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Originally Posted by jmjj215
Well that all depends. By hold I don't mean you hold the same asset class the entire time.
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I understood that.
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As an investor moves toward retirement, they would change their portfolio holdings to reflect that, move from growth, into more income funds, hold more bonds, less stock, lessen their international/aggressive funds a bit..
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That used to be the 'conventional wisdom'.
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I don't think an investor who was at a 50/50 stock/bond portfolio would've fared all that bad in 2000. Bonds were quite something from 00-03.
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The average government bond fund, one of the most widely held of bond funds, rose
6.2% in 2001. But the Standard & Poor's 500 stock index
fell 13% in 2001.
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That's why I mentioned those Target Retirement Funds (I know vanguard offers them, sure the others do too), those are a great way to diversify away the unsystematic risk of the market. No?
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Target Maturity bond funds are good for receiving a definitive amount of your principal returned to you at a set date in the future, particularly if you require a certain amount of money for a specific purpose. They can be market timed, but require a level of sophistication.
BTW, I had forgotten about another interesting article that makes for good reading. It’s by
Malcolm Gladwell (of ‘Tipping Point’ and ‘Blink’):
BLOWING UP (Department of Finance)
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