Author Topic: Is it time to add bonds?  (Read 1052 times)

nihilism122

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Is it time to add bonds?
« on: December 22, 2016, 11:56:11 AM »
I am a soon to be 35 year old Canadian investor.  I invest in ETFs.  My portfolio is all stocks and REITS.  At some point I want to start adding some bonds to my portfolio for diversification and stability, but I am struggling with when to do it.  Part of me says start now and another part says keep investing in stocks while you are still relatively young and still accumulating wealth.  I am 10-15 years away from retirement and I have a portfolio well into six figures.  My portfolio breakdown is roughly:

20% US stocks
20% International stocks
20% REITS (10% domestic and 10% international)
35% Canadian stocks
5% cash

Interested in hearing what people think.  Any insight is appreciated. 

SeattleCPA

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Re: Is it time to add bonds?
« Reply #1 on: December 22, 2016, 12:58:34 PM »
Just an idea...

You might be find insightful to look at the bond allocation percentages used by the target retirement funds that assume people will retire in 10-15 years.

Not that you'd want to do the exact same thing... but it'd probably give you a little clarity.

FWIW, and as I've shared before, I would not assume you have the stomach for a bondless portfolio unless you've already been through a bear market and felt fine with no bonds.

nihilism122

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Re: Is it time to add bonds?
« Reply #2 on: December 26, 2016, 10:27:14 AM »
Thanks.  The target funds seem to be around 10-15% bonds (15 if I retire in 10 years and 10 if I retire in 15).  Now I am wondering if it is even worth adding such a small percentage of bonds at this point.  I may wait a few more years or very gradually start adding a little bit a year until I get to those allocations in a few years.  I'm more likely to work 15 more years than 10, so I have a lot of time. 

Retire-Canada

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Re: Is it time to add bonds?
« Reply #3 on: December 26, 2016, 02:08:09 PM »
What I am reading is that you don't know what you want to do in terms of bonds therefore it's hard to spend money buying them. That makes sense and the solution is to come up with a plan with regards to bonds that you feel confident in. Until you reach that point it will always be hard to buy bonds.

There is no specific answer to your question. You need to determine what you want to do.

Personally I'm 48 and ~5yrs out from FIRE. I'm 100% stocks. My current thinking is to buy ~5yrs worth of minimal living expenses in an asset like bonds that would get me through a market crash without depleting my stocks. Psychologically that seems like enough safety net/cushion given how I felt about the tech bubble and 2008. Initially that would be something like 10% of my initial FIRE portfolio or say $100K, but if my portfolio doubled I would keep that part of the portfolio at $100K+inflation. With a much bigger portfolio I need that safety net less not more.

I still haven't made up my mind exactly what I'll do and until I decide I'm going to roll along with my current asset allocation.