Hey Team,
A recent post here regarding long term treasuries has led me to re-evaluating my asset allocation. Right now I am at about 80/20, but more geared towards short term bonds. Everything I have is in a Roth IRA
The fact that long term treasuries are not correlated with the stock market, makes it seem like a good idea to have at least some exposure to them (more than the total bond market gives). This raises a few questions (sorry if this turns out to be some what of a question dump, but bonds are way more complex than I realized, after days of reading, I have a lot of questions):
1) Two options I have been considering are EDV and VUSTX. I know EDV is longer duration, but wanted to see what you guys thought about which to choose. If I go with EDV, do I need less exposure to bonds? (maybe going 90/10?) Should I go with the little bit safer VUSTX? Maybe some sort of mix? Should I consider BLV as well?
Portfolio visualizer shows that the most long term treasuries have lost in a year was about 10%. There is not really a category for something like EDV, so I'm not sure how much more volatile it really is.
2) Do you abandon all short term bonds? ( I have a sufficient emergency fund, maybe only a small amount of savings into short term bonds?)
3) How will a portfolio consisting of mostly stocks, with 10-20% in long term treasuries, react to high inflation? Should I be concerned with high inflation? Anything I can do to hedge against inflation besides buying Gold or Bitcoin?
4) Interest Rates - Yes, we are at or near an all time low. I think they can go lower still or stay the same, but will they? Is this something to be concerned about? Do you think rates will stay low? Is it worth waiting (market timing) until December until the Fed announces the next rate hike? Rate hikes supposedly affect long term bonds more, is this safe to assume?
5) I understand that the returns of long term treasuries the past 30 years have been influenced by the steadily declining rates. I think they can stay low, or go a little bit lower, but is it realistic to expect these types of returns with rates as low as they are? If I am buying into long term treasuries, am I basically betting that rates will stay low (because I have no idea if they will or not?) Is it worth it to have long term treasuries, solely for the hedge against a stock market crash? (Because I have no idea if it will or not)
6) I'm young and don't have much money, is an 80 stocks (60/40 us /inter) /20 long term treasuries allocation a good long term plan?
Let me know if any more information would help out. Thanks in advance!!!
Submitted October 18, 2017 at 12:57PM by Very_Shagadelic http://ift.tt/2xPTCoS
