6 money fears

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One of the most common fear that is seldom mentioned is this habit of favoring fixed income (read bonds) in a portfolio allocation. So much so that this represents far more than it is finanically prudent for individual investors. This happens because people are not reminded of the fact that their social security income and FERS pension incomeare for all practical purposes representative examples of bond fund income stream they have already setup whether they realize it or not. In estimating your portfolio, do not forget to add the net present value of these two income streams. For majority of investors, this income will represent 50-66% of the total retirement income. Socail security income stream is worth anywhere between 170K to 200K while your FERS pension is worth another $100K at least. So their holisitic portfolio is already loaded with 50-66% of bonds, to the tune of 300K. Why then would you mess with F or other bond funds in your other form of savings, including the TSP account or IRA accounts?. If it is for reducing volatility, you are better off with some G funds, but seiously, does any one need 50-50% of fixed income assets in their overall portfolioduring their accumulation phase of investing period? Nevertheless, sadly, no TSP or asset allocation guru's will never ever tell you to stay away from bond funds. Caveat Emptor.
 
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