Re: Is investing in bonds funds stupid at the current moment?
Posted: Tue Jul 10, 2018 7:40 am
The end of the bull market in bonds has been forecast for several years now, if not longer.
YMMV.
YMMV.
This seems fine to me, especially since you have a long time ahead of you. The advice that you don't need a big allocation in bonds since you're young with plenty of time for stocks to recover is correct. So long as you have the mental risk tolerance for it(and wont panic and move your stocks into bonds after you see stocks fall and bonds go up, which is likely in a crash, and also not what you should do)
I personally didn't put bonds in my nisa either. Why put the (probable) lowest return thing in there? But I do have bonds in my overall portfolio, just in a taxable account.
People will tell you REITS are good or bonds are bad or stocks are good or bad or gold is going to collapse, or whatever. But this is all pretty fuzzy, and they've been saying the same shit for 10 years now. Honestly, if you are listening to their doomsday predictions, you are getting emotional and timing the market.
Now my main criticism to your question is "Is investing in bonds funds stupid at the current moment?". That implies timing the market. The question should be "Is investing in bonds with my risk tolerance a good idea". And the answer to that is entirely up to you.
Are you willing to take a higher risk for potentially higher returns?
Will you keep your stock(not sell them) if they drop 50%? What if they drop to 25%? 10%?
What about your REIT allocation? How much can that lose before you sell?
Will you want to buy bonds when you see they're going up during a stock crash?
If your answers are Yes/yes/yes/no you'll be fine without bonds. Just make a plan of when you will buy them(e.g. "Once I hit 40 I will increase my bond allocation to 10% and add 10% every 6 years after so that I'm at 50% when I'm 64 and retire) or something like that. There's no point in buying the bonds once they go up in value.
Actively timing the market has been repeatedly shown to produce worse results(a recent article showed the best average returns were made by people who forgot they had an investment account and didn't change anything!), so just decide what you're comfortable with, what you're going to do in the future and stick with that unless you learn something new(and I don't mean getting new stock tips)
And if you do want to time the market? Well consider that we've had 10 years high returns on stocks and reits, and some people are talking about another looming crisis, as long as threats of trade wars. If I was a betting man, I'd actually say now is a pretty good time to put money into bonds. But I'm not, and I'm just sticking to my allocation come rain come shine.