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Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75839  
Subject: Re: 401(k) allocation to eliminate s/t bond fund Date: 3/4/2011 5:46 PM
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I would keep the bonds but still underweight long term bonds.


The reason for this is that when you rebalance regularly between several asset classes you end up automatically "selling high and buying low" so in theory having a percentage of you assets allocation in bonds like it is now will have the same return as a 100% stock portfolio but with less volatility (often called risk).

If you google "efficient frontier" or "modern portfolio theory" you will find lots about this, some of it very technical.

You might check out these books at your local library if you want to learn more;

http://www.amazon.com/All-About-Asset-Allocation-Second/dp/0...

http://www.amazon.com/Intelligent-Asset-Allocator-Portfolio-...

Greg
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