OK, So You REALLY Don’t Want Bonds In Your Investment Portfolio?

It’s lunch hour at an elementary school.

Several kids meet beside a field while two captains pick teams for a quick soccer game.

They pick the hotshot players first, leaving the weaker kids to sweat. Nobody wants to be the last one standing.

If these kids represented an investment portfolio, bonds would be the heavy kid with two left feet. There’s a reason plenty of investors don’t want them on their team.

The 10-year yield on U.S. Treasury bonds is about 2.90 percent per year. That’s the highest yield since December 2013.

But compared to yesteryear, bonds are still gasping for air. They haven’t had such low yields since 1956.

Image by Pixabay

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Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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4 Responses

  1. Jason says:

    Hi Andrew,

    Having read your book and heard you speak, I fear I may have already veered a little off piste by over complicating things in relation to bonds. I’m a Dubai based uk national with a 60/40 equities to bonds portfolio. In a effort to diversify my bonds I have 3 etfs. iGLS giving me the classic short maturity term you promote, VGOV which provides longer term exposure and a relatively small holding in SHYU which gives me more attractive yields though the capital price has lost 10% since I invested. It’s becoming very confusing maintaining the original allocation based on the three bond catergories and also compared to my equites to bond ratio. I wish I had just bought one simple fund now. Given bonds perform roughly the same I’m thinking I’m not going to lose if I sell and invest in one simple fund. Would you agree? If so could you explain the difference to me investing in a etf vs say a vanguard fund say the vanguard global index GBPH account.

    Thanks in advance

  2. ron says:

    Happened to me at a time when there was no real global aggregated bond fund yet. Since Novembre last year I have AGGG who does exactly that: a blend of international government and corporate bonds.

  3. Jason says:

    Thanks Ron. Yes I have Developed similar legacy issues. Did you simply sell up everything and buy AGGG? That’s my dilema at the moment. I was also thinking alternatively I just invest in a vanguard mutual fund.

  4. ron says:

    No, I kept what I had and I just added to AGGG. If I ever need to sell something I will then sell one of the legacy bond etf’s first.

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