TokyoBoglehead wrote: ↑Thu Apr 13, 2023 2:56 am
ToushiTime wrote: ↑Thu Apr 13, 2023 1:50 am
However, for me, as I mentioned, I don't want to have just cash and equities.
I am thinking of having cash, bonds and equities.
Hopefully, my tone here is coming across as "seeking a pleasant and amicable debate" and not like I'm cross-examining you. It's one of my failings.
....
Now that you understand the downsides, and the poor risk-free ward case for YEN investors why do you continue to pursue bond investments?
Diversity itself is not "better" automatically. Introducing commodities or futures would not necessarily improve your CAGR, but it would definitely increase your risk.
Are you mainly consuming American sources of investing info?
Anyways, if I were 100% set on more diversity than global stocks offer, I would look at Emaxis Slim REIT products personally. Those are tempting
To answer your questions:
No, I’m not convinced it is necessarily a poor risk-free reward case for bond investments.
Yes, I see near-term downside risk for yen-based investment in bonds if the yen strengthens due to the Bank of Japan raising rates.
But surely there is also potential upside over the longer term from dollar appreciation, based on the differing long-term outlooks for the US economy versus Japan’s. That assumes that currencies reflect the strength of economies over the long term, and it assumes the US has a better economic future than Japan over the long term. I'd be open to arguments against both those assumptions.
I know you can get the same benefits from long-term dollar strengthening if you buy US equity funds instead of Treasuries, but surely government bonds are useful to diversify risk (and safer than other alternatives such as futures , commodities etc)?
Isn't that why most/many investors have bonds as part of their portfolio, hence the 60/40 cliché, which is a one-size fits all concept but has become common parlance because most investors hold some level of bonds. In my case I would be thinking of 10-20% bonds 80-90% equity.
For Japan based investors with yen to spend, are you against bond investments per se, or just against buying one nation’s government bonds?
Do you own bonds yourself? From your profile/tag, I think no. I was considering a bond-free portfolio too. It doesn't seem like a clear-cut issue, as northSaver seemed to imply. There again most of this stuff isn't
I thought you recommended the eMaxis Developed Nation Bond to me the other day, but maybe that was just as an alternative if I insisted on buying bonds?
I bought Emaxis Slim REITs on your recommendation. Thanks for that.
