low enough withdrawal rate, why would we limit so much our expectations on return? Though I know the benefits of holding bonds in a diversified portfolio, itīs just hard to me to renounce to the extra return when I feel I otherwise have enough and reasonable security and stability.
I would love to read your opinions and also I would be very grateful if anyone could provide links or information that could help me make a more informed decision. Things like efficient curves and risk/return ratios with different allocations, etc. I already know firecalc.
Thanks for reading.