Is now a bad time to invest in bonds?

[Gittins Gal]

I'm doing a bit of background reading towards putting together a balanced portfolio in my stocks and shares ISA.

I've read that having a good mix of bond and equity investments can help to mitigate against losses but all the current evidence suggests that there will be a bear market when QE is wound down.

So, if you were starting up, would you bother with bonds? I am of course, taking the long view i.e 5-10 years.

[OwlHoot]

I'm doing a bit of background reading towards putting together a balanced portfolio in my stocks and shares ISA.

I've read that having a good mix of bond and equity investments can help to mitigate against losses but all the current evidence suggests that there will be a bear market when QE is wound down.

So, if you were starting up, would you bother with bonds? I am of course, taking the long view i.e 5-10 years.

I'd invest in shotguns, crates of ammo, and tins of tuna

HTH

AtW

[doodab]

I'd invest in shotguns, crates of ammo, and tins of tuna

HTH

AtW

You forgot beans. You'll need some beans to keep the bunker warm and moist.

[AtW]

I'm doing a bit of background reading towards putting together a balanced portfolio in my stocks and shares ISA.

Marry a banker instead - his word will be your bond...

[DimPrawn]

Marry a banker instead - his word will be your bond...

No tulip Sherlock

The Blind Banker - Wikipedia, the free encyclopedia

[darmstadt]

My two James's are doing okay, Basildon not so brilliant and Brooke is just steady.

[Zero Liability]

What's their appeal?

[lukemg]

2 mistakes - posting in general and being widely considered as a sockie....
However, bonds is a good one, with some people suggesting asset allocation as your age as a % of bonds in your portfolio. This is to reduce the impact on your overall pot if/when shares take their inevitable nose-dive AND if you use rebalancing to equal the %ages annually, this will have the effect of you purchasing the lower priced area, encouraging a buy low, sell high attitude you might remember from 'trading places'
However, effect of low interest rates says bonds are in trouble when they rise so what can you use for fixed income.
I look at it like this, every asset is part of my portfolio = equity in my house, savings, NS&I etc which provides a more stable portion of the pot SO I feel more comfortable having all my investments in shares giving a breakdown of shares - 42%, cash 34%, house 25%.
I am also switching about 5% into REIT's which tend to be more like fixed interest stuff.
My opinion might change when I get <5 years to retirement tho, as impact of a big share kick back would leave no time to recover (I never sell out and over time, this has proved the best option as they have always recovered if you can hold your nerve).
Too complex ? try the 80/20 lifestyle fund from Vanguard, setup a monthly payment and try to forget about it for 10-15 years !

[Gittins Gal]

2 mistakes - posting in general and being widely considered as a sockie....
However, bonds is a good one, with some people suggesting asset allocation as your age as a % of bonds in your portfolio. This is to reduce the impact on your overall pot if/when shares take their inevitable nose-dive AND if you use rebalancing to equal the %ages annually, this will have the effect of you purchasing the lower priced area, encouraging a buy low, sell high attitude you might remember from 'trading places'
However, effect of low interest rates says bonds are in trouble when they rise so what can you use for fixed income.
I look at it like this, every asset is part of my portfolio = equity in my house, savings, NS&I etc which provides a more stable portion of the pot SO I feel more comfortable having all my investments in shares giving a breakdown of shares - 42%, cash 34%, house 25%.
I am also switching about 5% into REIT's which tend to be more like fixed interest stuff.
My opinion might change when I get <5 years to retirement tho, as impact of a big share kick back would leave no time to recover (I never sell out and over time, this has proved the best option as they have always recovered if you can hold your nerve).
Too complex ? try the 80/20 lifestyle fund from Vanguard, setup a monthly payment and try to forget about it for 10-15 years !

Very helpful post, thank you.

Don't worry. I'm not a sockie but I don't know where else I should have posted this other than in general. Perhaps I should have gone to some financial forum!

Anyway, yes I've heard that your age should translate to the percentage of your investments that you should put in the low risk pot.

Inneresting you mention REITs as I was just looking at them. The analysis seems to suggest that commercial property in the uk is going to pick up in 2014 and they seem like a pretty good medium risk bet.

[Old Greg]

Very helpful post, thank you.

Don't worry. I'm not a sockie but I don't know where else I should have posted this other than in general. Perhaps I should have gone to some financial forum!

Anyway, yes I've heard that your age should translate to the percentage of your investments that you should put in the low risk pot.

Inneresting you mention REITs as I was just looking at them. The analysis seems to suggest that commercial property in the uk is going to pick up in 2014 and they seem like a pretty good medium risk bet.

Please don't tell me you're real. That's the saddest thing I've heard in a long time. Please accept my commiserations.