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Rethinking this bond allocation should match your age formula

David Swensen’s book Unconventional Success mentioned that investors should construct a portfolio with monies allocated to the core asset classes below, keeping a bias towards equities: 30% Domestic Equity (VTI) 15% Foreign Developed Equity (VEA) 5% Emerging Markets (VWO) 20% REITs (Real Estate Investment Trusts) (VNQ) 15% U.S. Treasury Bonds (SHY) 15% TIPS (Treasury Inflation Protection Securities) Add up bonds and treasuries and that’s 30% fixed income folks. Many financial experts including a famous one, John Bogle, have stated as you ...

Top Canadian Bond ETFs for your portfolio

Earlier this month, I provided you some of my favourite, low cost Canadian equity Exchange Traded Funds (ETFs) to consider for your portfolio.  Now, I want to talk about what a bond can do for you, sharing some of my favourite low cost Canadian bond ETFs for your portfolio.  First up, why bonds matter. Despite Crappy Yields… To borrow some words from Rick Ferri, passive indexing guru, bonds help protect a portfolio from its owner – they keep you from investing in too many equities.  Yes, bond yields have been crappy for a few years now ...

Why I like my Bond ETFs

Maybe it’s because the market is up and down all over the place and I’m thinking about them more. Maybe it’s because bonds are one of the first things I learned about when I opened my RRSP account almost 12 years ago. Maybe it’s because they saved my hide, like my friend “Bond, James Bond” does with his girl in the movies.  Bonds saved my behind when the TSX plummeted to the mid-7000′s and equities were on fire (as in, burning down to you know where) in 2008-2009. I like my bond ETFs. Here are some ...

Understanding yield to maturity is important

Recently, I wrote about my purchase of the Claymore 1-5 Year Laddered Government Bond ETF (CLF).  I choose CLF because it carries one of the lowest costs of any ETF in Canada, at a dirt-cheap fee of 0.17%.   I also bought CLF since it is a low-risk product, I now own some government debt.  The average bond duration of CLF is about 2.5 years.  Meaning, when (if?) interest rates rise (don’t they have to go up?) I won’t lose much value.  A rise in interest rates of 1% means I should only lose about 2.5% of my CLF bond value since bond ...

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