Joined: 15/01/2016(UTC)
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Cm258;336270 wrote:ben ski;336260 wrote:Cm258;336258 wrote:Peanuts;336254 wrote:Aminatidi;336231 wrote:
Not so sure in the heat of the moment if you login to your platform to add your monthly £2K and your account shows £300K when a couple of months ago it was showing £500K.
You're not exactly "buying the dip" at that point are you you're just a passenger hoping it goes back up in a timeframe you're comfortable with.
DCA'ing during a 40% market crash is a gift. I agree with your comment re timeframe but at 36yrs old Cm258 needed lose too much sleep. I mean for my pension, a big correction like that would be a gift. I'm piling in nearly £3,500 a month, so it would be ideal buying up units at 40% down from peak. Any views on short vs intermediate duration government bonds? I feel ditching the intermediate now, of all times, is poor timing... Rates could be cut, we might see a recession, the stock market looks frothy.... All scenarios where slightly longer duration does better... Intermediate tends to diversify stocks better. You're also securing decent nominal yields for quite a few years – if we were back to sub-inflation yields in 5 years, we'd all be back in this situation where bonds don't really make sense. My own preference would be a barbell of short-term inflation-linked bonds, and longer-duration inflation-linked. So if you had 10% in each, you'd automatically be rebalancing out of the one that held up better, depending on what's happening. With global debt where it is, there is an argument you shouldn't be holding much of it. Inflation-linked bonds kind of ticks the box as a real asset, so I'd rather build a base of them, which they're on yields that guarantee growing your capital after inflation. Thanks ben ski Tim Hale suggests 50:50 short duration conventional gilts and short duration index linked gilts. What's your view on that pairing as the 'defensive' mix? A part of me thinks I ought to follow this model properly and ditch IGLT And IGLH in favour of IGLS! I was just saying in the other thread, one problem with bond index funds is average duration can be a bit long – the market includes lots of institutional investors who have to match long-term liabilities. So the argument for short-duration is strong. But with short duration, you still run into this problem, when yields drop or go back to negative (real) (which there is a view they may, with the cost of debt refinancing – although that is double-edged, as you also need people to buy), that then you suddenly find yourself losing money for holding bonds. From backtests, I think McQ's done a good one on Bogleheads, I think we know intermediate duration treasuries have diversified stocks best. So maybe an average duration around 7-10 years. But I've come to the conclusion there's no fixed allocation that always works with bonds. As they get more expensive, you generally want to shorten duration. So I'd hold a barbell of short and long, and when they get expensive, you'd be selling the long-dated fund (which would be rising more).
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