BND
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BND
Anyone see any downsides to growing a position on BND? While not as aggressively adding as much to equity side (already high)
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Re: BND
I think the duration of BND may be too long for some folks. If your horizon is long, then it's a good choice.
Re: BND
No, if your intent is to increase your allocation to bonds over time.Eastcoaster212 wrote: ↑Mon Aug 15, 2022 11:57 pm Anyone see any downsides to growing a position on BND? While not as aggressively adding as much to equity side (already high)
Re: BND
The only downside I see is the short duration.Eastcoaster212 wrote: ↑Mon Aug 15, 2022 11:57 pm Anyone see any downsides to growing a position on BND? While not as aggressively adding as much to equity side (already high)
But if you’re cool with interest rate risk, BND is a low cost way to get it.
IMHO, a long-term investor should be looking at long-term bonds.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
Re: BND
The downside is whether or not you understand why you are doing this, meaning that it could be the obvious choice to meet your objectives or could be exactly not what you would want.Eastcoaster212 wrote: ↑Mon Aug 15, 2022 11:57 pm Anyone see any downsides to growing a position on BND? While not as aggressively adding as much to equity side (already high)
What is your plan? Funds are picked to support objectives.
Re: BND
You should have a predetermined asset allocation that meets your needs and reflects your risk tolerance
Don’t “grow” a position in anything unless it’s needed to achieve that allocation.
Don’t “grow” a position in anything unless it’s needed to achieve that allocation.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Re: BND
I did not fully understand duration and interest rate risk when I started allocating to BND and BIV. Fortunately I don't plan to touch these funds for at least ten years. It could have been a mistake for me if I needed the funds sooner. Live and learn and in this case no harm done. I have learned a lot about building a fixed-income position to cover multiple years of expenses prior to retirement. Eventually some of those BND/BIV dollars will serve that purpose after they rebound from the interest rate shocks.
Re: BND
I'm not sure I understand in what circumstances BND duration would be too long. Can you explain?Marseille07 wrote: ↑Tue Aug 16, 2022 12:21 am I think the duration of BND may be too long for some folks. If your horizon is long, then it's a good choice.
Thanks,
Framus
- WingsFan4Life
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Re: BND
There's definitely a lukewarm reception to BND in this thread. One user says the duration is too long and another says the duration is too short. What fund should a boglehead invest in?
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Re: BND
It's part of the "three fund portfolio". If you're not really sure what to use, it's a fine default choice. For people in the accumulation stage. As you switch to spending your portfolio, the metrics might change.WingsFan4Life wrote: ↑Tue Aug 16, 2022 2:21 pm There's definitely a lukewarm reception to BND in this thread. One user says the duration is too long and another says the duration is too short. What fund should a boglehead invest in?
Re: BND
If you're 85, your spending needs probably aren't 7 years in the future.framus wrote: ↑Tue Aug 16, 2022 2:15 pmI'm not sure I understand in what circumstances BND duration would be too long. Can you explain?Marseille07 wrote: ↑Tue Aug 16, 2022 12:21 am I think the duration of BND may be too long for some folks. If your horizon is long, then it's a good choice.
Thanks,
Framus
Re: BND
A couple funds that have different maturities?WingsFan4Life wrote: ↑Tue Aug 16, 2022 2:21 pm There's definitely a lukewarm reception to BND in this thread. One user says the duration is too long and another says the duration is too short. What fund should a boglehead invest in?
And/or a TIPS fund, since this fund doesn’t include them.
Product summary
The fund’s investment objective is to seek to track the performance of a broad, market-weighted bond index. The fund generally:
Provides broad exposure to the taxable investment-grade U.S. dollar-denominated bond market, excluding inflation-protected and tax-exempt bonds.
Offers relatively high potential for investment income; share value tends to rise and fall modestly.
May be more appropriate for medium- or long-term goals where you’re looking for a reliable income stream.
Is appropriate for diversifying the risks of stocks in a portfolio.
Source: https://investor.vanguard.com/investmen ... d#overview
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils