BND

FilthyWishDragon

Just buy VT (stocks) and BND (bonds) at whatever proportion suits your risk tolerance. No need to pay hundreds of thousands a year to these goofballs.

FilthyWishDragon

Just buy VT (stocks) and BND (bonds) at whatever proportion suits your risk tolerance. No need to pay hundreds of thousands a year to these bozos.

Think-Variation2986

I don't understand why people don't take like half their profits and buy VT, BND, or NOBL or something. That's what I do. Once my options account gets to a certain size, all profits will be moved into my long account and into boring stuff that only an apocalyptic event would wreck.

suoromalc

I have ~300K or 15% of my asset in BND in a taxable account. Recently 1) I inherited some foreign estate from my grandparents. I intended to leave them as they are and treat them like a cushion asset similar to bond. 2) I've got a new tech job in California. My new tax bracket and California tax will kill my BND returns. I originally hold BND in case of unexpected life changes and needing the cash (e.g. buying a house). Now it is looking less likely. I'm considering - Selling BND and convert them to California Muni fund (VTEC). Less diversified, lower return, and IIUC only beneficial for the highest tax bracket earners. - Go all in on stock (VTI + VXUS). Higher return, lower dividend and taxes on them. Riskier, but placing the bet that I don't need 300K in ~5 year, and if I do I'll just sell some. - Keep the BND? - Other asset classes? IMO my dream asset would be a fund that invests in bond, has bond like performance, but doesn't issue dividends so I can defer tax indefinitely. Don't think such fund exist.

StaggeringMediocrity

You can also include BND (Vanguard's bond ETF) if you want something that will mirror a target date fund. VTI, VXUS, and BND are a common "three fund portfolio" that's recommended over in r/Bogleheads People choose different ratios depending on their age and risk tolerance, and then increase BND at the expense of the others as they get closer to their anticipated retirement age. That way they can mirror a TDF without paying the expense ratio of a managed fund.

gizmole

All my cash is in SGOV. So, I'm at least getting 4.62% until I decide. Right now, I am considering my 40% fixed income allocation 35% in 50/50 BND/TIPS, and 5% SGOV.

gizmole

60YO: 61% equities, 16% BND, 23% cash ATM. I am still figuring out where to put the cash based on possible inflation.

JasonD8888

“So if stuff goes downhill you may be able to lose money on bonds?” Absolutely. When interest rates start going up, the value (sale price) of existing bonds will drop dramatically. Look up the 10 year charts of bond ETFs like TLT, BND, etc and a host of other bond fund ETFs (Google can show a list). ALL of them will show a dramatic fall in 2022 and 2023 when interest rates started going up steadily. Retirees with bond fund portfolios watched helplessly as their values kept going down quarter after quarter. It is one thing to say bonds will give a “steady” income. Another, when bond values fall with rising interest rates. If you hold long term bonds, you will have to sell at a loss. Or, keep holding the low interest bonds to maturity when everyone else is buying high rate bonds. The harsh reality strikes only when you actually are in the game. This fact is so obvious but so easy to see away from. Very real nevertheless.

Keikyk

About 10% cash, 10% BND and the rest in equities. I'll adjust as the situation develops but likely won't go much higher than this in cash

Rich-Contribution-84

I keep 9-12 months worth of expenses in cash as an emergency fund. If you’re asking percentage of overall portfolio? I’ve never even looked at it that way. I don’t think of my cash as anything other than the funds that would keep me alive if I lost my job or insurance or if I need a new roof or something. It’s about 8% of what my retirement portfolio is, though. At age 41 my retirement portfolio is 75% ~ stocks (mostly broad market index funds and a TDF) and 25% ~ physical real estate (residential rental property). I plan to retire around age 65, so when I’m about age 50 (15 years from retirement) I’ll shift from growth/accumulation mode to preservation mode and I’ll start aggressively adding things like BND/SGOV/maybe some cash to my retirement portfolio, but until then, I just keep buying VTI/VXUS 80/20 every two weeks automatically out of my paycheck in my taxable account and the TDF in my 401(k) and HSA.

rasputin777

VOO and chill. Just enter it. The conventional wisdom 3 months ago was to exit the market. For the impending bear market or crash. We're up like 15% since then. Just invest every time you get paid. And you'll beat nearly everyone who tries with real effort. Track your gains. It's fun. I look on the first of every month. Sometimes its down. Mostly it's up. And it keeps increasing. After a few years you'll look and realize half the money in there is from gains. Free money. Maybe hundreds of thousands. It's a great motivator. And watching 50 different tickers sucks. You'll pick a few bad ones and focus on those ones and wonder if you should sell or stay. Same for the winners. If it's in spy or voo you'll have no reason to sell. Opening the portfolio with one big fat line item is great. VOO is all you need. VTI and VT have almost always underperformed. BND is for... some people but I don't know who.

Marshall_Hoodie

Boglehead 3 fund is some sort of (VOO/VTI/VT), VXUS, and (BND/SGOV) depending on age for amount of bonds. Some true believers are bonds % for age.

MaxwellSmart07

I feel your disappointment. The Boglehead orthodox are still insisting, after the fact, that I should have been into VOO, VXUS , BND &/or AVUV over the last decade instead of SPMO, QQQ, SPLG, VGT and SMH. The situation now is in flux. Will you abandon international or retain it and dca into domestic growth? FYI: IDMO is far better than VXUS.

InjuryEmbarrassed532

Good to see BND inching up slowly. The resilience and optimism of the human spirit in the face of fascism and the ongoing trans genocide is something to behold.

Late_Payment5716

hat’s a great monthly allocation. I’d personally do: * VTI (Total US Stock Market) * SCHD (Dividend growth) * QQQM (Tech-focused, lower expense than QQQ) * A little in BND if you want to buffer with bonds You could go heavier on equities now while you’re young and shift later. Just stay consistent and keep costs low.

ikeepeatingandeating

You could do worse that your picks, but you can simplify. Pick a single US equity fund like VOO/VTI, a single international fund like VXUS, and a single bond fund like BND. Swap VTI/VXUS with VT for an all-in one world equity ETF. If you get to higher income swap some BND for munis like MUB to decrease taxation. Pick the percentages and hold. I do 45% US, 35% international, 20% bonds. That's it! Remember, dividends aren't free money, they're just forced capital gains. Don't chase them unless you have preferential tax treatment (eg. you live in Canada, Canadian-source dividends have preferential treatment for low income brackets). This normally isn't the case in the US.

SortResponsible5998

Solid. I keep bonds simple—mostly ETFs. Like 70% treasuries (BND or IEF), 30% corporate (LQD). Treasuries for safety, corps for a lil’ extra yield. All intermediate-term—don’t wanna get smoked by rate swings. You mix yours up more or keep it chill too?

Johnny_BoySouth

Just post your VOO/BND position next time

jbroskio

I ASKED AI TO REFINE CORRECT AND SIMPLIFY MY EXPLANATION. You should ask it questions about market mechanics and economics. It hallucinates occasionally so double check it but at this point I trust it more than people on the internet. Here’s what it gave me: “Bonds are like IOUs from the government or companies. They borrow money from you and pay you interest (called a yield) until they pay you back. But if interest rates go up, new bonds pay more — so your old bond isn’t worth as much if you try to sell it early. That’s why bond prices fall when rates rise. Now, bond ETFs like BND or TLT don’t hold just one bond — they hold lots of them, and they’re traded on the stock market like regular stocks. Their price moves every day based on how valuable the bonds inside them are. So when rates fall, those old, higher-yielding bonds inside the ETF go up in value, and the ETF price goes up too — and vice versa. 🧠 Bottom line: bond ETFs move opposite to interest rates because they track the value of older bonds with fixed payouts.”

jbroskio

BEST DESCRIPTION!!!: Government borrows money from you by giving you an iou. They pay you a yield for doing this. A bonus for the loan. The yield is locked in till it expires. The price you pay plus a small premium is the par. You can sell the bond on the open market but if the yield for new bonds goes higher yours becomes less attractive and the par decreases. The yield is mostly based on the fed rate and the demand(people want to buy) for bonds. A bond etf like BND or TLT are funds that hold bonds and pay out an average of the yields minus the fee. The price of the bond etf is marked to market meaning it’s basically the par. If the fed lowers rates the existing bonds with higher rates will become more valuable on the market. So the bonds move opposite of the yields. That’s bonds in a nutshell.

InjuryEmbarrassed532

But why did BND go down as well…

Drunk_On_Boba

Everybody else explained what a regular bond is. BND is different. It is an ETF, you are basically buying a group of different bonds instead of a group of shares. You give monthly or quarterly payouts on interest kind of like a dividend where they just add it to your account.

Affectionate-Day2743

to be fair, something like 92% of my port is VOO, VXUS and BND. The rest i consider fun money and use it to buy meme stocks and stuff like RDDT or microcap biotech stocks. lol.

Shoddy-Spring3512

Maybe a split strategy may interest you. 40-50% into VOO 30-40% into some sort of intermediate bond ETF like BND The rest in CDs or Treasuries And then look to rebalance every 6-12 months to adjust everything as needed.

MaxwellSmart07

Bogleheads on Reddit generally do not like anything unorthodox that deviates from their formulas. They are content taking the emotion out of investing (dca no matter what and “set it and forget it”.) When I point out being in large cap growth and tech the last 10-15 years returned 2x their VOO and chill, or their VTI + VXUS + BND portfolios, they still argue, after the fact, I was wrong to have invested the way I did. The contentiousness is mind boggling.

ILoveKombucha

Personally, I favor a Boglehead approach (named after John Bogle, founder of Vanguard). The idea is to "buy the market" and hold for the long haul (basically what you are describing). Here's a good generic Boglehead 3 fund setup: VTI/VXUS/BND at 60/20/20 allocation. This consists of the total US Market (VTI, or similar; you could substitute VOO, for example), VXUS (total world stocks, excluding the US (this adds much more stock diversification), and BND, which is a bond fund. Bonds are lower risk lower return investments, but you use them to smooth out the volatility of your portfolio, especially as you near retirement. So if you have 30 years till retirement, you might forgo any bonds, and if you are nearer to retirement, you might consider having more than 20% allocated to bonds. But the above is a generic portfolio that would be "good enough" for most folks. The key is to understand each of the 3 portions: why you would have them, optimal allocations between the three, etc.

neutral_good-

I haven't seen anyone really answer how BND works for your portfolio.. all of those "Bond etfs" just pay a monthly dividend. BND yearly dividend is around 4% so you get 12 payments a year that will equal a roughly 4% return on your investment. If you look at long vs short bond etfs, you will see how rate changes affect their prices. EDV for example - vanguard long term bond - the price REALLY changes with rate changes. Back in 2021 it was $177 a share, now it is in the $60s. If rates go up, price goes down. That's because all ETF dividend payments are a constant, so if rates for the underlying bonds in EDV go from 2% to 4% for example, and the dividend payment is $2 a year, then the price will move accordingly with the rate change. In this example when rates are 2%, the price of EDV would be $100 a share (so the $2 yearly dividend is 2% of the price). When rates go up to 4%, the price would drop to $50/share so that the $2 in yearly dividend is now 4% of the share price. Short term bond ets dont move much in price, take VUSB (vanguard ultra short bond) as an example. The price since 2021 has moved between $49-$50 and rates have been around 4% the whole time, as you'd expect for short term bonds. I personally am holding a large amount of VUSB right now for the 4% return.

Front-Difficult

BND is not a bond, it's an ETF. BND attempts to track the performance of the total US fixed-income bond market. Government, mortgage, corporate, etc. 1YR - 30YR bonds. It's essentially a tool for gambling on interest rates and/or institutional trust. Or Wall Street greed. Buying BND is not the same as buying a bond. Most bond holders intend to hold the entire bond until it's maturity (at least when they initially buy it). They essentially lock in a rate of return until the bond matures, and then are returned their money to find a new investment. A pension fund might choose to buy bonds today because yields are satisfactory, and hold those bonds for 30 years. It's ROI will never change, they'll get 4.9% per year for the next 30 years guaranteed (unless the whole economy collapses). They only tend to sell when the underlying financial health of the fund changes - when they initially bought the bond they expected to hold it for the full length of it's maturity. BND buys fresh bonds every week no matter the yield or the term to maturity (so long as its longer than 1Y). If yields crash BND is going to spike. If yields soar BND is going to crash. There's no guarantee your returns will be stable. It's a completely different instrument to buying an actual bond, it's not going to give you the same performance at all.

5D-4C-08-65

BND (and bond ETFs in general) roll their composition of bonds as the maturity becomes shorter. So there’s no real maturity date to speak of, there is an average “maturity” if you want, which in BND’s case is around 10ish years. So (using absurd numbers just because it makes the maths easier) BND only holds a promise for $100 in 10 years (a.k.a. a bond) which costs $25, after 5 years this promise is worth $50 because the pay date is now 5 years away, and BND sells this promise and uses $50 to buy two new promises for $100 in another 10 years. Rinse and repeat.

SiJayB

I see. I understand when Theres a set time frame of 3 months etc etc.. but how does a bond like BND work? From what I can see there’s no graduation shown.

Charming_Barber7627

Exactly where I pulled this advice from. Bogleheads have a slight preference for BND over SGOV, but BND has more principal risk to large swings in interest rates. They might also propose slightly more in international and slight less in US.

xiongchiamiov

There is a way to convert unused 529 funds into an IRA, but that's still restrictive and it's limited to only a certain amount, so I understand not going that route. I don't think there's any one clear answer. I would probably do something like 60% VT 40% BND as a fairly conservative but still growth oriented portfolio. Depending on how you're feeling about risk versus expected growth you could adjust the bond proportion up or down. Or stay in cash equivalents (VBIL, CDs, bonds that mature then). Or even do something fun like [a risk parity portfolio](https://portfoliocharts.com/2016/04/18/the-theory-behind-the-golden-butterfly/). One important thing to consider when you're looking at these is whether you're going to be regularly adding new funds or not. The golden butterfly, for instance, requires regular rebalancing to maintain its attributes, but in a taxable account you probably don't want to sell funds to rebalance, so that means putting all your new money into the parts that are underweight. That also might just be more work than you want to do. https://www.ishares.com/us/literature/product-brief/ishares-core-esg-allocation-brief.pdf might be interesting as another option - they're like target date funds, but rather than adjusting the ratio over time they stay static.

CommandOk50

The only reason i would invest in any bondnfund is if i was near retirement or using my investments as income, and i would still get an etf like BND that has varying durations. Long term bonds are too volatile.

dudeatwork77

No need. Just buy VTI/VXUS/BND

Strange_Cabinet_5673

Basic etfs. Either S&P index funds (VOO, SPY) or total market index funds (VTI, VT) plus bond funds (BND, BNDW, SGOV, etc.) just depends are your goals and risk tolerance

Ok_Eye4858

Before you embark on your research - read the book, "A random walk down wall street". If that's a little too much, try "retire before mom and dad" from Rob Berger. Take the time to understand their description on why slow and steady wins the race. It's OK to have 10% of your portfolio as something we call "FOMO" allocation. In that portfolio slice you can buy individual stocks, even options if you really want to spice it up but stick with VTI/BND/TIPS for majority of your portfolio and you should be fine.

ILoveKombucha

Congrats! (Seriously!) Just know that such out-performance is statistically very unlikely to last for a long period of time (you are unlikely to outperform the market as a whole over a long time span; if you are stock picking, you are likely to underperform the market). Personally, I would strongly consider taking your winnings and diversifying into a global portfolio. And I would also strongly consider diversifying into some more conservative assets as you age.... consider bonds for example. Just as you gained 33% in a few months, you can just as easily lose 33% in a few months. I'd look at it like you hit the lotto. That's great that you hit the lotto... don't keep playing the lotto, though. It's a real and known bias that humans have: we think that when we win, it's because we did something right. Then we develop an out-sized sense of our abilities. This leads to mistakes that can cost you dearly. Maybe you did do something right, but consider... the greatest minds in the world are trying to play the stock game to win, and most don't out-perform the market. It's a lot more luck than anyone wants to admit. Personally, I try to keep my speculative plays to less than 10% of my portfolio. The rest is boring low cost highly diversified ETFs (think VOO/VXUS/BND kind of thing). It's not romantic or cool, and it's not going to make me rich in 5 or 10 years. But as lame as it looks, this portfolio is likely to beat a solid majority of folks who are picking their stocks (like on this forum). Zero condescension or rudeness intended here. Truly am happy for you! I just don't want to see your luck reverse! Maybe you are a genius stock picker. Or maybe you got lucky. If you are just lucky, you should quit while you are ahead!

Odd-Record-1041

The classic answer: it depends. What are your goals, risk tolerance, and time horizon? If you're young and can handle the volatility of 2025, consider a mix of domestic and international equity exposure using broad-based index ETFs. If you're older or feeling cautious, bonds might be worth exploring. I’m less familiar with them, but ETFs like BND or BNDX can provide bond exposure. Whatever you decide, take a breath. The market is volatile right now, headlines from the president or Fed chair are moving it by full percentage points. Zoom out and keep the bigger picture in mind.

xiongchiamiov

These days most TDFs are pretty cheap (the best quartile are under .22%) and what most people see as underperformance is because they're comparing to a portfolio that isn't diversified internationally or into bonds. If you want to cut out that management fee though and you will stay diversified, then that's fine. If you're just in the US megacaps, to my mind you're putting yourself into a fair amount of risk: single country, single asset type, single company size. So I'd be looking more at something like VTI+VXUS+BND as a start.

EmuFit1895

Thanks for taking the time to reply. Albeit I am a noob, but you are just making CD's look like an easy bargain at a no-risk 4% profit. Especially to the extent that the bond market depends on the wisdom, ethics, and efficiency of the executive branch, I will have no confidence in bonds for the next 3+ years. We seem to agree that bond ETF's like BND are not a great deal. ETF replay shows that BND has appreciated 4% in three years.

AICHEngineer

You are correct that bond etfs are unlike straight bonds. Bond etfs effectively DCA the yield of whatever duration or segment theyre targeting. If yields are 5% right now on GOVZ, theyre buying bonds at 5%. If theyre 4% tomorrow, theyre buying 4%. Theyre continually rolling off old bonds and buying new ones at the new rates. However: Youre not making the connection between the changing risk free rate and the changing bond return premium. Post GFC we were in a super low risk free rate environment. From 2010 to 2017, the effective federal funds rate was zero and the 12-month CAGR on BND oscillated between 0 and 5% per. You cant look at the total CAGR start to finish of BND and compare that to todays fed funds rate. Bonds have had a huge drawdown due to rising rates, so any simple compound interest calculation is silly. Back in 1990-1995, BND (or VBMFX, older total bond market fund) was pushing 10-15% CAGR while the fed funds rate was cut from 10% down to 3%, and was then followed by a bond bear slump where CAGR went negative in 1995 as the fed raised rates. Personally, I dont buy the total bond market. I dont like how low duration risk it is, and I dont need the corporate bond exposure. But im just sharing how you should be evaluation these instruments. Bonds with duration have exposure to risk, and when the Fed does something ridiculous like hike 5% in a year for the fed funds rate, you get bonds losing value because newly issued bonds are at much more attractive yields. You have to discount existing bonds to match that yield. Going forward, all the bonds in the fund are priced at higher yields, so if new yields go down, the price of bond funds rise, like today. I just bought several thousand of long long duration debt via GOVZ yesterday (5x the volatility of BND, 26 yr duration vs 6 yr) and its up over 2% today because interest rates moved down a little bit.

EmuFit1895

So it sounds like investing in actual bonds is very different than investing in bond ETFs, right? Because BND appears to average a 2% overall annual return over the past few decades, which sounds safe but not very profitable...

BigEdsHairMayo

BND up nicely today. ZIRP, here we come!!!

greytoc

Many brokers like Fidelity and Vanguard provide access to the fixed income markets. This would include treasuries, bonds, CDs, etc. You can always buy a bond if you know how to evaluate bonds. But most investors will buy a bond fund instead for diversity. The exception would be sovereign debt like treasuries since they have very high credit quality. Funds like BND seek to maintain a "constant duration" - and in the case of BND - on the intermediate end of the yield curve around 7-10 years. So it depends on what you need. There are also bond funds that are "target maturity" - that means they target a maturity like a bond and they liquidate to simulate a bond maturing at a specific date. Bonds also have a vast range of credit quality which is why there is a range of yields.

EmuFit1895

Thanks - so instead of buying an ETF like "BND" I would buy one specific bond? Can you do that through normal brokerages like Fidelity and Vanguard?

SubstantialStress250

I’m in the same boat as OP, although I do have an emergency fund. I just opened a Fidelity account yesterday, initially $1000 centered around low-risk, long-term holds like VOO, SHV, BND, etc etc., and I plan to put about $200/month into it as well. Would you recommend staying in the low-volatility area like T bonds, or would it be worthwhile to dip into blue chips? My overall goal is long-term growth and stability, even in downswings just so I can build a decent chunk of generational wealth, as my grandparents are probably the first in our bloodline to hand a property down, so I’d like to add onto that for my future children.

RubiksSugarCube

Those target funds are also great to use as templates for investors who'd rather buy ETFs. VSMPX = VTI VGTSX = VXUS VTBIX = BND VTILX = BNDX

xiongchiamiov

Others have addressed why they change in value. As far as stability, you need to look at something like BND, which is what would be recommended. It has movement, but it's nothing like SPY. Some folks also don't include bonds for direct stability, but for stability _of the portfolio_. They have a less-than-1 correlation with stocks, which decreases overall volatility. I personally primarily use longterm treasuries because they _tend_ to go up when stocks are shitting down, which is a very helpful correlation (rebalancing helps me sell high and buy low). But even when they don't, they're still helping reduce the overall volatility of the portfolio.

DavidMeridian

I advise you include a "total market" fund or two, such as VTI (US mkt), VEA (non-US developed mkt), VWO (emerging mkt), etc. In lieu of QQQ, consider FTEC or VGT for the US tech index (both have lower expenses than QQQ). I would definitely not put 25% in BND.

s0methingggg

It’s your IRA, I mean they’re probably over valued but what’s that even matter anymore lol Sell half and put it in VOO/VXUS unless you’re the one person 40+ in this sub. Then add a little BND Let the rest ride If it were taxable on the other hand…….. Sell all, immediately open an incredibly over leveraged multi leg options position on (insert ticker of the week) Then get divorced obviously

MaxwellSmart07

All this talk about QQQ tanking in a downturn. Meh. So will VOO and VTI as much or almost as much and the latter two will not perform nearly as well in the recovery. Want something to better withstand downturns? — SPMO. Swap BND and CD’s for SPMO..

ramksr

BND to offset for bad times like bear market/down/corrections etc... and if I need money for some reason then BND/CD may come in handy... Again not sure if my logic is sound...

compound_news

If you're looking 10+ years old then it's totally fine to take on risk. CDs are paying pretty decently right now, so, fair. What's your thought behind the 25% weight in BND?

Perfect-Scene7079

invest in? "the market" so like VTI/BND/VXUS those 3 ETFs give you total US, total domestic bond (only bonds worth holding), and total foreign market (any publicly traded foreign company worth investing in) you could do like 70/20/10 or 70/10/20 or whatever the fuck you want but this isnt a subreddit for investing

Heyhayheigh

Everyone here says VOO and chill. But lump sum is a BIG BOY MOVE. Most will panic sell. It’s easier to be poor. Just starting out. $100/weekly of VOO, easy stuff. The swings dont hurt, you barely feel them. Try lumping 90/10 VOO/BND… Putin will invade somewhere and you are instantly one of the lemmings running off the cliff. Understand what a good pro sounds like. Understand how they get paid and their motivations. The most important thing is trust. Having a good pro is like having a good CPA, most are shit, but if you get a good one they help a TON.

Heyhayheigh

Bonds are the stable part you withdraw from unless doing a rebalance. So it depends on when you gonna take out how much. Not mad at 2 years expected expenses/distributions in BND or SGOV. Then take it from there with risk tolerance. It’s whatever lets you sleep at night for the rest. It is always a balancing act of risk on/risk off. But it is about spending, when will the money be liquidated and spent. Some people that is right after retirement, in my experience helping clients, they normally go into bonds way too early as they don’t even touch 401k until RMD time, they don’t want to pay taxes. Wild really when you think about it.

xiongchiamiov

Most commonly, it's holding BND. >E.g., if the investment horizon is 20 years, wouldn’t it make more sense to use a single 20-year Treasury instead? That really depends on how you want to handle inflation and interest rate risk (for instance, bonds were paying almost nothing for a long time, so putting 40% of your portfolio into them then would've been not very optimal). Funds are also generally more convenient for rebalancing and DCAing, and it's only fairly recently that decreasing duration bond funds have come about.

IronyElSupremo

Think you’re good except may look af increasing long bonds a bit. Fidelity published an analysis last year about asset allocation in and coming out of the 2008-2009 GFC. Investment grade bonds in an 80/20 portfolio helped balance that stock drop, and while equities did better coming out going to 2014, at 2014 both were about equal. Can play around with it. Then from 1999 to about 2020-ish, a 80/20 “Boglehead-ish” 4 fund (60/20/15/5 in VTI, VXUS, BND,BNDX) did as well as the stock index (… which is very hard to do)z

KeyPerspective999

\+1 and [https://www.bogleheads.org/wiki/Three-fund\_portfolio](https://www.bogleheads.org/wiki/Three-fund_portfolio) I would do some mixture of VTI/VXUS/BND and call it a day.

Heyhayheigh

Because it is common practice. Most advisors are mediocre. They don’t know why they explain the things they explain. Most are covering procedural bases. Clients want to panic sell balanced portfolios, what do you think they would want to do to 100% aggressive SP500? I wish clients could just handle the volatility of pure VOO with some BND or SGOV for the balanced part (risk tolerance), but they can’t. They forget that. Or never have that explained to them in the first place.

BlueCollarRefined

So buy some BND. No reason to start giving some one else a slice of your pie.

RonMexico16

Do you have any high interest debt? That can be a better place to start than the market. If you’ve already made the decision to start an after-tax account, I’d venture over to r/Bogleheads and get a 2-3 fund portfolio started of diverse low cost ETFs. VT/BND or VTI/VXUS/BND is always a good place to start.

Legaon

Put 500k in: —>mutual fund variants:(VTWAX + VBTLX + VTABX) —>ETF variants: (VT + BND + BNDX) Live off of the passive income

FxHorizonTrading

Depending on the sums, actively managed / hedging funds can work wonders - ofc the right ones.. its a long and painul search usually, but worth it to go the route I assume your from the US - going partly into VXUS wouldnt hurt a lot, taking some BND as well Holding other currencies - outside of the USD - to actually hedge equity moves, requires very active management (from professionals) not to get caught in a wrong move and losing even more

Legaon

Think of (investing in the stock market), like this. By investing in “assets that are good long term assets.” Either (ETFs or mutual funds). You are achieving (capital appreciation + earning dividends). —>Capital appreciation = total value of your stock portfolio. Capital appreciation = unrealized gains/money on paper. People who are long term investors do not care about (capital appreciation as much). They will only care about capital appreciation, when they are going to sell shares/convert unrealized gains into realized gains. -when you sold share because of a dip. You just converted (unrealized gains, into realized gains). —>Earning dividends = earning passive income, without even having to sell shares. You are getting a guaranteed return on your investment, without even having to sell shares. -Aka: You have manually allocated ($10,000 dollars to your investments). In return, you could be receiving ($300 dollars in dividends per year). ($300/$10,000 = 0.03 * 100% = 3%). ->You have manually allocated ($10,000 dollars to your investments). You are receiving (capital appreciation, but can also become capital depreciation). You are receiving (dividend income, and perhaps long term dividend appreciation, but can also become dividend depreciation). ->You have manually allocated ($10,000 dollars to your investments). And you are receiving a (3% APY interest rate — because of the ($300 dollars in dividends per year). And the amount of dividends could potentially grow, if there is “long term dividend appreciation.” Good long term assets to invest in: -ETF variants: (VT + BND + BNDX) -mutual fund variants: (VTWAX + VBTLX + VTABX). (Total world stock market = 100% equities) + (Total US bond market) + (Total international bond market). Bonds are essentially debt assets. (Financial institutions/banks), mainly make their profits from (debt or debt interest). Bond holders get to receive a percentage of this (debt or debt interest).

ILikeXiaolongbao

I am not a financial advisor, and this is not official advice, do everything at your own risk. For sure you should pay off your truck, the market is a bit volatile at the moment and I'd rather just get rid of that debt than try and arbitrage your way into some minor profit by delaying payments. Just pay it off so you are actually debt-free, unless it's some absurdly low interest rate. As for the rest, something like half toward your mortgage and half the market sounds like a good plan. It depends on your age, but since you have a large safety fund you can be somewhat aggressive in the market, but I would absolutely not go for a large BTC holding. As much as the crypto crowd would tell you different, you are not using that money to invest, you are using it to speculate. You are gambling on sentiment. That's actually a good gamble, better than sports betting and so on, but it isn't investing. A decent portfolio could look something like: 40% VOO - This tracks the S&P 500, and is a very popular ETF. 20% BND - This is an ETF for the bond market and is ultra secure. 10% BTC - This is obviously the aggressive part of your portfolio, but I think 10% isn't too crazy. 20% VEA - This is an ETF that invests globally in developed countries apart from the USA. This helps you avoid being too exposed to the US economy if it doesn't do as well. 5% GOOG - Stock in Alphabet seems quite under-priced and could have good upside. 5% NVDA - This gives you some AI upside. Obviously you need to figure out your risk tolerance and so on, but I think this is reasonable, but do more research because you have quite a lot of capital to invest and it's important to be comfortable with your money.

Huge-Truck8207

Congrats on graduating! That’s an amazing gift from your grandma—and a smart one too. If you’re thinking long-term (20+ years), putting that $5,000 into a low-cost broad-market index fund is one of the best moves you can make. A few great options people often recommend: • Vanguard Total Stock Market Index Fund (VTSAX or VTI) – gives you exposure to the entire U.S. market • Vanguard S&P 500 ETF (VOO) – tracks the top 500 U.S. companies • Fidelity ZERO Total Market Index Fund (FZROX) – no fees, great for beginners • Schwab U.S. Broad Market ETF (SCHB) – another low-fee broad-market choice If you want a bit of diversification, you could consider: • 70% in a U.S. index fund (like VTI or VOO) • 20% in an international index fund (like VXUS or VEU) • 10% in a bond ETF (like BND) or high-yield savings/CD if you want a bit of stability Set it and forget it—with automatic reinvestment—and you’ll be thanking Grandma big time in 20 years. Also: if you’re using a Roth IRA for this (assuming you’re eligible), the long-term tax benefits could be huge. Whatever you choose, the key is starting early and sticking with it—and you’re already doing both. You’re way ahead of the game.

-Lorne-Malvo-

What makes me anti bogle is they don't typically scrutinize what they buy, or even care how it does. They worship conformity. Gains are secondary to formulas. Fuck that lol Most of those who own international funds could not even tell you what are the top companies in their international fund, and they just say "buy international". So just because it is not the USA its going to do well? Fuck that. If I'm buying international I'm going to research and find I region that shows a legit promising reason to buy there, and not just because I should "buy international" to be diversified. Fuck that Anyhow... Are you in bonds or a bond fund? If a bond fund be sure to scrutinize it. Funds like BND are a sure fire way to lose money. Bonds are great, many bond funds tend to suck and lose value over time. BND has been a money loser for years and only this year did it bring a lousy (but at least a paltry gain of 0.5%). A money market fund would do about 8-9 times better, so would actual bonds One would do better buying money market funds or actual bonds. Cheers to you!

ComfortableCraft2710

I asked ai for an investment plan and it gave me this. Is it solid? I'm new to investing and haven't started yet. Here’s the **optimal 20-year investment strategy** for your $50,000 lump sum + $500/month, balancing growth, risk management, and simplicity: --- ### **1. Core Portfolio Allocation (Recommended)** | ETF | Allocation | Role | Key Benefits | |-----|-----------|------|-------------| | **VOO (S&P 500)** | 70% | Core growth | Broad market exposure, ~10% avg. returns | | **AVUV (Small-Cap Value)** | 15% | Higher growth potential | Historically outperforms large-cap over long periods | | **VXUS (International Stocks)** | 10% | Diversification | Captures growth outside the U.S. | | **BND (Bonds)** | 5% | Stability | Reduces volatility, especially later in the 20-year period | **Why this mix?** - **VOO** is your foundation (low-cost, proven track record). - **AVUV** adds small-cap value stocks, which have higher long-term return potential. - **VXUS** hedges against U.S. underperformance. - **BND** provides safety as you near your 20-year goal. --- ### **2. Expected Growth (Projections)** - **Assumptions:** 7–9% avg. annual return (adjusted for inflation and fees). - **Math:** - **Initial $50,000** + **$500/month** for 20 years: - At **7% return**: **~$600,000** - At **9% return**: **~$800,000** --- ### **3. Execution Plan** #### **Step 1: Invest the Lump Sum** - Immediately deploy your **$50,000** into the portfolio: - **$35,000** → VOO - **$7,500** → AVUV - **$5,000** → VXUS - **$2,500** → BND #### **Step 2: Monthly Contributions ($500)** - Allocate monthly buys to maintain balance: - **$350 (70%)** → VOO - **$75 (15%)** → AVUV - **$50 (10%)** → VXUS - **$25 (5%)** → BND #### **Step 3: Rebalance Annually** - Once per year, adjust holdings back to target allocations (e.g., if VOO grows to 75%, sell some to buy more AVUV/VXUS). --- ### **4. Why Not 100% S&P 500 (VOO)?** - While **VOO alone** could work, adding **AVUV and VXUS** improves: - **Diversification:** Avoids overexposure to U.S. mega-caps. - **Return potential:** Small-cap value (AVUV) has historically beaten the S&P 500 over 20-year periods. - **Risk management:** Bonds (BND) reduce portfolio swings. --- ### **5. Alternative Strategies** #### **A) Aggressive Growth (Higher Risk)** - **100% Stocks:** 80% VOO + 20% AVUV (no bonds). - **Potential upside:** ~$700K–$1M after 20 years, but with bigger drawdowns. #### **B) Conservative Approach** - **60% VOO + 20% AVUV + 10% VXUS + 10% BND** - Smoother ride, but lower expected returns (~$500K–$700K). --- ### **6. Key Rules for Success** 1. **Never panic-sell** (hold through market crashes). 2. **Automate investments** (set up monthly $500 buys). 3. **Ignore short-term noise** (20-year trends favor patience). 4. **Tax efficiency:** Use a **tax-advantaged account** (e.g., Roth IRA, 401k) if possible. --- ### **Final Recommendation** **Best balance of growth and safety:** - **70% VOO | 15% AVUV | 10% VXUS | 5% BND** - **Projected value after 20 years:** **$600K–$800K** This strategy maximizes returns while managing risk, aligns with historical market behavior, and requires minimal maintenance. Would you like help optimizing for taxes or adjusting the bond allocation as you age?

Suspicious_You_6562

I’m 26 with 40% in BND/SGOV. I’m in med school but, with government loans at 8-9% fixed, I felt like it was more valuable loading up on fixed income products to pay off tuition and cost of living rather than potentially borrowing more loans in case of a prolonged market downturn. Yeah, it sucks in hindsight to be holding onto bonds at 5% yields for the last year compared to a 20% run up in the S&P 500 in 2024. If only we all had crystal balls. I still think the peace of mind was worth it to protect my capital to pay off tuition for the upcoming year(s)

Early_Statement_4826

Just another storm to ride out. If you are diversified, then not all that much to worry about. I used to be a domestic bond only person. But I diversified into funds like BNDX, and SPHY to compliment BND. And a mix of CD's can't hurt either. Commodities will also be important under the Trump administration since there's a lot of unpredictability.

six_six

Does that mean BND goes up?

ILoveKombucha

Same advice. Not SPY... VOO or VTI. (Also, wise to add some international, and if you are getting closer to retirement, strongly consider bonds). A good 3 fund portfolio might be: VOO, VXUS, and BND. (US, international, bonds). Reasonable allocation for a millennial might be 80/20/20.

ILoveKombucha

You invest for the long term (15-30 years), not for a big gain in the immediate future. Over long term, you can expect (based on well over 100 years of returns) around a 5-6% real return (that is subtracting the effects of inflation from your gains). That said, the very real possibility of suboptimal returns in the S&P500 over the next decade is exactly why you diversify. It is wise to include some international stocks into your portfolio. I encourage you to learn about the Boglehead style of investing, and learn about a Boglehead 3-fund portfolio. An example allocation would look like this: S&P500 OR US Total Stock Market 60% (use a fund like VOO or VTI) Total International minus the US: 20% (use a fund like VXUS) US Bond fund: 20% (use a fund like BND). This way you - for practical purposes - own the entire stock market of planet Earth (60% of your money goes US, 20% international). Bonds generally don't offer a great return, but they reduce the volatility of your portfolio. Some folks hate bonds because stocks generally outperform bonds (by miles) over the long term. If you can stomach a lot of volatility, and have a long time before you need to cash out, you can avoid bonds. On the other hand, watch the hysteria of folks on reddit investing forums, and realize... a lot of people who THINK they can stomach volatility actually can't. That's what bonds are for. The above portfolio is a reasonable default allocation, and if you follow that for 15-30 years, you'll likely be very happy about your results. You won't get rich quick, and you won't be the best performer, but you'll do better than probably 80%-90% of all investors. Final thought: don't underestimate humanity in innovating and finding ways to grow the economy. It would be foolish to bet against the S&P500 in any significant way. Just be in the game for the long haul. Look at 2000-2012 or so... basically a flat decade. And look at what happened after that....

ChairmanMeow1986

Lol, sorry BND.

smartfon

The goal is to balance between maximum yield, reduced volatility, and liquidity, so I will likely have access to 100K at any given time without having to sell the stocks. 60K will be in stocks. I won't touch them because there might be a bear market in a few years, who knows. The remaining 140K will be in fixed income assets, of which 40K (JBBB and CLOZ) will pay the highest rate but could default and I could theoretically permanently lose that 40K, leaving me with 100K. I suppose the JAAA and FLOT could also TEMPORARILY lose value but I believe they do not lose value drastically and they recover much faster, which is why I have this "ladder" of safety and risk. Is there a flaw in this logic? I don't want long duration bonds like BND because of how they got decimated in 2022. I cannot rule out another rate hike soon if we have a high inflation so I don't want long term treasuries, but I'm also too greedy to put everything in the "low yield" SGOV. I should also mention that I have taken into account the fact that SGOV is state tax exempt while the others are not. I've also looked up CDs but they seem to pay a lower rate and I'm not a fan of locking up the funds. But I'm open to suggestions.

ChairmanMeow1986

It depends on your risk tolerance really. VOO (SPY is also a S&P500 etf) and chill is popular. More risk and a tech concentration could be QQQ (Nasdeq 100). VTI is an argument over VOO for mid/small cap exposure. The Russell 1000/2000 growth and value are arguable, as well as IJR/IJH for small/mid cap diversification. Had over to r/Bogleheads, they'll add something like VXUS and SCHD for diversification. If you want diversification something like 15% VOO, 15% VTI, 5-10% Russell 1000/2000 growth, 5-10% Russell 2000 value (or IJH/IJR, all 4 at 5% maybe), 20% SCHD (dividends), 20%VXUS (All world), and 10% Bonds (BND or Treasuries)/Gold (GLD)/ or single stock picks. This would give you a good allocation mix for a diversified ETF portfolio if you want more than VOO and chill, but don't know what you are doing.

Nosemyfart

Every person will have a taste for different allocations of course. For example, I in general have a 60% US (VTI), 30% international (VXUS) and 10% bonds (BND). My wife on the other hand chooses to keep things even simpler by just buying VT + bonds

InjuryEmbarrassed532

BND is definitely doing worse than common sense says it should.

FxHorizonTrading

Congratz! Spread it out a bit 90/10 VT / BND or 70/20/10 VTI / VXUS / BND (or equivalents) Thats a "safe" bet going forward, if you hodl till retirement.. Be sure to max your tax advantage accounts first, and keeping 6-12 months of expenses in a HYSA or MMF as safety net You may also want to get 5% aside for play money with crypto And maybe.. you want to set aside some 10% too for "other" investments e.g. PE, RE, whatever

Early_Statement_4826

SCHD 40%, VXUS 15%, FBTC 5%, BND 25%, SGOV 15%. SGOV acting as your rainy day fund since the banks have a $250K limit.

ILuvAnneHathaway

5% SCHD - dividend value 5% VIG - dividend growth 10% VB - small cap blend 10% AVUV - small cap value 10% BND - bonds 15% SCHG - tech growth 20% VXUS - international 25% VTI - total market How’s this ?

ILuvAnneHathaway

How’s this new one ? 5% SCHD - dividend value 5% VIG - dividend growth 10% VB - small cap blend 10% AVUV - small cap value 10% BND - bonds 15% SCHG - tech growth 20% VXUS - international 25% VTI - total market

1dirtbiker

Same boring thing I do everyday. Check in at market open, mid-day, and again at close, though sometimes I only get around to check after close. I'll keep my well diversified positions untouched, and then I'll do the same thing tomorrow. Next payday, my 401K, IRA, and brokerage will automatically be funded, and the only thing I'll need to do is buy 90% IVV and 10% BND in my brokerage. My 401K and IRA automatically invest. Once in awhile I'll buy a single stock that I've researched well, and plan to keep for years, but I keep single stock purchases in total to under 10% of my portfolio. I don't mess around with gambling, err, options, I mean. I had very few single stocks that significantly beat the market, and never did anything exciting in the market, besides buy a third of a bitcoin a few years ago. I signed on to the get rich slowly plan, and it's working nicely. I came from nothing, and now have a 7 figure net worth. You'd never know I was a multimillionaire if you met me, because I live well below my means, and don't flash my money around. Yes, I know, boring post of the day award in wallstreetbets. 

wha2les

have you compared it to BND index?

Sea_Tack

That's fair, but on the topic of buying at a discount, do you have a specific approach to how you do this? What does "discount" mean to you in % terms? Do you have quantitative support for your approach? I am seeing more feedback that lump sum investing beats dca. So this risk is that the discount may only happen after a big upswing, or basically never happen, which leaves you worse off. All I can say for myself is I rebalanced from BND to VT on April 4th which is close to the perfect day/time and in hindsight I look like a savant. But I just decided this based on my spidey-sense which is a concern. I need to think on how I can batten down the hatches of my plan, since I am now spending more time on reddit and feel like it's getting into my head a bit.

Im_Still_Here12

If you go [here](https://investor.vanguard.com/investment-products/etfs/profile/bndx#overview) you can read on what BNDX is. It appears its an international bond fund with similar time frames as BND. You need to ask yourself why are you buying bonds in the first place. I don't feel a younger investor needs them at all. You will get far greater returns overtime investing in index type ETF/Mutual Funds. Save bonds for when you are nearing retirement.

noncompact_leaf

Thank you for explaining this! The PIMCO Active Bond ETF "BOND" says "Intermediate Core Plus Bond" while BND says "Intermediate Core Bond". But you're saying they're interchangable, right?  Also, I don't see it as short-term savings but rather safer savings. (And I would never have bought them, but it was a time when I had a terrible financial advisor, so I'm trying to get myself out of what he did.)

Im_Still_Here12

You need to understand that BND is made up of intermediate term government bonds. When the fed raised interest rates to combat inflation coming out of covid, that made the resell of all those low interest short term bonds that BND was holding (from purchases during covid) close to worthless on the resale market. No one wants to buy 1 - 2% intermediate term bonds when you can buy short term bills/bonds for 4-5%. So BND had to wait to maturity date to cycle out all of those low interest rate bonds in order to purchase new bonds at new interest rates. You shouldn't be using BND for short term savings. You need SGOV or any money market fund/HYSA for that.

xiongchiamiov

You need to look at dividends reinvested. That would normally be https://totalrealreturns.com/s/BND,BNDX,SGOV but it looks like something happened to their data a few days ago so it's not giving historical graphs. Bond prices on the secondary market depend on interest rates for new bonds. https://www.bogleheads.org/forum/viewtopic.php?t=360575 is a good read, and includes this nice summary: > There is a rule of thumb--for a bond, it is exact, but for a bond fund it is only a rule of thumb. It is: the duration of the bond fund is the period of time over which short- and long-term effects of an interest rate increase balance out. An interest rate increase is bad for an investor who holds for less than the duration, good an investor who holds for longer than that. The specific question that you're having at the end is called ["the cash trap"](https://www.reddit.com/r/Bogleheads/comments/1cgcqrp/thinking_of_ditching_your_total_bond_fund_for_a/).

unfixablesteve

“I have my uninvested savings in the ETFs BOND and BNDX” Your savings are invested, in BND and BNDX. 

grokfinance

SPY already includes heavy QQQ influence. So just pick SPY and BND.

pouleaveclesdents

No, it's not going all into bonds - probably a mix of QQQ/SPY/DIA and then BND/BNDW.

pouleaveclesdents

I'm going to be moving out of this account and putting it in something else (combination of index funds and BND/BNDW probably) when I retire...in 13 days.

BeerPowered

I'd start by splitting it up. keep some for flexibility, maybe $50–75k in cash or short-term bonds. Then put most of it in a taxable brokerage account, low-cost index funds like VTI or a 70/30 VTI/BND mix if you want some bonds. You’re already on track, so just make it work harder over time.

helpwithsong2024

If you honestly never want to think about it again, put 12 months of your current expenses into BND and the rest into VT. Call it a day. For me that would be dumping 400K into VT and 50K into BND.

ILuvAnneHathaway

VWO – Vanguard FTSE Emerging Markets ETF SPMO – Invesco S&P 500 Momentum ETF VEA – Vanguard FTSE Developed Markets ETF SPHQ – Invesco S&P 500 Quality ETF IVV – iShares Core S&P 500 ETF SCHG – Schwab U.S. Large-Cap Growth ETF BND – Vanguard Total Bond Market ETF VB – Vanguard Small-Cap ETF Is this a good portfolio for my Roth IRA ? I’m 21 , I just made it on robinhood and this is what they gave me , but chatgbt said I should consolidate all the ones that are similar / track large cap SMP ? So what do you guys think

xiongchiamiov

Read the stuff you've already been linked; it's good. A few additional things that may be interesting. The most common options are a total bond fund like BND, or some holding of treasuries. Some of this depends on whether you're looking for stability from your bonds or negative correlation during a stock downturn. When you look into sequence of returns risk (which is the thing you're addressing), the "bond tent" concept will come up: https://www.kitces.com/blog/managing-portfolio-size-effect-with-bond-tent-in-retirement-red-zone/

RandolphE6

There's a lot of bad information on Reddit. Growth does not mean stocks "grow" more and have higher returns. In fact, historically growth lags value in performance. Also, dividends are not free money. It's simply taken out of the value of the stock when the dividend is paid to shareholders. This is useful when you get older and rely on investment income so you don't have to sell stocks yourself and help avoid making emotional decisions. Stick to broad market index funds like VTI and VXUS. The less risk tolerance you have, the larger your BND position should be. Bonds are useful at any age to reduce volatility and likelihood of acting emotionally which is the biggest risk to returns. A target date fund for your age would include about 10% bond allocation which would be considered aggressive.

Solintari

I would consider bonds and commodities a facet of diversification too. I mostly follow the three fund approach at 80/20 in bonds (VTI, VXUS, BND). When I it 50 I will shift to a 60/40 probably and stay there, and start adding muni bonds for better income in retirement.