No. of Recommendations: 0
I think you are on the right track. You don't "need" bonds for retirement. They do provide a measure of stability. If the market turns down on your stocks, you have a reasonably stable source of funds to cover the downturn. That is why the Foolish system described earlier on this board and especially on the Retire Early Homeboard--recommends full stock investment as the main source of retirement income with only 3 to 5 yrs of annual living expenses invested in bonds--usually treasuries or CDs in a laddered maturity portfolio.

You will not find much positive about bond funds on this board. You would be better off to hold the bonds themselves or CDs (any maturing investment) when interest rates are rising. Bond funds do provide diversification and professional management--especially for smaller account balances. But they are best when interest rates are stable or falling. Avoid them when rates are rising.

When you say 3 to 5 years annual living expenses invested in bonds, what are you really saying? Let's assume one's annual living expenses are $30,000. Social Security and Pension Income are $20,000. Does one need to have $150,000 or $50,000 in bonds (using 5 years as the rule of thumb)?

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