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Post by Chahta on May 28, 2021 15:34:20 GMT
youtu.be/yqMCTSnJ6Y4?t=5169
This will only work as a copy and paste. Of course in an up market bonds do not show their value. My opinion later.
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Post by steadyeddy on May 28, 2021 20:14:32 GMT
youtu.be/yqMCTSnJ6Y4?t=5169
This will only work as a copy and paste. Of course in an up market bonds do not show their value. My opinion later. I would not be able to sleep well at night with everything in stocks. Some have the metal guts, I don't. As one that is approaching retirement, I will always remember the Feb-Mar 2020 time period where within approx 20 trading days, most stock indexes went down 30%. Dogma could easily put you in a doghouse.  |
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Post by FD1000 on May 28, 2021 20:23:04 GMT
Too long to listen. From memory, Dave Ramsey has some good advice and especially for unresponsible people. He also has some bad advice such as:
1) pay your smaller debt first, instead of paying your highest interest loan first.
2) Invest in stocks, they will produce 12% annually. We know the long term wasn't 12%. The last 10-11 years were amazing, I don't think we will another 12% average annually in the next 10 years.
3) Ramsey doesn't recommend bonds.
4) Ramsey isn't good for advanced/sophisticated investors.
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Post by steadyeddy on May 29, 2021 0:09:01 GMT
In the current environment, there is some truth to not holding bonds as the yields are so low and the shock-absorbing capacity of the bonds is no longer there when equities tank. So, on a temporary basis I could buy his thesis that holding bonds would not grow your wealth. For those in accumulation phase, that might be sound advice. But for most on this board may be not so.
I am considering (just considering) to shift to cash as my FI and hold only stock funds, because the marginal benefit of holding bond funds is much less now than before.
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Post by Chahta on May 29, 2021 15:07:46 GMT
One of my issues with his thesis is that he "thinks" all bonds are the same. Munis, HY, MS, BL and core funds can do just fine long term. If you buy quality funds with a good track record chances of losing money is very low. Sure short term there can be loses but not generally long term B&H. Equities run the same risks.
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Post by nromsted on May 29, 2021 20:31:36 GMT
I'm sure Dave Ramsey has a large enough portfolio that he'll be just fine if the market fell a lot. Perhaps he sees that as a buying opportunity. Most retail investors are not so fortunate.
But, I do agree with him on the need to keep a strong growth component in one's portfolio as we age (and survive). The traditional rules about percent of bonds are perhaps too conservative - especially as enforced by target-date funds.
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Post by FD1000 on May 30, 2021 2:51:02 GMT
I'm sure Dave Ramsey has a large enough portfolio that he'll be just fine if the market fell a lot. Perhaps he sees that as a buying opportunity. Most retail investors are not so fortunate. But, I do agree with him on the need to keep a strong growth component in one's portfolio as we age (and survive). The traditional rules about percent of bonds are perhaps too conservative - especially as enforced by target-date funds. Why talk about Ramsey portfolio? He gives generic advice for others. When someone has a big portfolio they can be in 90/10 or 10/90. Do you realize that target-date funds are different in several brokers? They have different asset allocation and funds. The traditional rules? I have seen over the years how "sophisticated" investors trade too much and make tactical changes and end up worse than simple KISS buy and hold very cheap portfolio. BTW, nothing in investment is all or nothing. You can mix and tailor your portfolio using several systems/funds/goals. |
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Post by johntaylor on Jun 6, 2021 16:02:39 GMT
When Vanguard started target funds, they were too low on post-retirement growth potential and later changed
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Post by retiredat48 on Jun 7, 2021 16:00:44 GMT
In the current environment, there is some truth to not holding bonds as the yields are so low and the shock-absorbing capacity of the bonds is no longer there when equities tank. So, on a temporary basis I could buy his thesis that holding bonds would not grow your wealth. For those in accumulation phase, that might be sound advice. But for most on this board may be not so. I am considering (just considering) to shift to cash as my FI and hold only stock funds, because the marginal benefit of holding bond funds is much less now than before. So steady...a question for you: Is there an interest rate on your intermediate or long term bond funds whereby you would "give up" on bonds...consider them not worth owning? Like, 1.75%? or 1%...or 1/2%...or 0%...or negative rates?? BTW as a refresher, by the rule of 72, bonds at 1% yield, with dividends reinvested, will double in 72 years of investing. At 2% yield, takes 36 years to double. TIA R48 |
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Post by steadyeddy on Jun 7, 2021 18:30:09 GMT
In the current environment, there is some truth to not holding bonds as the yields are so low and the shock-absorbing capacity of the bonds is no longer there when equities tank. So, on a temporary basis I could buy his thesis that holding bonds would not grow your wealth. For those in accumulation phase, that might be sound advice. But for most on this board may be not so. I am considering (just considering) to shift to cash as my FI and hold only stock funds, because the marginal benefit of holding bond funds is much less now than before. So steady...a question for you: Is there an interest rate on your intermediate or long term bond funds whereby you would "give up" on bonds...consider them not worth owning? Like, 1.75%? or 1%...or 1/2%...or 0%...or negative rates?? BTW as a refresher, by the rule of 72, bonds at 1% yield, with dividends reinvested, will double in 72 years of investing. At 2% yield, takes 36 years to double. TIA R48 , you ask tough questions. Given my investment style, I don't think I would completely give up on bonds; I have been reducing the duration of the bond portion of my portfolio. If (magically) rates go negative and my current holdings appreciate in value, I would probably sell them all. |
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Post by jongaltiii on Jun 7, 2021 22:23:22 GMT
RE FD1000 “Too long to listen. From memory, Dave Ramsey has some good advice and especially for unresponsible people. He also has some bad advice such as: 1) pay your smaller debt first, instead of paying your highest interest loan first. <— He has a system called snowball. Even though the math works to pay the higher interest first, it’s momentum and positive reinforcement that gets people out of debt. A feeling of accomplishment that keeps people digging out of debt. That’s why he says pay smallest loan first. It’s worked well and he’s best known for helping people become debt free.2) Invest in stocks, they will produce 12% annually. We know the long term wasn't 12%. The last 10-11 years were amazing, I don't think we will another 12% average annually in the next 10 years. He says that’s “the average over history” and references 1926-2018-whereby 10-11% is the average return in the S&P 500. He makes it sound easy when we know it’s not that easy. But at least he encourages young people to invest 15% of their income when they are young and AFTER they are out of debt.3) Ramsey doesn't recommend bonds. He is definitely against bonds. However, 25% of his portfolio is “Growth and Income”…so even he admits he might own some. 4) Ramsey isn't good for advanced/sophisticated investors. Interesting post. |
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Post by fishingrod on Jun 7, 2021 22:35:50 GMT
In the current environment, there is some truth to not holding bonds as the yields are so low and the shock-absorbing capacity of the bonds is no longer there when equities tank. So, on a temporary basis I could buy his thesis that holding bonds would not grow your wealth. For those in accumulation phase, that might be sound advice. But for most on this board may be not so. I am considering (just considering) to shift to cash as my FI and hold only stock funds, because the marginal benefit of holding bond funds is much less now than before. So steady...a question for you: Is there an interest rate on your intermediate or long term bond funds whereby you would "give up" on bonds...consider them not worth owning? Like, 1.75%? or 1%...or 1/2%...or 0%...or negative rates?? BTW as a refresher, by the rule of 72, bonds at 1% yield, with dividends reinvested, will double in 72 years of investing. At 2% yield, takes 36 years to double. TIA R48 Not Steady but....
I guess if my intermediate bond funds happen to drop below the % I may get from comparable 5 year CD's, I might think about changing my allocation. At this point I have over 8% capital gains on VWIUX Vanguard's Intermediate Tax exempt bond fund. I treat this as a small buffer.
fishingrod
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Post by Chahta on Jun 8, 2021 11:30:10 GMT
In the current environment, there is some truth to not holding bonds as the yields are so low and the shock-absorbing capacity of the bonds is no longer there when equities tank. So, on a temporary basis I could buy his thesis that holding bonds would not grow your wealth. For those in accumulation phase, that might be sound advice. But for most on this board may be not so. I am considering (just considering) to shift to cash as my FI and hold only stock funds, because the marginal benefit of holding bond funds is much less now than before. So steady...a question for you: Is there an interest rate on your intermediate or long term bond funds whereby you would "give up" on bonds...consider them not worth owning? Like, 1.75%? or 1%...or 1/2%...or 0%...or negative rates?? BTW as a refresher, by the rule of 72, bonds at 1% yield, with dividends reinvested, will double in 72 years of investing. At 2% yield, takes 36 years to double.TIA R48 True for a single bond, but funds are actively trying to grow the value, not rely on yield alone. Still much slower than equities. |
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Post by Chahta on Jun 8, 2021 11:33:41 GMT
steadyeddy:
"retiredat48 , you ask tough questions. Given my investment style, I don't think I would completely give up on bonds; I have been reducing the duration of the bond portion of my portfolio. If (magically) rates go negative and my current holdings appreciate in value, I would probably sell them all."
I doubt treasuries would ever get to 0%; who would buy the debt? But a sub 2% yield for LT bonds would be a good time to unload them I think.
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Post by yogibearbull on Nov 14, 2023 18:04:51 GMT
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Deleted
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Post by Deleted on Nov 14, 2023 19:46:08 GMT
As an old engineer I always told folks, "you can't debate correct math but you can question assumptions". That's Ramsey's problem. His assumptions have large SD's and promote risk. When you are rich your risk tolerance can be high buy he suggests he's preaching to the little guy where risk is more important.
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