Bonds or alternatives for Couch Potato Portfolio?
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Thread: Bonds or alternatives for Couch Potato Portfolio?

  1. #1
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    Bonds or alternatives for Couch Potato Portfolio?

    TD Canadian Bond Index –eSeries (TDB909) for the fixed-income portion of my couch potato portfolio or something else? This is for retirement savings and I'm 36.

    I'm trying to keep my TDW RRSP account in Basic (b/c its $25/year vs $100/year) so no ETFs or equities. Maybe in 10 years I'll have enough $$ to make the extra fee worthwhile, but I'm just starting out now.

    I gather from what I've seen here that there's some negative feeling about bond funds right now?


  2. #2
    Senior Member leoc2's Avatar
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    The duration of the bond fund is an indication of its sensitivity to interest rate rises. The duration times the interest rate increase approximates the percentage decline in market value. Example: For bond duration of 5 years and interest rates rise 1% = 5% decline in market value. The duration risk is not an issue if you hold the fund for a period of time longer than the duration. In the previous example if you hold for 5 years the market value decline disappears as maturing bonds are replaced with new bonds with higher interest rates. If the average duration of the e-series is 10 years or less then no problems.

    http://canadiancouchpotato.com/2010/...nd-index-fund/
    http://www.bogleheads.org/wiki/Bonds:_Advanced_Topics

  3. #3
    Senior Member Financial Cents's Avatar
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    I use XBB for my main holding with a bit of CLF.
    My Own Advisor Saving and investing my way to financial freedom.

  4. #4
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    @leoc2: thank you for the info, that was good reading!

    @financial cents: thanks, but those are ETFs. Maybe in a few years.

  5. #5
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    High interest savings accounts or GICs are valid alternatives. I bet a 5 year GIC will beat CLF over the next five years.

  6. #6
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    My bond holdings are primarily in the PH&N Bond Fund D which I planned to hold 'forever'. However, all of the talk about bonds being a poor investment going forward has me a bit nervous. Recently, I cashed in some of my equity holdings and have now set up a 10 per cent cash position in my portfolio using a HISA. This leaves my portfolio with a 10 per cent cash/40 per cent bond/50 per cent equity allocation. I am approaching 69 years of age and will have to further decrease my equity exposure going forward but am not sure where I will move the resulting cash to????

    http://quote.morningstar.ca/quicktak...&culture=en-CA

    Last edited by Belguy; 2012-03-25 at 01:00 PM.

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