At what age did you start moving into bonds?

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BV3273
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At what age did you start moving into bonds?

Post by BV3273 »

I’m a bit curious on this. I am early 30s and I’m 100% equities. I have seen some tremendous growth this year due to some of my growth funds that I hold. I am curious as to when I should start the transition into Bond Funds. The bulk of my holdings are in my 401K.

5% - Company Stock - I’m currently in a black out period.
40% - SP
40% - Fidelity Growth
15% - Vanguard International Growth

I have Baird Aggregate Bond Fund - BAGIX - Available in my 401k.
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KingRiggs
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Re: At what age did you start moving into bonds?

Post by KingRiggs »

Moved to 70/30 when I hit 50 years old, and realized that losing half of my 100% equity portfolio in a downturn would make me very sad...

You'll know it's time when you feel the same way. :beer
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Old Sage(brush)
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Re: At what age did you start moving into bonds?

Post by Old Sage(brush) »

At about 50. This was after having had the experience of going through 2008 with an allocation to a total return hedge fund that, according to my advisor (who I have since separated from), was supposed to provide "bond like lower volatility" but, did not, lost upward of 25% during dip in 2008 (overall, portfolio was down over 40%). So, learned a few lessons, and now have significant allocation in bonds. Although of course it can go down, can even go down 25% or more, but, just feel it is a better route based on my experience.
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Re: At what age did you start moving into bonds?

Post by Broken Man 1999 »

I-bonds in 2000, 2001, age late 40ties.

Moved to near a 50/50 split in 2015, when I received my lump-sum pension, and DW started SS. We were both 62.

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mptfan
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Re: At what age did you start moving into bonds?

Post by mptfan »

I can't say when I started moving into bonds because I was never out of bonds. I've never had less than 10% bonds, and usually not less than 20%.
Last edited by mptfan on Sun Oct 18, 2020 9:01 am, edited 1 time in total.
macheta
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Re: At what age did you start moving into bonds?

Post by macheta »

I was about 32 years old when I started following Bogleheads and started the three fund portfolio. My strategy has always taken the conservative approach even before being introduced with Bogleheads. I would have taken more risk before I was 40 years old if I did it all over again.
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Re: At what age did you start moving into bonds?

Post by Outer Marker »

I think every portfolio should have at least 10% bonds. I'm in good company with Warren Buffett. Age -20 in bonds is as good as any other rule of thumb.
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Brianmcg321
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Re: At what age did you start moving into bonds?

Post by Brianmcg321 »

I’m waiting until 60.
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BV3273
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Re: At what age did you start moving into bonds?

Post by BV3273 »

Thanks all! I’m leaning towards 10% to start. I just don’t want to have a bunch of drag on my portfolio, especially if returns are below normal. I think it would be good ballast though.
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Re: At what age did you start moving into bonds?

Post by ClevrChico »

I've always had bonds in my portfolio. Experience has taught me that when things are going well, life has a way messing it all up.
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BV3273
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Re: At what age did you start moving into bonds?

Post by BV3273 »

ClevrChico wrote: Sun Oct 18, 2020 9:10 am I've always had bonds in my portfolio. Experience has taught me that when things are going well, life has a way messing it all up.
I totally agree. What was your starting allocation of bonds?
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Re: At what age did you start moving into bonds?

Post by Ron Ronnerson »

Four years ago, when I was 41. I’m currently at roughly 22% bonds. I’m expecting a pension and that factored into things.
joetro29
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Re: At what age did you start moving into bonds?

Post by joetro29 »

Great question and discussion. I’m about 99 equities age 37, but also have pension. Should move my tax deferred to bonds but gosh is this likely poor timing.
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Re: At what age did you start moving into bonds?

Post by Stinky »

Started to move into bonds (really stable value fund in 401(k)) at about age 60.

I might have done it sooner, but I had a really solid defined benefit plan that has given my income post-retirement some stability.
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ClevrChico
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Re: At what age did you start moving into bonds?

Post by ClevrChico »

BV3273 wrote: Sun Oct 18, 2020 9:14 am
ClevrChico wrote: Sun Oct 18, 2020 9:10 am I've always had bonds in my portfolio. Experience has taught me that when things are going well, life has a way messing it all up.
I totally agree. What was your starting allocation of bonds?
My starting allocation was 100% in GNMA bonds :shock: , as I was both extremely defensive post the .com crash, and I listened to Bob Brinker, pre-bogleheads. It turned out to be a decent decision.

Now, that I'm better informed, I might follow the glide path of Vanguard's target date funds, or just do Age - 10.

https://investor.vanguard.com/mutual-fu ... irement/#/
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Re: At what age did you start moving into bonds?

Post by dogagility »

We moved away from an all-equity investment retirement portfolio about 5 years prior to from my expected salary reduction time (aka semi-retirement). Now that we're two years out from that, we're at 80/20. When I fully retire (maybe in another 5 years), we plan to go to 70/30 and use VPW.

However, we're more aggressive investors than the typical Boglehead, but we have had significant personal capital and were (are) not worried about market volatility.
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EvelynTroy
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Re: At what age did you start moving into bonds?

Post by EvelynTroy »

I don't think age has all that much to do with the fixed income side of someone's portfolio. Diversification is very powerful tool.
I have gone by the messages from Jason Zweig, Allen Roth, and Larry Swedroe -

https://blog.aarp.org/bulletin-today/bo ... -need-them

Zweig - "I think people who scoff at bonds (or foreign stocks for that matter) misunderstand the point of diversification. The reason to diversify is not to increase your return, or even to lower your risk; it's to insure yourself against the unforeseeable." "It's insurance against the ultimate risk of being surprised by what happens around us."

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Re: At what age did you start moving into bonds?

Post by UpperNwGuy »

I would add 20 percent bonds in your 40s, increase it to 30 percent in your 50s, increase again to 40% in your 60s, then hold at 40% for the rest of your life. (This is the age minus 20 system.)
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Re: At what age did you start moving into bonds?

Post by oldcomputerguy »

For most of my investing lifetime, I was 100% equity. This was not because I intended to carry the risk, rather, it was because I didn't know any better. (I began investing in my 401k back in the mid-1980's, and knew nothing about proper asset allocation at the time; I just accepted the word of the "advisor" that the company sent me to.) After I found Bogleheads (about five years ago, at age 59) and educated myself a bit, I realized with horror that I had been (and at the time still was) carrying way too much risk for my situation. I immediately went to a 60/40 AA, with the intent of continuing to work until FRA. My plan changed in 2017, at which time I went ahead and retired and went to 50/50, which is where I am now.
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Re: At what age did you start moving into bonds?

Post by Sheepdog »

I started at age 10 in 1943 when I purchased War Bonds via pasting 10 and 25 cent stamps at school into a book and when full ($18.75) were exchanged to a $25 10 year War Bond. I purchased a lot of War and E and EE Bonds over the years and CDs as well. I did not purchase my first stocks until about age 28 to 30. It took me years later to trust stocks. Never did I own over 58% stock. (now 27%) It worked out fine for me.
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Re: At what age did you start moving into bonds?

Post by KingRiggs »

Sheepdog wrote: Sun Oct 18, 2020 10:10 am I started at age 10 in 1943 when I purchased War Bonds via pasting 10 and 25 cent stamps at school into a book and when full ($18.75) were exchanged to a $25 10 year War Bond. I purchased a lot of War and E and EE Bonds over the years and CDs as well. I did not purchase my first stocks until about age 28 to 30. It took me years later to trust stocks. Never did I own over 58% stock. (now 27%) It worked out fine for me.
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Re: At what age did you start moving into bonds?

Post by Ice-9 »

macheta wrote: Sun Oct 18, 2020 8:49 am I was about 32 years old when I started following Bogleheads and started the three fund portfolio. My strategy has always taken the conservative approach even before being introduced with Bogleheads. I would have taken more risk before I was 40 years old if I did it all over again.
My story is similar.

I actually started with a portfolio that was 86/14 equities/fixed income. I was 35 when the 2008-9 crash happened, during which my asset allocation plan required me to rebalance three times back into stocks. The first time, I was enthusiastic about stocks being on sale. The second time, I was a bit less enthusiastic but managed to do it.

By the third time, in February 2009, with my portfolio greatly reduced and my equity percentage having sunk way down into the 60s, my gut would not allow me to rebalance all the way back to 86/14. I did some back of envelope calculations and decided I was comfortable with 70/30 and only rebalanced back to that allocation. I've stayed at 70/30 ever since.

Obviously, I'd be a little wealthier through the long bull run had I pushed myself to rebalance all the way back to 86/14, but I simply couldn't at that time in February 2009. Since then, with memories of what the crash was like, it was easy to stay 70/30 ever since. It's not a huge regret, and hindsight is 20/20, but I do somewhat wish that at some point since then I would have realized I'm still relatively young and maybe I can boost the equity percentage back to something more appropriate for my age, like maybe 80/20. Now I'm late 40s, and 70/30 feels about right for that age, so I'm staying put until maybe ten years from retirement.

But my advice for those younger than me is similar to macheta above: Implement a higher equity / lower fixed income allocation into middle age. In retrospect, my 70/30 wasn't too bad but perhaps a tad too conservative.
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Re: At what age did you start moving into bonds?

Post by Fishing50 »

Added 30% bonds at 45yrs old in preparation for retirement at 50yrs old. Decreased to 20% due to increased pension from a promotion providing increased ability to assume risk. Having bonds allowed rebalancing into equites in March, effectively buying low.
1yr from military pension. 80 equites / 20 bonds for life, ZERO emergency fund, 100% taxable in equities (dividends in cash), 33% taxable, 30% Roth, 37% tax deferred. | Gone Fishing At 52yrs old!
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Re: At what age did you start moving into bonds?

Post by Normchad »

I started adding bonds around age 40.

My thinking is that the portfolio is for retirement. And I’m not worried about a crappy decade, I’m confident that given enough time, things will recover. So I didn’t need them in my 20s or 30s.

When I hit 40, I figured I might be 15 years away from needing the money. So I started shifting over. At 51 now, I’m about 35% BND.
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Re: At what age did you start moving into bonds?

Post by avidlearner »

around age 35, I was around 10% bonds. Now I am 40 and 20% bonds
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Re: At what age did you start moving into bonds?

Post by MarkRoulo »

BV3273 wrote: Sun Oct 18, 2020 8:16 am I’m a bit curious on this. I am early 30s and I’m 100% equities. I have seen some tremendous growth this year due to some of my growth funds that I hold. I am curious as to when I should start the transition into Bond Funds. The bulk of my holdings are in my 401K.
You have two questions here.
  • What age did the commentors move into bonds, and
  • When should you?
I bought my first bonds around 2000 at age 32. I bought I series savings bonds and then followed this up with individual 30 year TIPS in an IRA.

But ... I was in the tech field then (still am) and was REALLY looking for something other than stock. I figured I had enough exposure to the stock market, thank you very much.

But these things were all paying out inflation plus 3.4%-3.6%. Today you keep up with inflation with ISeries bonds and maybe lose a bit with long TIPS (I haven’t checked recently).

Stocks don’t seem like a good deal and bond yields are terrible. Neither is “obviously” a better choice so I guess they are priced consistently :-)

I’d view bonds as a risk reducer, so when do you want to start de-risking your portfolio?
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Re: At what age did you start moving into bonds?

Post by tibbitts »

"Moved"(?) to 50/50 stocks/bonds at age 22. Okay technically more like stable value, not bonds. Maybe age 23, whatever, whenever I started investing. Not sure what the point is.
Last edited by tibbitts on Sun Oct 18, 2020 10:55 am, edited 2 times in total.
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Re: At what age did you start moving into bonds?

Post by Kenkat »

I never had anything less than 20% bonds, even starting out in my early 20s.
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Re: At what age did you start moving into bonds?

Post by neverpanic »

I joined the forum because of suspecting it was time for me to begin adding bonds in preparation for a possible retirement someday.

At 49, I have higher-than-average risk tolerance, so I am still 100% equities and cash, no bonds yet. I view my rental properties as being "bond-like".
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Re: At what age did you start moving into bonds?

Post by Northster »

I too started early When I began work in 1973 the choices were few and being a conservative guy I put 50% into TIAA traditional and 50% into CREF. Later added more equities in taxable account. For sure the CREF outgrew the Trad over the years but am now safely retired and have few regrets.
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Re: At what age did you start moving into bonds?

Post by BalancedJCB19 »

I held bonds from the very beginning, I was learning and did age in bonds and didn't start investing until I was 30. I was 70 stocks, 30 bonds. Now that I'm 56 and educated myself, I would have been 100% stocks probably until about 45. I'm currently 56 and my plan is to hold balanced index for life which is 60/40 stocks/bonds. Everyone has to follow their own path and learn what works for them. Also, in the beginning, your portfolio is small, when you start looking at a million dollar portfolio, losing a larger percentage of that during a downturn, hurts because it's a big number. Even a 60/40 portfolio can go down 25%, but an all equity portfolio can go down 50% or more, so I feel that is my risk tolerance with a million dollar portfolio.
Last edited by BalancedJCB19 on Sun Oct 18, 2020 11:11 am, edited 1 time in total.
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Re: At what age did you start moving into bonds?

Post by MrBobcat »

I didn't even understand AA (or index investing) till I found this board and went through the reading list... so age 53. I'm 70/30 now. Plan right now is to start gliding towards 60/40 about 5 years out from retirement. We'll see, I'm still learning.
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Re: At what age did you start moving into bonds?

Post by nedsaid »

I went from about 94% stocks in my retirement portfolio to 80% in early 2000 before the Tech crash. Because interest rates were relatively high, the proceeds from sale of stock went to cash. About the same time, I allocated contributions to my workplace 403(b) 60% to stocks and 40% to bonds. I was age 40 at the time.
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Re: At what age did you start moving into bonds?

Post by goingup »

BV3273 wrote: Sun Oct 18, 2020 8:16 am I’m a bit curious on this. I am early 30s and I’m 100% equities. I have seen some tremendous growth this year due to some of my growth funds that I hold. I am curious as to when I should start the transition into Bond Funds. The bulk of my holdings are in my 401K.

5% - Company Stock - I’m currently in a black out period.
40% - SP
40% - Fidelity Growth
15% - Vanguard International Growth

I have Baird Aggregate Bond Fund - BAGIX - Available in my 401k.
Are you 100% equities? In some of your earlier posts you said you owned NY state munis, national munis, Long-term treasuries, Short-term treasuries. In light of the fact you own bonds, I don't really understand your question? :confused

We had Target Funds and then blended funds in our 30's. Started buying individual bond funds in earnest after 2008-2009 because of the pain of those years. Now in our 50's and retired we're 60/40 ish but that can drift 10%.
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Re: At what age did you start moving into bonds?

Post by Buy_N_Hold »

oldcomputerguy wrote: Sun Oct 18, 2020 10:00 am For most of my investing lifetime, I was 100% equity. This was not because I intended to carry the risk, rather, it was because I didn't know any better. (I began investing in my 401k back in the mid-1980's, and knew nothing about proper asset allocation at the time; I just accepted the word of the "advisor" that the company sent me to.) After I found Bogleheads (about five years ago, at age 59) and educated myself a bit, I realized with horror that I had been (and at the time still was) carrying way too much risk for my situation. I immediately went to a 60/40 AA, with the intent of continuing to work until FRA. My plan changed in 2017, at which time I went ahead and retired and went to 50/50, which is where I am now.
This was a great time to be 100% equities, so ironically your ignorance worked in your favor!
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Re: At what age did you start moving into bonds?

Post by invest2bfree »

I had no bonds till I was 40 and the only reason I called added them is when you have increased your assets many times your income it is not a good idea to full equity risk.

You need start adding bonds when your portfolio is 5x your income.
At 10x your income be more conservative.

If you have make $100k income and net worth is only $100k I would not bother with bonds you are in accumulation phase.
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Re: At what age did you start moving into bonds?

Post by Gill »

Like others, I was never out of bonds. Of course, during some of my earning years bonds were more attractive than equities with tax free bonds yielding 8% or better and taxable bonds including treasuries exceeding 10-12%.
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Re: At what age did you start moving into bonds?

Post by Dottie57 »

I always had 30-40% of bonds. The FA of my first 401k suggested a 60/40 portfolio - so thar was my choice.


Yes, I made and exceeded my goals.
Last edited by Dottie57 on Sun Oct 18, 2020 12:10 pm, edited 2 times in total.
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BV3273
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Re: At what age did you start moving into bonds?

Post by BV3273 »

goingup wrote: Sun Oct 18, 2020 11:23 am
BV3273 wrote: Sun Oct 18, 2020 8:16 am I’m a bit curious on this. I am early 30s and I’m 100% equities. I have seen some tremendous growth this year due to some of my growth funds that I hold. I am curious as to when I should start the transition into Bond Funds. The bulk of my holdings are in my 401K.

5% - Company Stock - I’m currently in a black out period.
40% - SP
40% - Fidelity Growth
15% - Vanguard International Growth

I have Baird Aggregate Bond Fund - BAGIX - Available in my 401k.
Are you 100% equities? In some of your earlier posts you said you owned NY state munis, national munis, Long-term treasuries, Short-term treasuries. In light of the fact you own bonds, I don't really understand your question? :confused

We had Target Funds and then blended funds in our 30's. Started buying individual bond funds in earnest after 2008-2009 because of the pain of those years. Now in our 50's and retired we're 60/40 ish but that can drift 10%.
I was looking into moving into those bond funds but I never pulled the trigger.
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Re: At what age did you start moving into bonds?

Post by Dottie57 »

KingRiggs wrote: Sun Oct 18, 2020 10:16 am
Sheepdog wrote: Sun Oct 18, 2020 10:10 am I started at age 10 in 1943 when I purchased War Bonds via pasting 10 and 25 cent stamps at school into a book and when full ($18.75) were exchanged to a $25 10 year War Bond. I purchased a lot of War and E and EE Bonds over the years and CDs as well. I did not purchase my first stocks until about age 28 to 30. It took me years later to trust stocks. Never did I own over 58% stock. (now 27%) It worked out fine for me.
I love you, Sheepdog! :happy
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BV3273
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Re: At what age did you start moving into bonds?

Post by BV3273 »

MarkRoulo wrote: Sun Oct 18, 2020 10:50 am
BV3273 wrote: Sun Oct 18, 2020 8:16 am I’m a bit curious on this. I am early 30s and I’m 100% equities. I have seen some tremendous growth this year due to some of my growth funds that I hold. I am curious as to when I should start the transition into Bond Funds. The bulk of my holdings are in my 401K.
You have two questions here.
  • What age did the commentors move into bonds, and
  • When should you?
I bought my first bonds around 2000 at age 32. I bought I series savings bonds and then followed this up with individual 30 year TIPS in an IRA.

But ... I was in the tech field then (still am) and was REALLY looking for something other than stock. I figured I had enough exposure to the stock market, thank you very much.

But these things were all paying out inflation plus 3.4%-3.6%. Today you keep up with inflation with ISeries bonds and maybe lose a bit with long TIPS (I haven’t checked recently).

Stocks don’t seem like a good deal and bond yields are terrible. Neither is “obviously” a better choice so I guess they are priced consistently :-)

I’d view bonds as a risk reducer, so when do you want to start de-risking your portfolio?
Probably gonna start soon
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Re: At what age did you start moving into bonds?

Post by abc132 »

The answer really depends why you are interested in moving into bonds.

1. Can't sleep at night
In this case, you likely want to add enough bonds that you don't make dramatic moves based on emotion, like puling everything out of the market when it is down 30%. Put enough into bonds that you can do this.

2. Asset protection
This becomes important when your investment income becomes significant compared to your employment income. Typically at 15-20x retirement income. This would typically be 6-8 years before early retirement, and 8-10 years before non early retirement.

3. Loss of income potential
If you don't have that many working years left, or your employment has a risk of long term unemployment, you risk to rely on pulling funds out during a downturn. A ladder of bonds or a bond fund can be used during a downturn or job loss, or reinvested.

If you are:
1. Start the process of accumulating bonds now. Don't make any drastic changes that cause tax consequences, but feel free to switch to X% bonds using tax deferred or tax-free accounts.
2. Keep investing mostly in stocks. Something in the 90/10 AA or 80/20 AA range won't be extremely harmful to long term growth, given that new income additions should wash out some of the advantages of stocks over bonds. Investing in your earnings potential is more important than your AA.
3. This is likely not you. At age 30, severe health issues will drain your accounts, and the best protection is investing past the point.

Investing is a personal choice, so what makes sense for you will be different than what makes sense for me, or for anyone else. I think you could likely wait into your 40's and be better off financially, if your emergency fund is big enough and if you have the willingness to experience downturns to gain additional rewards. Based on your question, I would say you are interested in bonds and should have no problems with your overall plan going to 80/20 AA.
Last edited by abc132 on Sun Oct 18, 2020 12:53 pm, edited 2 times in total.
J295
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Re: At what age did you start moving into bonds?

Post by J295 »

Around transition away from full time work, around age 53.
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Re: At what age did you start moving into bonds?

Post by nisiprius »

About age 32.
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Re: At what age did you start moving into bonds?

Post by Bernard »

I'm 63 now and I'm still 100% equities. I may consider bonds when I'm older, say in my mid-to-late 70s, unless . . . there's a major event that suggests a financial disaster.
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Re: At what age did you start moving into bonds?

Post by Dave55 »

Sometime at around age 36.

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Re: At what age did you start moving into bonds?

Post by Peter Foley »

About age 60. I had been fairly aggressive at about 70/30 AA but about a year before I retired I went to 45/55. I did it fairly gradually taking about a year to a year and a half to "dollar cost average" the move.
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Re: At what age did you start moving into bonds?

Post by rkhusky »

Ever since I started investing. Vanguard Wellington (65/35) was one of my first funds, and the only one left from those days. Something about an inception date of 1929 drew me.

This was before I knew anything about investing. I just looked in a magazine and picked some of the top-performing recommended funds. Janus Twenty, Stein Roe Young Investor, Vanguard US Growth, and PBHG Emerging Markets were some of my early picks. No rhyme or reason and I didn’t even consider expense ratio.
dru808
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Re: At what age did you start moving into bonds?

Post by dru808 »

I’ve always had some bonds, started investing with a lifestrategy fund.
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topper1296
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Re: At what age did you start moving into bonds?

Post by topper1296 »

Outer Marker wrote: Sun Oct 18, 2020 8:57 am I think every portfolio should have at least 10% bonds. I'm in good company with Warren Buffett. Age -20 in bonds is as good as any other rule of thumb.
+1. This is what I do.
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