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URL:  http://boards.fool.com/the-other-members-have-given-some-good-advice-on-29147792.aspx

Subject:  Re: 401(k) allocation to eliminate s/t bond fund Date:  3/4/2011  11:13 AM
Author:  MajorMajor78 Number:  68615 of 78168

The other members have given some good advice on whether or not to keep the bond fund. Personally I'm 100% equities like you are suggesting because my time horizon is out around 28-33 years. One important risk you should note is that there are extended periods of time where stocks fail to generate returns and having a bond component in the portfolio can keep you moving forward even in a long term bear market. A good example of this is the 2000-2009 decade where the S&P was essentailly flat. A bond portion would have ensured some small forward progress in this time. This also happened in the 30's, 70's and I believe at least one time period somewhere in the 55-64 range... it's been a while since I've read that data so my dates may be a little off but these periods do occur on a quasi-regular basis. Over a 20+ horizon stocks have always won out but it's good to keep in mind that being diversified over differnt asset classes can give you both more stable returns and a degree of flexability in differnt market conditions. Pick an asset allocation that fits your style and go with it. If that's pretty much all stocks there's nothing wrong with that.

One thing to consider though... You might actually have more REIT's in your portfolio than you realize. Vanguard Value index and ESPECIALLY Vanguard Small Cap Value index are REIT stock heavy. You easily have more than 20% of your portfolio in REIT's even if the fund name doesn't mention it. Here's a link to some data that breaks