LongTermInvestor88 wrote: ↑Sun Jun 06, 2021 1:28 pm
You really do have some misplaced faith in the expected returns of bonds in the future. Bonds do not have anything near the expected return they provided in the past yet you continue which I feel wrongly to advise others in early accumulation to hold a significant allocation of bonds.
One thing bonds provide that equities can never promise, return of your principal. An equity is a call option on profits. The key to becoming a successful investor is being able to remain solvent long enough to remain in the game. There were plenty of CPA's and unemployed IT workers in past recessions, being young doesn't make you immune to those kind of events. So long as the OP is solvent enough to stay in the game, then go ahead. The only people I knew who were 100% equity were those with no debt, plenty of other means of financial liquidity/assets that provided cashflow. In other words, they did not place any reliance on those assets, they could have gone to zero and it would not affect their standard of living and/or their marriage. Those who will have a future defined benefit pension from say the federal government, they can be 100% equity, they have no risk with that source of income. Those who have a secure essential job, they can go 100% equity. Those who are risk takers, sure go 100% equity. Those who don't know their own risk tolerance? They should be holding some bonds because the worst way to find out your risk tolerance is when you wake up the next morning and the market is down 5,000 points with no end in sight and they are about to hit the "sell" button. If the OP needs to ask us, then he's not sure about doing it and he didn't write that his wife was in agreement with this strategy either.
Finance is personal, KlangFool speaks from his own experience as do we all, there will always be some who throw caution to the wind so the OP needs to weigh his own beliefs and that of his spouses. His spouse is a CPA, there are very few CPA's I know of who will go full tilt into anything especially for one who practices in a field which errs in conservatism. Thirteen years ago, we nearly came to the brink of the second Great Depression instead of the Great Recession we had, not many on this forum were privy to what was happening in real time, let's just say that if you did, you'd revisit your "equity is the new bond and cash is trash" thoughts. Giving up some return, is better than losing it all.