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I'm 35 and run a mix around 70-30 to 80-20 stocks to fixed income

Just curious, what is your take on so much bonds at 35? Also, as a 35yo, waht bonds to you keep and where(taxable, nontaxable)?


The "your age in bonds" formula (probably, with people living longer, 110 minus your age in stocks now makes more sense) is really more important for people nearing or in retirement, with concern about a deep, sustained stock market downturn.

For younger people there are two issues:

1) Do you have enough "safe money" to get through personal hard times, like losing your job and not being able to find a new on for a few years. (Obviously, this depends on your career, but health problems can happen to anyone, as can divorces, etc.) For most young people if you take seriously building a contingency fund (which has to be in a taxable account, although sometimes you can withdraw retirement money for extreme contingencies), that will end up being 20-30% of assets (excluding home).

2) Optimizing returns with rebalacing. This is a tough one. Historical statistics show either there is no point in putting any investment money (i.e., not contingency fund) is bonds/fixed income as long as you have new money to invest in market down turns, or that you should have a portion in bonds, specifically long bonds, to offset losses when the stock market is down and sell to reinvest in stocks. It depends on when you slice the markets as to which is true, and whether historical statistics can hold up with bonds still at low historical rates (making significant gains less likely) and with so much foreign capital in US bonds, not to mention the whole derivates and carry-trade wild cards.

If I were 35, I'd make sure I had a good safe nest egg, then drip into stocks and not worry about it.
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