RetireJapan

As for investing in the stock Market, I amongst many others prefer the eMaxis Slim Funds. As I am fairly young-ish my portfolio is currently 100% stocks.

However, I am working on a plan for my folks and I want to have a mix of about 65% bonds and 35% stocks as they are fairly close to their retirement.

ｅＭＡＸＩＳ Ｓｌｉｍ 先進国債券インデックス - Is this recommended for bonds or are there other funds which are more attractive?

Or is it worth mixing it up with ｅＭＡＸＩＳ 新興国債券インデックス?

Also, since I have not invested in bonds yet, what is a good average return? For example, I use a 5% average growth when working on projections for stocks. Is it around 2% for bonds? Higher? Lower?

Thanks in advance.

If you are looking at bonds as a hedge I would NOT choose emerging markets. Remember, bonds are essentially debt, the fund is loaning money.

Who do you think is more likely to pay back the debt owed?

I would stick to a Developed country or American bond index fund. Japan is a safe choice as well, but it will pay basically nothing at the moment.

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Emerging country stocks definitely have a place in a portfolio. They represent 8-10% of the market. The more you choose the riskier your portfolio. I personally would not choose Emerging country bonds.

Kanto wrote: ↑Tue Jun 02, 2020 3:25 am If you are looking at bonds as a hedge I would NOT choose emerging markets. Remember, bonds are essentially debt, the fund is loaning money.

Who do you think is more likely to pay back the debt owed?

I would stick to a Developed country or American bond index fund. Japan is a safe choice as well, but it will pay basically nothing at the moment.

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Developed country stocks definitely have a place in a portfolio. They represent 8-10% of the market. The more you choose the riskier your portfolio. I personally would not choose Developed country bonds.

I am confused as you say you would stick to Developed country bond index fund but then say you would not choose developed country bonds...

If you are looking at bonds as a hedge I would NOT choose emerging markets. Remember, bonds are essentially debt, the fund is loaning money.

Who do you think is more likely to pay back the debt owed?

I would stick to a Developed country or American bond index fund. Japan is a safe choice as well, but it will pay basically nothing at the moment.

-----------

Emerging country stocks definitely have a place in a portfolio. They represent 8-10% of the market. The more you choose the riskier your portfolio. I personally would not choose Emerging country bonds.

I am confused as you say you would stick to Developed country bond index fund but then say you would not choose developed country bonds...

Ooops sorry the terms were flipped. Fixed

OkiBum wrote: ↑Tue Jun 02, 2020 2:30 am As for investing in the stock Market, I amongst many others prefer the eMaxis Slim Funds. As I am fairly young-ish my portfolio is currently 100% stocks.

However, I am working on a plan for my folks and I want to have a mix of about 65% bonds and 35% stocks as they are fairly close to their retirement.

ｅＭＡＸＩＳ Ｓｌｉｍ 先進国債券インデックス - Is this recommended for bonds or are there other funds which are more attractive?

Or is it worth mixing it up with ｅＭＡＸＩＳ 新興国債券インデックス?

Also, since I have not invested in bonds yet, what is a good average return? For example, I use a 5% average growth when working on projections for stocks. Is it around 2% for bonds? Higher? Lower?

Thanks in advance.

2% sounds about right. My wife has this fund in her NISA and it's returned about 2% P.A. so far, but of course it depends on the time period you choose. The fund has one of the lowest ERs and has good inflows, so it's a good choice in those respects. Developed bond funds have a volatility of about 7% and will go up and down with currency swings as well as bond prices. Also, the currency risk makes them more correlated with foreign stocks than domestic bonds. That is, if foreign stocks fall, then you can expect the bonds to fall a bit too. If you want something more stable and less correlated with stocks then you'll need more in cash or Japanese bonds.

I have no idea what will happen from now on. Bond funds have done well due to falling interest rates over the past 40 years. When rates fall, bond prices go up. If rates start to rise, then bond funds will suffer. I can't see that happening anytime soon because the world economy is in recession, but it should be something to bear in mind.

Thanks for sharing the details.