What type of bond mutual funds should I have in my portfolio?

July 27, 2010, 9:12 am
Question
I am a retired teacher. For years I invested mainly in stocks and put a small percentage of money in a total bond fund. Through the years as I increased the percentage of money I put in my bond funds, I diversified into intermediate corporate, intermediate government and i-bonds. I have recently retired and am looking to diversify my bond holdings even more. Should I invest in corporate bonds, government bonds, long, short intermediate, i-bonds, junk bonds, international bonds or all of the above.
Answer
I agree with the others that you should probably avoid (or at least cut back on) long bonds at this point, as interest rates are historically very low, and will probably rise in the next 10 years. Other than that, I like your "all of the above" strategy. Be sure at least 20-30% is in international bonds, as this is a good currency hedge (if the dollar loses value, international bond shares rise).





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