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FWIW, I don't particularly like the rule-of-thumb that says your bond allocation should increase each year

FWIW - I agree!
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Other factors such as your current position, investing goals, and the market primarily dictate asset allocation.

Examples:
Current Position Investing Goals Market
Retired - $10MM net, $50,000/yr Exps, 7.5% UST 10 yr
(conservative type)

or

Working - $10 net, to retire one day*, 3% UST 10 yr
(*exps in some horizon, can fully fund 401(k), non conservative type)


Both the same age...and you can pick the age but then justify the same bond allocation for both! Does taht work for all ages?

Age can play a factor in risk tolerance but really is a small driver for asset allocation. And there are more than two asset classes which did not all correlate to one when the SHTF!


My bond allocation will start mechanically increasing this summer after QE2 ends.

Does it matter what rates are doing - have done etc.?
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