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Author: WendyBG Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35379  
Subject: Re: How to diversify into bonds Date: 1/9/2014 11:34 PM
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Some very smart people have given you good advice.

My advice for someone your age is to keep at least 6 months of living expenses (including the full price of your health insurance) in an emergency fund in cash. If you can't relocate, it's safer to keep 1 year's living expenses in cash.

Joelcorley wrote about his job loss. DH and I also lost our jobs about the same time in 1997.

Although the economy is improving (especially where you live), business cycles eventually bring recession inevitably. During a recession, jobs often vanish generally at the same time that you may have lost your job.

The Median Duration of Unemployment is declining but is still high on a historic basis.

http://research.stlouisfed.org/fred2/series/UEMPMED

If you were to lose your job, you would want to be able to pay your mortgage and other expenses while searching for a new job. The stress is dramatically reduced (and you may be saved from default) by an adequate emergency fund.

Please take a look at the history of the 10-year Treasury bond yield.
http://research.stlouisfed.org/fred2/series/DGS10
http://research.stlouisfed.org/fred2/series/BAMLC0A1CAAA

If you buy bonds when both yields and spreads are low, you take the risk that your bonds will lose value when yields rise.

In an emergency, you need CASH. Don't take the risk that you may be forced to sell either stocks or bonds when their values are depressed.

Wendy (many a crisis)
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