I understand stocks and equity ETFs pretty well, but I’ve never really gotten into bonds. From what I’ve read, bonds don’t seem to play the same role they used to, like balancing stocks and generating income.
I’ve been happy with a 100% equities portfolio, knowing it’s more volatile but offers higher returns.
Now that I’m getting closer to retirement, I’m wondering if I should add some income-producing assets. What do you all think? Are bonds still worth it, or do you have better alternatives?
US Treasuries are a go-to for safety during a bear market. They’ve performed well in past downturns like 2008 and 2020, but they can still be volatile, especially long-term ones. I stick with Treasury money markets and short-term Treasuries.
@Olen
Don’t forget the 1970s when inflation was high. Even then, a portfolio with 10-20% long Treasuries and the rest in SPY did well long-term, with smaller drawdowns compared to 100% SPY.
@Olen
Is there an easy way to invest in Treasuries through Vanguard?
Keller said:
@Olen
Is there an easy way to invest in Treasuries through Vanguard?
Try ETFs like $SGOV, $IEF, $BND, or $TLT depending on your risk tolerance.
Keller said:
@Olen
Is there an easy way to invest in Treasuries through Vanguard?
Yes, Vanguard offers Treasury money market funds (VUSXX) and Treasury ETFs. You can also buy individual Treasuries through them.
Keller said:
@Olen
Is there an easy way to invest in Treasuries through Vanguard?
You can buy individual Treasuries on Vanguard, but they require $1,000 increments. Check out tutorials online.
It seems like there’s more talk about alternatives to bonds lately. Things like REITs, covered-call funds, preferred stock, and managed futures are worth considering. Each has different risks and rewards, so it depends on your comfort level and what you want your portfolio to do.
I stick with actual bonds, CDs, and Treasuries. Fixed income still has its place.
Not a lot of bond fans here, huh?
I’ve put 80% of my portfolio into US bonds and the rest into corporate bonds. It gives me about a 6% return and a steady income stream. I reinvest some of it into other opportunities.
Reagan said:
I’ve put 80% of my portfolio into US bonds and the rest into corporate bonds. It gives me about a 6% return and a steady income stream. I reinvest some of it into other opportunities.
How do you get 6%? Is it from daily yields or something else?
@Corey
Most of my bonds are long-term and pay semi-annual coupons. I also take on some higher-risk corporate bonds for better yields, but that’s only 20% of my portfolio.
CDs and money markets are paying about the same as bonds right now.
Merit said:
CDs and money markets are paying about the same as bonds right now.
That won’t last forever.
Merit said:
CDs and money markets are paying about the same as bonds right now.
That won’t last forever.
Same goes for Treasury bonds.
Merit said:
CDs and money markets are paying about the same as bonds right now.
CDs aren’t very tax-efficient compared to other options.
Merit said:
CDs and money markets are paying about the same as bonds right now.
CDs aren’t very tax-efficient compared to other options.
Why is that?
@Bliss
Treasuries are state tax-free. Municipal bonds can be tax-free on both federal and state levels. CDs, however, are taxed as regular income.
Larkin said:
@Bliss
Treasuries are state tax-free. Municipal bonds can be tax-free on both federal and state levels. CDs, however, are taxed as regular income.
That’s not true for most bond dividends either.