I am considered investing in another fund through Vanguard, and I was looking at the performance of the Total Stock Market fund and the Total Bond Market Fund:
https://personal.vanguard.com/us/funds/snapshot?FundId=0084&FundIntExt=INT
https://personal.vanguard.com/us/funds/snapshot?FundId=0085&FundIntExt=INT
I hear repeatedly how someone my age should invest primarily in Stocks, and roughly 10% bonds, if any.
However the way the market is going, and judging by the performance of the two find linked above, someone who invested in Bond funds would be much better off, even if the market didn’t go as sour (the yield on the Bonds fund is greater than even if you extrapolate the growth of the Stocks prior to the recession).
Is it a wise move to invest a bit more in Bond funds such as this or should I stick to stocks?
$so fresh so clean$ 11:59 am on March 1, 2010
I would invest in a dividend and growth stock fund outside of your IRA.
edgetrader 11:59 am on March 1, 2010
Who is at the helm of your investment strategy?
At age 24, you are in a retirement fund and looking
for a bond market fund?
You need growth, not some bond fund!! You have to be
seeking to maximize you growth potential during your
earnings career so that you can put what you make
into bonds when you are about to retire, if you are so
keen on bonds. [Real estate would be better, safer.]
You think someone who invests in bonds would be
much better off?
The purchasing power of $10,000 over the past decade
is about $3,000 today. How happy are those bond
holders who lost 70% of the value of their money,
and probably paid taxes on some of the interest?!
What you should do is stick your nose into a few
books and learn how to take care of your financial future.
It ain’t that hard. I would avoid any investments until
you know what you are doing, and are then in a position
to decide what suits your needs best.
10% in bonds?
Absolutely not!
Try 10% in gold and silver. Where the value of a dollar
declined 70%, as noted, gold and silver quadrupled in
value over the same time frame.
You need to learn what "value" is and the various forms
in which it can be found.
An excellent primer for learning about "value" in selecting
stocks is "How To Make Money In Stocks," by William
O’Neil, about $15-$20. You will learn to seek out the
strongest performers to give you the best odds of getting
a return on your money.
There is a companion web site:
http://www.investors.com.
At 24, you need to kick your level of interest and
direction into high gear.
exactduke 11:59 am on March 1, 2010
Someone your age should be heavily into stocks. But if you want a heavier allocation to bonds, because the market makes you nervous, why not?? You could buy the bond fund you have listed. Or you could choose a target date retirement fund that has the right bond allocation that you desire.
Even for someone in their 20’s, I would probably have a 20% allocation to bonds. I like bonds for diversification.
what? 11:59 am on March 1, 2010
you can invest more in fixed income if you’re risk-averse, but the reason that young people are advised to invest heavily in equities is that you should have a long time horizon. short-term movement in the stock market are largely irrelevant for such a long-term goal as retirement.
mrzwink 11:59 am on March 1, 2010
since youre investing for your retirement, youre investing over a very long period of time (20+ years). If you look at hystorical data, the stockmarker makes roughly 8% gain per year over those longer periods. crisis will always come and go, if you hold your stock youre not affecten. you simply ride the waves up and down.
when you approach your retirement age, youll make your investment strategy more defensively. so you wont run the risk that a crisis at age 64 wont loose you all your retirement money.
so since youre 24, youre retirement is a long way awya, and temprary economical crisis wont affect you. invest offensively get your 8% average gain. when you start aproaching 40 or 45 you shift to a more defensive profile and to a very defensive profile at age 60. so you wont run risk of losing your retirement at higher age.
donfletcheryh 11:59 am on March 1, 2010
Avoid long term bonds or funds heavily invested in them as though they were a plague. Long term bonds lose value big time when interest rates go up. Right now interest rates are so low they have almost no way to go other than up.
Short term bonds pay so little that you may as well keep the money in a savings account ready to be invested when opportunity arises.
This looks like a proposition that one should invest in equities.
Well, that is part of it. One should hold cash in a savings account and buy equities when they represent great value.
Great value is not based on previous prices for the stock.